BEATRICE – Despite taking a major hit in electric reserves during a polar plunge and rolling blackouts across the nation, the City of Beatrice will be able to keep retail electric rates steady, this coming year.
The mayor and city council heard a review a rate study done by J.K. Energy Consulting, Monday night.
Consultant John Krajewski says the city has moved to a better portfolio of wholesale energy sources as it transitioned away from Nebraska Public Power District, a shift that will be completed this coming year. "It looks like your existing rates are sufficient to cover your projected expenses. It think that's pretty impressive from this standpoint....you really haven't rates.....I think 2009 is the last time you increased rates."
In February during a severe winter demand for power, some municipalities have found themselves in the position of having to pass-through major power purchase costs to their customers. The City of Beatrice hasn’t, by using electric reserves to handle the increased costs.
"I could recommend you lower rates if you wanted me to. I don't think that's prudent because you had a pretty significant drawdown in your cash reserves as a result of that February event. And, I think it would be prudent to replenish those, just because you have operating expenses that come in...you sometimes have capital expenses that come in...I think it's appropriate to have an adequate level of cash reserves to cover those types of expenses."
City Administrator Tobias Tempelmeyer says the city will go into the year with about a $4 million cash reserve in its electric budget.
Krajewski says rates are made up of a monthly customer charge and an energy charge. He says he’s more concerned about the customer charge..an amount assessed no matter how much energy a customer uses.
"You don't want to be losing money on that snowbird that leaves town for a couple of months and you're still sending a bill out to them every month. That was one deficiency. Overall, the revenue is fine. My goal would be to increase the amount you collect from the customer charge, but then decrease the amount from the energy charge so overall, you're still collecting the same amount of money."
Krajewski is recommending the city institute a $2 monthly increase in the customer charge….though accompanied by a decrease in the energy charge. He said another change would equalize rates between summer and winter seasons. Under Nebraska Public Power District, typically rates were higher in the summer when peak demand was at its highest.
"There will be some small increases to the residential electric heat and general space heat...a function of adjusting the summer-winter rates. Probably, for some customers that use a lot in the winter..not as much in the summer, may see a slight increase in what they pay."
Krajewski said the city’s electric rates are very competitive with peer group rates. He said it doesn’t appear the city would have to raise rates in the next three years. Tempelmeyer says the community will still be able to undertake capital improvements in its electric department, including a new substation at Beatrice State Developmental Center this coming budget year.
The Beatrice City Council will consider approval of an electric rate ordinance in the coming weeks, which would go into effect October 1st.