April 4th, 2011
Electric Rate Redesign Being Considered!
City’s press release:
Council to Decide on Proposed Electric Rate Design
Newark, DE (April 4, 2011) – Newark City Council will consider recommended revisions to Newark’s electric rates based on the comprehensive rate study performed by consulting firm Black and Veatch at a public hearing during the April 25th City Council meeting. Black and Veatch were tasked with designing rates that accurately reflect the cost of service to customer classes, which would balance the cost of operating the City’s electric utility among all customer groups. Key components of the study were reviewed at a City Council workshop in August 2010. City staff involved a group of stakeholders representative of the different classes of electric customers during the study.
City Council established policy objectives that are to be achieved through the proposed revisions that include:
Promote econmic development within the City.
Encourage energy conservation among all class customers.
Reduce the City’s financial sensitivity to variations in weather.
Be fair and reasonable to all classes of customers.
Recover all prudently incurred costs and maintain the financial integrity of the utility.
Be competitive with Delmarva’s rates.
Black and Veatch’s study shows that the amount of revenue needed to recover all prudently incurred costs for the year is $56 million, which is $2.8 million less than would be collected under the current rate structure. The $2.8 million revenue reduction would be allocated among the large customer classes’ rates to promote economic development and more accurately reflect the cost of serving those customers. The revenues collected from residential and other small customers remain unchanged.
To reduce the City’s financial sensitivity to weather, a ten dollar monthly charge to residential customers is proposed to recover more of the fixed costs incurred in providing electric service. The other customer classes will be paying a comparable charge.
Conservation is encouraged by instituting seasonal block rates for residential and general service classes, which include inclining block rates in summer for the residential class. Block rates would be level in winter. A similar design is proposed for larger demand metered customers.
Additionally, it is proposed the existing customer classes be redefined to include a new class for very large industrial customers while the University of Delaware would be in a customer class by itself.
The proposed ordinance and Black and Veatch’s complete electric rate study is available at www.cityofnewarkde.us.
