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Councilors Review Study

October 17, 2012

NEW BREMEN — After reviewing the results of an electric rate and cost of service study, the village of New Bremen Council is moving forward with several changes in the village’s electric rates, effective next year.

“We started several months ago on an electric rates and cost of service survey for the village, and we’re here tonight to give you the results of that and to give you some recommendations and some suggested modifications to your electric rates,” John Courtney, of Courtney & Associates, said Tuesday night during his presentation to councilors.

In the survey, Courtney & Associates reviewed the historical energy sales data of each of the village’s five class — residential, commercial non-demand, government, commercial demand and large power — which showed the residential class makes up approximately a quarter of the village’s total energy sales. Since 2009, the village has seen its energy sales grow from more than 56 million kilowatt hours in 2009 to 63 million kilowatt hours in 2011. With zero percent growth, the village is projected to see energy sales of more than 62 million kilowatt hours through 2015.

The survey also reviewed the project power supply costs, which included unbilled costs of 7 percent and projections of the cost per kilowatt hour projected by AMP, and also examined the village’s projected revenue requirements and projected revenues at its current rates. Courtney & Associates projected the village will continue to see its revenues exceeding its revenue requirements through 2015.

“We try to be conservative in projecting expenses and we try to be conservative in projecting revenue,” Courtney said, noting the projected growth of zero percent. “Revenues do not need to be increased in order to meet the 2015 revenue requirements.”

Courtney & Associates also reviewed the cost of service, which showed power supply costs representing more than two-thirds of the total cost and showed New Bremen with a lower customer service cost than most. The analysis revealed the rates and charges are not consistent with the cost of service results.

“We feel the rates and charges are not consistent with the cost of service results, in particular in regard to the residential and commercial non-demand,” Courtney said. “We think the service charges are too low ... Certainly, your customer charges need to be addressed.”

The tail-block energy rates are also low, he added.

“You barely cover your power cost when you look at what you charge a residential customer,” he said. “Even with the power cost added on there, it’s hardly above your power cost, so that needs to get raised.”

For the commercial demand and large power classes, the demand rate fluctuates drastically and is difficult to predict, he said.

“The demand rate, that fluctuates quite a bit from month to month, it’s difficult to predict for the commercial demand and large power classes,” Courtney said, noting the power supply cost adjustment formula also fluctuates too much month to month.

Courtney & Associates proposed several changes to help make the rates more consistent and fair to the village’s customers. For the residential class, Courtney & Associates recommended a service charge increase from $3.12 to $5 for single-phase customers, from $6.24 to $10 for three-phase customers and an additional $2.50 charge, up from $1.04, for rural service. The recommendation also called for a charge of $0.095 per kilowatt hour for the first 500 kilowatt hours and a charge of $0.085 per kilowatt hour for more than 500 kilowatt hours.

Courtney & Associates recommended no longer allowing new customers in the commercial non-demand class. Those already in the class will have the option to continue to stay in the class or to move to the commercial demand class. According to the proposal, commercial non-demand class customers will see an increase in the service charge from $3.12 to $5 for single-phase, from $6.24 to $19 for three-phase and an additional $2.50, down from $3.12, for rural service. For the first 2,000 kilowatt hours, a charge of $0.105 per kilowatt hour will be assessed, and $0.095 per kilowatt hour will be charged for more than 2,000 kilowatt hours.

It was also recommended that the village get rid of the government class, allowing customers to choose the customer non-demand or customer demand class.

The commercial demand class will see an increase in its service charge from $3.12 to $25.

The demand charge will fall from $8.25 per kilowatt to $8, and the energy charge will rise from $0.05885 to $0.06 per kilowatt hour.

Under Courtney & Associates’ proposal, the large power class’ customer charge will rise from $3.12 to $100 per month and the demand charge will rise from $8.1375 to $10 per kilowatt hour. The kilowatt charge will rise from $0.104 to $0.50 and the energy charge will fall from $0.0585 to $0.045 per kilowatt hour.

Village Administrator Wayne York said after several discussions with Courtney & Associates, it has been determined the changes are beneficial to the village.

“I think we’re all convinced we need to move in this direction,” York said.

Councilors approved the first reading of a resolution to accept the proposed rates by Courtney & Associates with the addition of a $100 charge for a meter tap, effective Jan. 1.

In other business, councilors:

• Discussed the policy of the fire and police department participating in community events. Councilors discussed the policy in place, which only covers when the fire and police department will escort groups through town. After discussion, councilors agreed to keep the policy in place and to continue to allow the police and fire chiefs to decide on whether their departments should participate in an event.

The next meeting of the Village of New Bremen Council will be held at 6:30 p.m. Oct. 23 at the municipal center.

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