By Terry Rogers
On Monday, March 14, 2016, Milford City Council heard a proposal from City Manager Eric Norenberg to proceed with a study of electric rates by UFS. According to Eric Norenberg, City Manager, the study will do more than just study whether electric rates in Milford are adequate.
“The study will evaluate the cost of services for the electric utility, in particular the fixed costs of operating the utility,” Mr. Norenberg said. “It will also develop a long-term financial plan for the utility that will identify current and projected rate adjustments that are needed and the timing of such. The study will determine the cost of providing electric service for each rate classification and update the design of the electric rates by classification and develop a power cost adjustment mechanism that is appropriate for the city.”
The city hopes to accomplish updating the cost of service for each rate category so that the fixed cost of the utility are recovered appropriately and that there is adequate funding for reserves to provide for regular repairs and upgrades to the system. T\According to Norenberg, this is important for the long-term safety and reliability of the system that customers depend on.
UFS will gather and analyze data and prepare preliminary findings. They will then meet with city leaders to present their findings and recommendations. Mr. Norenberg said that council will then be able to provide input for the final rate design. Mr. Norenberg said there was no way to know if rates could rise or fall as a result of the study. He said that if the recommendation was to adjust rates, council will be given options to decide how and when to phase in those adjustments.
Mr. Norenberg said that recent additions of solar power to homes in the city’s electric service area are very beneficial to the consumer and to the environment, but the city must still recoup adequate revenue to ensure maintenance and upkeep of the electric distribution system. “Just because a consumer has solar panels on their roof doesn’t mean they don’t need the utility to be there to supply power at night or when the panels aren’t functioning,” Mr. Norenberg said. “Therefore, all customers need to fairly share in the cost.”
It is not known when UFS will complete the study and report their findings back to city council. City leaders are hopeful that the firm will find that the rates are adequate enough to support fixed costs and that no rate increase is necessary.