Electric rate increase coming for FerdinandSeptember 23, 2019
By LEANN BURKE
FERDINAND — For the second time this year, Ferdinand utility customers can expect an increase in their bills.
At last week’s meeting, the town council discussed increases to the electric rates that result from an electric rate study currently underway. It is the first rate study the town has done in about a decade.
Earlier this year, the town also raised its water rates.
The electric rate increase will vary by customer based on how much electricity is used, but Clerk-Treasurer Tammy Miller figures average residential customers will see a 12.5% — about $9 — increase in their bills. The average commercial customer will see a 19.5% increase, or about $25. The average industrial customer will see a 16.8% increase, or about $153. Large industrial customers will see an 11.9% increase, but Miller did not have an average dollar amount increase since usage among large industrial users varies greatly.
“Nobody likes a rate increase,” Miller said. “But it’s not really optional.”
The rate increase will only affect residents who get their electricity from the town’s electric department. Customers of other electric service providers that serve parts of the town will not be affected.
In July, the town entered an agreement with Alpha Engineering of Indianapolis to complete the rate study. The contract was not to exceed $7,500. Alpha Engineering has been the town’s electrical consultant for over a decade, is managing the electrical upgrades throughout town and performed the town’s last electric rate study in 2007.
Upgrades to the town’s electric infrastructure, as well as changes in the purchase cost of the electricity the town purchases necessitated the rate increase.
The town is currently performing a $1.5 million upgrade to a substation and plans to upgrade power lines throughout the town in phases after the substation is finished. The upgrade alone has depleted the electric department’s reserves, Miller said, and the department will need to have funds available to upgrade the power lines.
With the rate increases, Miller said, the reserves will be “moving in the right direction.”
Councilman Ron Weyer, who is one of the town officials overseeing the electric upgrades, said there is no set timeline for the power line upgrades. It will depend on when the substation work is completed.
Another factor causing the rate increase is the cost the town’s electric department pays to purchase power from NextEra Energy Resources. Those costs have increased in the last 10 years. The town also incurs an additional cost — called the Midwest Independent System Operator charge — that covers the cost of transporting power through the grid to the town each month. Miller said that cost varies greatly month to month, and Weyer pointed out that the town has no control over that charge.
In the old rates — which were established after the previous rate study — the MISO charge was built in. Now, Miller said, the charge exceeds what the town recoups in the built-in charges to ratepayers. To solve that issue, the town plans to charge a pass through that will cover the MISO. That charge will appear on ratepayers’ bills and will vary each month, depending on what the town is charged. That billing change is separate from the rate increase.
Miller said that going forward, the town will complete a rate study every couple years to make sure the rates are where they should be and to avoid large increases in the future.
The council will consider an ordinance establishing the new electric rates at its next regularly scheduled meeting, set for 7:30 p.m. Tuesday, Oct. 15, at the town office, 2065 Main St.
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