The Duncan Banner

October 23, 2013

Electric rate increase possible for Duncan Power customers

Derrick Miller
The Duncan Banner

DUNCAN — Yeager discusses rates

Duncan Power customers may see an electric rate increase beginning in November as a way to offset unbudgeted and unforeseen cost increases to the City of Duncan.

Duncan City Council members spent Tuesday’s regular meeting discussing possibly adopting a resolution that would increase electric rates for Duncan Power customers. Although the resolution was tabled during the meeting — giving council members two weeks to reach a decision — Duncan Power Director David Yeager said customers could expect to spend $3.36 more for every 1,000 kilowatt hours they use beginning in November. The resolution would take the fuel cost adjustment from $19.40 to $22.76 for every 1,000 kilowatt hours.

“We’re trying to do two things at once,” Yeager said. “We need to recover some costs that are not strictly energy related. Because it’s so complicated, tonight will be discussion. We had about 21⁄2 percent increase overall this year that was again unbudgeted.”

The City of Duncan is looking for a rate increase that will offset about $315,210. Yeager said that rate increase will not cover all of the 21⁄2 percent increase charged to the city. He said the city can no longer cover the 21⁄2 percent increase, and it will be up to the customers to levy that increase through November and December.

Yeager said OMPA is also looking at a rate increase, which would start in January. At that point, it could mean another rate increase for Duncan Power and its customers. He said OMPA is projecting an overall price increase of 3.95 percent on January kilowatt hours. He expects increase between 1.9 to 2 percent to be passed onto to consumers starting in January. This total would be based on the Consumer Price Index.

“We know it’s going to be hard for some people,” Yeager said. “That’s why were trying to taper into this thing. We’ll give them time to adjust. They can either adjust their usage or adjust their budget.”

Originally, the council was slated to vote on increasing the rate increase during Tuesday’s meeting, but City Manager Jim Frieda, City Financial Director Patty Clift and Yeager discussed the need to give council members enough time to review the information before making a decision.

“Because it’s so complicated, we’re taking it in steps,” Yeager said.

Council tables resolution

Duncan City Council members have two weeks to make a decision regarding a resolution to increase Duncan Power electric rates.

And from the discussion that took place during Tuesday’s regular meeting, members will more than like adopt the resolution out of necessity for the City of Duncan. Members tabled the resolution until the Nov. 12 regular meeting.

“It’s always difficult to ask for a rate increase of any kind,” City Manager Jim Frieda said. “We are not a recipient of ad valorem taxes. We depend on the sale of the electric utility.”

Frieda said several rate increases have been passed down to the City of Duncan this year, including one from the Southwestern Power Administration and another soon to come from the Oklahoma Municipal Power Authority.

He said the city has absorbed some of these rate increases for months, but it’s becoming more difficult for the city to continue to do so. Instead, if the resolution is adopted, customer bills will reflect these rate increases for November and December.

“We are not a utility company with stock,” Frieda said. “We are not trying to make a profit for our stockholders.”

Two representatives from OMPA attended the meeting to inform the city council of why the rate increases are occurring. David Osburn, OMPA general manager, said the municipal power group is experiencing several costs coming on all at once, which is why Duncan Power is experiencing rate increases.

“It’s unfortunate I have to discuss these rate increases in my first time at this council meeting,” Osburn said. “I hate to use this analogy, but it’s a perfect storm. We have a lot of things hitting all at the same time.”

Among the costs accrued by OMPA are the final debt payment for a coal plant, improvement to the coal plant to react to emissions, investment in the coal plant, Southwest Power Pool, transmission system, paying a pipeline company.

“Rates went up a fair amount,” Osburn said. “The rates are still competitive. Those items impacted our fixed costs. More and more is depending on natural gas prices.”

Council members spoke to needing the rate increases, although they will also be paying for those increased costs. Councilman Ricky Mayes wanted to put it to a vote, but Mayor Gene Brown and Frieda told him it would be better to wait two weeks to better inform customers.

“We want people to see the necessity of a rate increase,” Frieda said about tabling the item. “Putting it off two weeks will fall into the bill cycle for November.”