Electric rates may increase in Covington

COVINGTON -- The Covington City Council approved Monday night the first reading of an adjustment to electric utility rates that may mean an increase for residential customers.

The difference in electric bills for the average residential customer will vary depending on usage and the season, according to Utilities Director Bill Meecham.

However, a utility consultant told the council that the average customer would see an increase of about $3.39 per month on summer utility bills, but that bills should decrease in the winter by about $2, so the increase would really only be an increase of about $1 and some change.

"The reality is that there's so much up and down month to month and season to season, they wouldn't know they were getting an increase if they weren't told," Meecham said Tuesday. "The purpose of this isn't to increase any profits, because it doesn't."

Based on an estimate by Charlie Parmelee of utility consultants Parmelee and Associates, the city will lose $477 in revenue under the new rate structure.

Meecham told the council that while electric bills to customers have varied due to the cost of bulk power purchases that have affected the power cost adjustment, the actual rates have not changed in several years.

Currently, revenues generated from residential rates are not enough to cover service costs, and the commercial sector is bearing the brunt of the cost, subsidizing what residential is not covering, he said.

The city hired Parmelee and Associates to develop rate revisions to address the imbalance and make the city's rate structures more comparable to other utility providers.

"We're not massively going broke based on any part of our rate classifications. We're trying to keep them reasonably competitive and in line with other folks and recover our costs," Meecham said.

He added that utility rates can be a consideration by businesses when deciding whether to locate or maintain a location in a community.

Residential rates will go up 3.91 percent annually, with the bulk of that coming from the addition of two months -- May and October -- to the summer period when rates are higher, Parmelee said. The base charge will also be increased from $8.45 to $9.50 per month.

The General Service rates, which includes businesses and commercial users, would be reduced from 5.15 cents per kilowatt hour to 3.8 cents per kilowatt hour, for usage in excess of 200 kWh per kilowatt of demand.

"This would better reflect the cost to serve and will also make the rate schedule more comparable with the other utilities," Parmelee said.

Industrial rates in excess of 400 kWh per kilowatt of demand would increase from 2.13 cents per kilowatt hour to 3.1 cents. There is no base rate for industrial users now, but that would change under the proposal, with Parmelee recommending a base rate of $100 per month.

Mayor Kim Carter said that when she was elected, the city's summertime rates were the second highest in the state, and now they are in "the middle of the pack" thanks in part to the purchase of additional power by the city, which has helped stabilize rates.

"While citizens complain because even paying $1 (more) is too much for them, they are getting a good value and an improved value on services rendered," she said.

The vote was 4-2 to approve the first reading of the rate change, with Councilmen Chris Smith and Keith Dalton in opposition.

"I have a really hard time believing this is in the best interest of the city," Smith said Tuesday. "At this point, I'm certainly not in favor of raising any utility rates. I'm not for raising them one penny."

The final reading and vote on the rate change is scheduled for the council's Feb. 15 meeting. If approved, the new rates would be reflected in bills sent out in April.