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Council nixes rate increase from agenda

COVINGTON -- The City Council removed a proposal to increase residential electric utility rates from its agenda Monday night, before members were confronted by a packed house of residents who wanted to know how they could reduce their utility bills.

The council had approved a first reading of a rate change a month ago, but tabled it at its Feb. 16 meeting.

"It was obvious that a majority of elected officials were not satisfied with the proposal as presented by the consultant. We, therefore, wanted to talk back with the city's consultant to determine if other viable alternatives exist," said City Manager Steve Horton in an e-mail response to questions Tuesday. "As of yet, we have not determined that anything different can be done that would not be unfair to some other segment of rate payers. Our consultant has been out of town part of the time, so discussions have been limited. Because of these issues, we felt it best to just remove the proposal altogether. After we are able to talk more with our consultant, we can approach the elected officials again, provided we have something new to share."

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, according to Utilities Director Bill Meecham.

Residential rates were proposed to increase by 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. The base charge was proposed to increase from $8.45 to $9.50 per month.

General service rates, which include 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 under the proposal. Also, industrial rates in excess of 400 kWh per kilowatt of demand would be increased from 2.13 cents per kilowatt hour to 3.1 cents. Currently, there is no base rate for industrial users, but the proposal called for a base rate of $100 per month.

During the public comments portion of the meeting, resident Forrest Sawyer Jr. asked why the council was considering raising rates when so many people were struggling to pay utility bills.

Mayor Kim Carter responded that for every $1 worth of electricity provided to a resident's home, he or she is paying less than $1. The commercial sector is subsidizing the residential sector, she said.

"It's a balancing act. It's about parity. It's about keeping businesses here," she said.

Resident Letitia McClure asked how to reduce her bill -- she said that though she's cut down on washing, using electricity and limited computer usage to two days a week, her bill continues to be high.

"It's tough when you have total electric," Carter acknowledged, but added that when she was elected, the city had the second highest electric rates in the state due to insufficient baseload power, which forced the city to purchase power on the market at a higher cost. Now, the city is in the "middle of the pack," she said.

Electric rates have not changed since 2000, though the power cost adjustment, or PCA, has changed dramatically at times, Carter said. The PCA is an adjustment made on the electric bill, which goes up or down dependent on the city's cost to purchase power.

During the past two years, the city has purchased additional baseload power that has lowered the PCA, she said.

"We have actually improved. I know it's hard to believe as we face one of the coldest winters in a long time," she said.

Meecham said usage has increased due to the cold temperatures. He noted that this winter is the coldest recorded since 1978, with temperatures dropping below freezing 15 days in January. In 2009, there were only six days when the temperature was below freezing.

"It takes more energy to warm your house. I know that quite well. My bill just doubled," Meecham said.

Meecham urged residents to talk with city staff about conducting an energy audit to find ways to save on consumption. There are seven or eight agencies that provide assistance with utility payments as well, Carter said, and residents in attendance were given a list with numbers to call.

One resident questioned whether they could get a better rate if the city sold the utility system.

Carter said utilities subsidize property taxes, adding that the city collects $5 million in property taxes annually, with only $1 million coming from the residential sector, adding that property taxes would have to be increased if the city no longer operated the utility system.

"To entertain the option of selling it I don't think is in our best interest at this time," she said.