BAH HUMBUG • Nephi City raised electric rates at it's meeting on the 6th. Tony Ferguson, Electric Department Superintendent, discussed the need for a revision to all of the Nephi City Electric Utility Rates because of increases to the city.
By Myrna Trauntvein
Times-News Correspondent
Residential electricity rates were increased for Nephi residents effective immediately at Tuesday's city council meeting.
Tony Ferguson, Electric Department Superintendent, discussed the need for a revision to all of the Nephi City Electric Utility Rates.
"I recommend that you revise each of the six utility rates," said Ferguson.
Rate #1 is the residential rate which is to increase from 7-cents to 8-cents per kWh; Rate #6 is the Commercial Rate which will increase one-half of one-cent for each energy block in that rate (how many blocks); #7 is the Large Customer Rate which will increase by one-cent per kWh; #8 is the High Voltage Rate will increase one-fourth of one-cent; #21 is the Commercial/Combination Rate which will increase one-half of one-cent; and #23 is the Irrigation Rate which will increase one-half of one-cent.
He cited the increases in the cost of wholesale electricity purchased by the city as being one of the reasons that the need to raise more funds from rate payers was necessary.
In addition to the cost of purchasing wholesale power, he said, cost of materials used by the electrical department continues to increase.
Nephi is one of seven cities which make up Utah Municipal Power Agency (UMPA). The other cities are Levan, Manti, Provo, Salem and Spanish Fork.
The city council previously heard Ferguson's presentation, in much more detail than was covered during council meeting, and have had the opportunity to mull over the need to increase electricity utility rates in the community.
"You have had time to consider the request," said Mark Jones, mayor.
In addition to the increase in cost of wholesale electricity, the power industry is faced with uncertainty in environmental regulations and the cost of increased regulatory compliance for reliability standards mandated by the Federal Energy Regulatory Commission through the North American Electric Reliability Corporation.
According to the manager's report written by W. Leon Pexton, Chief Operating Officer and General Manager of UMPA, off-system MWh sales decreased 31 percent in 2010. UMPA margins declined substantially from off-system sales of surplus capacity and energy.
These margins are used to reduce net power costs to member cities. Lower member loads, reduced off-system sales margins combined with rising costs of owned generation and a long-term power purchase agreement have increased UMPA's net cost of operation.
Because of those factors, there was an 8 percent increase in the Fiscal 2010 budgeted rate to UMPA's members. Half of that was passed to member cities and the other half was paid by the Rate Stabilization Fund (RSF).
The Board of Directors increased the budgeted member billed rate 10.2 percent for Fiscal 2011. But that eliminated any planned use of RSF funds for rate stabilization in Fiscal 2011.
Ferguson said that he understood that increasing the power rates for customers was never an easy choice for city council's to make.
"It is never popular but it is necessary," he said. "We need to, at least, break even."
"The electric utility has been running at a significant loss," said Greg Rowley, council member.
In spite of the rate increase, Rowley said, city residents were still paying a significantly lower rate than most of the neighboring communities.
"You make a good point," said Ferguson. "We still maintain a very good utility."
In addition, Utah has the second lowest electricity rates among the western surrounding states. Utah has the fourth lowest average industrial electricity cost in the U.S. compared to the nation and the seventh lowest commercial electricity cost in the U.S.
Before the customer can understand how much electricity costs, the customer needs to understand how it's measured. When automobile gas is purchased it is charged by the gallon. Electricity is charged by the kilowatt-hour (kWh)—1000 watts for 1 hour, is a kilowatt-hour.
To get kilowatt-hours, take the wattage of the device being used, multiply by the number of hours used, and divide by 1000. (Dividing by 1000 changes it from watt-hours to kilowatt-hours.)
Use watts to see how hungry a device is for power (e.g., 100-watt bulb is using) and use watt-hours to see how much electricity is actually used over a period of time. Multiply the watts times the hours used to get the watt-hours. (Then divide by 1000 to get the kilowatt-hours, which is how a utility charges a customer.) Example: 100-watt bulb x 2 hours ÷ 1000 = 0.2 kWh.
Rowley made the motion to increase the rate and Justin Seely, council member, seconded the motion. A roll-call vote was then called for. The results were that all council members voted in favor of the action except for Robert Painter, who voted negatively.
