City looking at 6 percent electric rate hike
Glenwood Springs city officials are looking at an earlier-than-usual, expected 6 percent electric utility rate hike this year to help make up for the latest round of increases from the city’s wholesale municipal power supplier.
The city is still playing catch-up from an unexpected 6.5 percent increase in its wholesale rate from the Municipal Energy Agency of Nebraska (MEAN) last fall.
City Council decided at that time not to adjust rates, after already having passed along a 12 percent customer rate hike following a 12.5 percent wholesale rate increase in April 2014.
At the same time, the usual April rate adjustment from MEAN this year is expected to be about 2.5 percent.
“While there will be an increase, the amount is a lot better than we were anticipating,” City Manager Jeff Hecksel said during a recent work session with City Council to discuss the new rate proposal.
Another double-digit increase on the wholesale side would most likely have meant the same rate of increase for residential and commercial electric customers in the city, he said.
The rate adjustment is coming earlier in the year than usual because city electric fund revenues continue to lag behind expenses. To compensate, the city postponed plans to build a new facility to house the electric department and other services, Hecksel said.
“We are trying to get ahead of this, which is why we are here earlier than we would be otherwise,” he said.
Last year’s electric rate hike came in July. Council is set to consider the proposed new 6 percent increase at its March 19 meeting.
According to Glenwood Public Works Director Robin Millyard, a recent rate survey found that, under the current rate, Glenwood Springs ranks eighth-lowest in Colorado among 27 municipal-owned systems for residential customers, compared with fourth-lowest last year.
Glenwood is 12th-lowest in that group for both small and large commercial rates, compared with eighth last year for small commercial rates, and 10th for large commercial, Millyard said.
“The majority of municipal electric providers will likely experience significant rate increases in 2015 and beyond,” Millyard noted in a memo to City Council members. “The city will continue to perform an annual analysis of the effectiveness of our rates to ensure the utility is able to meet its expenses.”
The city’s residential electric rates also remain lower than the two other local electric utility providers, Holy Cross Energy, which operates as a member cooperative, and the investor-owned Xcel Energy, according to the survey.
The current residential rate in Glenwood Springs is $70.74 per 700 kilowatts of electricity, compared with $81.59 for Holy Cross and $78.64 for Xcel, according to the survey.
Xcel offers the lower rate among the three area providers for small commercial customers, while both Xcel and Holy Cross have the city beat for large commercial customers, according to that same survey.
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The Glenwood Springs city council voted to approve planning a public engagement process for South Canyon improvement possibilities, along with a request for proposals from developers.