Typical residential electrical customers of Oconto Falls Municipal Utilities will pay $2.42 more on their monthly electrical bills under a rate order issued July 10 by the Wisconsin Public Service Commission.
Residential customers currently paying $75.86 monthly for 604 kilowatt hours of power will pay $78.28 for the same amount of power, said Lisa Christensen, the utilities’ executive administrative assistant. The new rates took effect Saturday.
The current $7 monthly meter charge remains unchanged.
Rates for the utility’s general service, small power and large power customer classes will increase by 3.1, 1.7 and 1 percent, respectively, according to the rate order.
Bills reflecting the new rates will be mailed in September, Christensen said.
The utility can pass any increases in the cost of power it buys, called the power cost adjustment clause (PCAC), to its customers.
There have been a number of PCACs imposed since the PSC authorized the last rate increase in October 2010. At that time, typical residential customers were paying $71.93 for 604 kilowatts of power. PCACs have since boosted the cost of 608 kilowatts to $75.86
The biggest cost driver in any electric rate case is the cost of purchased power, which is about 80 percent of the utility’s total operating expense, Christensen said.
“Our other expenses, general overhead, the cost of replacement parts, insurance for employees, also go up with inflation,” she said.
This year the utility expects to pay $2.446 million to WPPI, its electricity supplier, and incur $3.403 million in total expenses, which includes a noncash depreciation expense, of $197,143.
The new rates will increase the utility’s revenue by $72,067 to $3.450 million. After expenses, the utility will have an estimated net operating income of $46,946. Without the new rates, the utility would have finished 2013 with a $25,101 deficit, with depreciation factored in.
When it filed a rate application in December, the utility had sought rates that would generate $81,836 in additional revenue.
While the PSC authorized only $72,067 in new revenue, Christensen said she didn’t know which expenses the agency had discounted in arriving at the new rates.
The new rates will allow the utility to earn a 5.5 percent rate of return on its infrastructure investment, an amount the PSC has said should ensure the utility’s financial viability.
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