For first time since 1993
Council approves electric rate hike on first reading
The San Marcos City Council approved the first electric rate increase since 1993 on first reading at its meeting on Monday, Dec. 13. Second and third readings are scheduled for January 4 and January 18 Council meetings. If approved by Council, the increase will take effect February 1, 2005.
Following an electric rate study by the Lower Colorado River Authority, City staff has recommended increasing the rate per kilowatt hour (KWh) an average of 10.5%. The energy charge would increase by a total of $0.00715 per KWh per KWh for all customers.
The rate hike would raise the average residential customer’s monthly electric bill by $6.67 and the average commercial customer by $14.53. The average resident using 932 KWh will see the bill increase from $60.74 to $67.41. An average business using 2,031 KWh will experience an increase from $121.67 to $136.20.
“We have held off raising the electric rates for nearly 12 years,” said City Manager Dan O’Leary. “However, the time has come to consider rate increases to keep our citizen-owned electric utility in sound financial condition. Our rates will continue to be very competitive with area utilities.”
The City of San Marcos purchased the local electric distribution system in 1986 and serves 17,900 customers. The rate increase will generate an additional $3.1 million in revenue annually.
The LCRA completed a revenue analysis and has prepared recommendations for the City Council to consider. LCRA, the city’s wholesale electric power supplier, studied several factors:
• Whether the monthly Power Cost Adjustment is working properly
• Texas State University’s monthly billing process
• Revenue requirements to actual revenues
• Restructuring retail pricing rates.
At the Dec. 13 meeting, City Manager O’Leary presented information on the Electric Utility’s financial condition, including a 10-year history and a 10-year financial forecast.
LCRA representatives then presented the results and recommendations from its study.
If Council approves the increase, City staff will conduct a Cost of Service Study to be paid for by the LCRA which could change the allocation of costs among customer classes in the future.
The study will identify and allocate all related generation, transmission and distribution expenses and determine the appropriate rate for each specific rate class. The city’s electric rates are allocated according to type of customers, including residential, several classes of commercial, and several classes of industrial.
December 15, 2004
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