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Evansville seeks 9.5% electric rate increase

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Kevin Murphy
January 18, 2012
— Residential customers of the Evansville Water & Light Department will pay an additional $8.70 on their monthly electric bills if the Wisconsin Public Service Commission approves a rate request submitted by the department last week.

Residential customers now pay $91.45 monthly for 777 kilowatt hours. They would pay $100.15, or 9.5 percent more, for the same amount of power under proposed rates, City Administrator Dan Wietecha said.


The utility has requested its first rate increase since 2007 because of increasing costs in labor, material and purchased power and the costs of expanding to serve more customers, Wietecha said.


"Mainly it's the inflationary costs of the energy we purchase and the number of infrastructure improvements we've made in the past few years. We've improved the reliability of service by upgrading lines on the southwest and eastern parts of town," he said Tuesday.


Revenue has been steadily rising, but so have expenses, according to the rate application.


Total operating revenue has increased from $6.3 million in 2008 to an estimated $7.71 million last year. Meanwhile, operating expenses—including depreciation—have increased from $7.02 million in 2010 to $7.68 million last year. That has dropped net operating income from $133,374 in 2010 to $30,414 last year.


Without the rate increase, the electric utility estimates it would finish 2012 with a $5,472 deficit in net operating income. The new rates would increase revenue by an estimated $540,658 and earn the utility 6.25 percent on its infrastructure investment as opposed to a negative 0.06 percent without the new rates, according to the rate application.


A 6.25 percent rate of return is what the PSC is authorizing municipal utilities to earn based on the cost of financing and other factors, said Wietecha.


"If in three months—which is about the time (the PSC) should act on this—bond rates go down, then our rate of return (and rates charged customers) will also go down," he said.


Before acting on the rate application, PSC staff will review the request, make a revenue recommendation and hold public hearings simultaneously in Evansville and Madison.


Bills with any new rates are expected to be mailed in June or July, Wietecha said.



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