Electric Rate Information

A formal rate hearing was held as part of the regularly scheduled Council meeting on March 17, 2015. A Public Hearing on the Second Reading of Ordinance No. 1, Series of 2015 was also conducted prior to Council's vote to approve an electrical rate increase. Below is a summary of the information considered during the decision-making process.

Background

During the preparation of the 2015 Budget for the Electrical Utility, it became apparent that anticipated revenues would no longer cover the necessary utility expenditures. This revenue shortfall would require dipping heavily into the Electric Utility's reserves, dropping reserve levels below previously established target levels. Since Electric Utility revenue is generated by the sale of electricity to its customers, the current rate structure needed to be reviewed and potentially adjusted. The last electric rate adjustment was approved in 2009 and was effective in February 2010. Since 2010, the City of Yuma's cost to purchase power has climbed significantly  over 27% when compared to 2015 expected power purchase costs. Though it has faced increased cost to purchase power, City of Yuma has not passed these increases on to its customers.

Figure 1 shows the expenditure breakdown for 2010 and 2015. Operations &, Maintenance expenditures include personnel costs, capital outlay purchases, capital projects, and normal operational and maintenance expenses. The total expenditures for these two comparison years were similar. In 2010, actual expenditures were $3,336,064.49, and 2015 expenditures are budgeted for $3,240,228. Figure 1 demonstrates the impacts of rising rates from our power supplier, requiring the Electric Utility to dedicate a larger percentage of its overall expenditures to the purchase of power.

Figure 1. Expenditures 2010 &, 2015

Why Power Purchase Costs are Increasing

The City of Yuma's power supplier is the Municipal Energy Agency of Nebraska (MEAN), which is part of the Nebraska Municipal Power Pool (NMPP). The overall cost of power includes purchases directly from MEAN and allotments from the Western Area Power Administration (WAPA), which are billed through MEAN.

Since the most recent rate adjustment in Yuma, changes to the Wholesale Electric Market have negatively impacted how MEAN operates. These changes have forced MEAN to adjust its rates several times in the last few years. The changing Wholesale Electric Market is a primary cause for MEAN rate increases. In 2014 alone , MEAN adjusted rates twice, passing a 12.8% increase in April and 6.5% increase in November. In 2015, Yuma is responsible for a $55,213 customer charge and a 3.7% rate increase in April.

For more information on MEAN and how the Wholesale Electric Market has impacted it, check out the flyers below, or go to MEAN's website.

About MEAN Fact Sheet

• RTO Fact Sheet
• Factors Affecting MEAN in the Wholesale Electric Market
• MEAN Website

Rate Study and Next Steps

Facing increased costs from MEAN and anticipating the need to dip heavily into the Electric Utility's reserves, Yuma City Council engaged JK Energy Consulting, LLC to provide a Cost of Service/Rate Design Study. The study reviewed the existing rates and current financial status of the utility. The goal of the study was to develop rates that reflect the cost of service. Further, the rates should be competitive with neighboring utilities, provide sufficient revenues to cover projected operating expenses, and reflect the cost of service for each rate class.

JK Energy Consulting LLC has proposed changes to the Service Charge (cost of meter) and Energy Charge (cost of power). These changes are summarized in the Table 1.

Table 1. Current &, Proposed Rates

Residential Rates

Commercial Rates

JK Energy is also recommending charging a service charge for each meter in the system. Currently, a customer may have multiple meters at one location (e.g. a meter for the house and a separate meter for the garage), but is only assessed one service charge. Each meter that is in the system costs the utility money. Because each meter must be maintained, monitored, read, and billed, a service charge should be assessed to each meter in an effort to fully recoup those costs associated with having a meter.

At the January 20, 2015 meeting, Yuma City Council approved the first reading of the rate ordinance, which reflects the rate recommendations of JK Energy. A Rate Hearing and second reading of the ordinance will be held on Tuesday, March 17, 2015 at 7:30 PM. This meeting will be at Yuma City Hall in the Council Chambers.

Below are links to Yuma's rate study and a recent rate comparison that NMPP conducted, which compares the utility rates (electric, water, and sewer) for over 100 utilities.