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Brodhead utility seeks rate hike

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Kevin Murphy
January 26, 2012

After losing money for the past two years, the Brodhead Water & Light Commission is asking to raise electric rates about 7 percent, according to an application filed with the Wisconsin Public Service Commission.


A typical residential customer would pay $6.03 more per month based on average usage of 751 kilowatt hours, boosting the monthly bill from $86.09 to $92.12, or 7 percent, according to Jeff Peterson, utility superintendent.


The rate increase would boost revenue 5.6 percent. The last rate increase was for 2.9 percent in 2005, according to the Jan. 19 application.


The utility reported net operating deficits of $46,472 in 2010 and $68,270 in 2011 and would lose $65,708 this year under current rates. If the PSC approves the request, the utility would increase revenue by $193,494 and finish the year with a $127,786 net operating income, according to the application.


"We should have requested an increase a couple of years ago, but the commission felt that it should be put off for awhile because of the tough economic times. Now it's time," Peterson said.


The local commission approved the rate application in a 2-0 vote Jan. 17.


The utility in 2010 had a 1.99 percent negative rate of return on its infrastructure investment, which would increase to negative 3.09 percent under current rates this year. The utility is seeking rates that would net it a 6 percent rate of return, an amount the PSC has authorized recently for municipal-owned utilities.


Annual sales of electricity slumped from $3.43 million in 2008 to $2.98 million in 2009 and rebounded to an estimated $3.45 million last year. The requested rates would increase operating income to $3.68 million this year.


Due largely to the increased cost to purchase power in the past few years, operating expenses have climbed from $2.88 million in 2010 to an estimated $3.18 million in 2011. Adding depreciation and tax equivalent payments boosted expenses to $3.24 million in 2010 and an estimated $3.55 million this year.


The utility in 2010 spent $2.43 million to purchase power and this year expects to spend $2.72 million.


Peterson said the utility, like the economy, has been struggling in the past few years and needs more revenue to pay its bills and debts.


"Two major customers closed plants, one plant re-opened but it's been difficult for everyone," he said.


The utility is seeking permission to expand its time-of-day rates to residential customers; industrial and commercial class customers now enjoy the rate break. Lower rates would be in effect during off-peak hours between 8 p.m. to 8 a.m.


"The new rates would be a little higher during peak times and less during off-peak," Peterson said.


Before the PSC acts on the application, staff will review it and make a revenue recommendation that the utility can accept or contest at rate hearings that would be held in Brodhead and Madison simultaneously.


Depending on the PSC's workload this spring, Peterson said he expects new rates could be in effect within three to five months.



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