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No deal yet on TC electric rates

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By Vince Luecke

Members advance plan to phase-in increase, but details could change

TELL CITY - The Tell City Common Council may approve phased-in electric-rate increases when its members meet next month, but any vote may not be unanimous.

The council disagreed Monday on the amount of additional revenue the city-owned utility needs, voting 3-2 to have City Attorney Jim Tyler prepare a schedule of accompanying rates and charges that would give the electric department 60 percent of the original increase it proposed in December. The balance of the rate hike would take effect in 2009.

Councilmen John Little and Tony Hollinden voted against the move and offered their own proposal of giving the utility 50 percent of its asked-for increase, with no automatic rate hike next year.

"We could save everyone a lot of paperwork by determining what the will of the council is," Gerald Yackle said Monday at the tail end of nearly an hour of discussion on electric rates.

The council introduced an ordinance in December that would generate an additional $1 million in revenue to reverse declining operating margins and plan for future projects. The elected body, with two new members, discussed a plan last month that would phase-in an increase over two years.

A special joint meeting of the electric board and council was held last month to gather information. A second reading of the ordinance was held Monday but the council disagreed on how much of an increase is needed. Some of the discussion centered on how higher raw electricity costs from the utility's power supplier are passed to customers through an adjustable tracker.

Tell City Electric Department Superintendent Marlow Smethurst took to the council-chambers podium for a third consecutive time to defend the rate increase. The additional revenue, he said, would fund work on a substation, allow for purchase of a new truck and support capital improvements.

Smethurst and members of the utility's board of directors have repeatedly pointed out that the utility has not had a base-rate increase since 1994.

Since then, prices for the supplies and equipment the utility uses everyday, from gasoline to transformers, have increased, they said.

The utility has said average residential electric rates would increase by 8.6 percent and increases across all rate classes would average 12.9 percent. At Monday's meeting, Smethurst said an average residential customer using 807 kilowatt hours during a month would pay $76.12, excluding sales taxes. The same customer now pays $65.78. The difference of $10.34 amounts to a 16-percent increase, but includes an increase of $3.25 in the monthly customer charge for residential customers.

Smethurst said different customers would see varying increases in order to make sure all rate classes shoulder their share of the utility's cost of providing power, which differs in not only how much electricity is used, but the peak amount each customer demands.

Gene Borders, representing woodworking firms Swiss Plywood and William Tell Woodcrafters, again voiced his concerns over the proposed rate hikes, saying some customers would see increases far above the average stated by Smethurst.

Borders said increases would reach up to 32 percent for a homeowner with a 200-amp service and a monthly usage of 5,000 kilowatt hours. A business with three-phase service using 2,439 kilowatt hours would see a 49-percent increase, he said.

"These rates are a lot bigger than needed," Borders said. By his calculations, he told the council, the electric department would generate $1.2 million in new revenue per year, not the $1 million the utility has cited.

Little was among the council members who questioned Smethurst's statement that the utility wouldn't see all the additional revenue generated under an increase, but would have to pay some of that directly to its power supplier.

"I thought the tracker (the adjustable factor included in customers' bills) allowed you to recover those costs," Little said.

"If we give you another $600,000 (in revenue), we hoped you were going to keep that," Hollinden added.

Smethurst said some costs have increased since the rate study was conducted, meaning not every dollar of new revenue would be available for needed work.

"What if we don't do anything?" Little asked, questioning the impact of no rate increase.

Smethurst said the impact of no additional revenue would be far less money for maintenance and future projects.

Monday's meeting ended with a motion by Little to move forward with an increase of half of what the utility originally sought. Hollinden seconded that motion, which failed 2-3, with council members Yackle, Dianne Rudolph and Gary Morton voting no.

Rudolph then asked the city attorney to prepare verbiage authorizing 60 percent of the increase this year, with the balance in 2009. It passed 3-2. However, that vote was not an adoption of the ordinance and the council could change its mind at the March 3 meeting.