Rate hike for water, electric base charges; slight reduction in LEAC

The Commonwealth Utilities Corp. and the consultant for the Commonwealth Public Utilities Commission have filed a joint petition yesterday that seeks increases for both water and wastewater and electric base charges, while recommending a slight reduction in the levelized energy adjustment clause, or LEAC.

The commission is expected to act on all these matters at its scheduled meeting this week, in anticipation of its closure by Jan. 29 due to the lack of commissioners.

CUC and Georgetown Consulting want the new water and wastewater rate structure to become effective on Feb. 12 this year.

“The initial water electric charge, as recommended, is forecast to produce $4.56 million on an annualized basis. The initial wastewater electric charge is forecast to produce $2.71 million on an annualized basis. The overall revenue increase, as a result of these structural changes to the current water and wastewater rates is forecast to be $4.228 million on annualized basis,” the CUC/Georgetown agreement states.

In a statement yesterday CUC cited four reasons for its rate hike for water and wastewater rates: power cost increases; stipulated order requirements; declining customer base; and operating cost increases.

The new charge will only be adjusted once CUC’s LEAC or MFAC (the monthly fuel adjustment clause) electric rate is changed. CUC is also petitioning the commission to change LEAC model to MFAC.

If this rate increase proposal is approved, a residential user of 10,000 gallons of water per month will see an average $12.32 increase in his or her monthly charges; for residential users of 10,000 gallons of wastewater service per month, the increase in his or her monthly charges will amount to $39.76.

According to CUC, majority of residential ratepayers use 10,000 gallons of water and wastewater service or less per month. CUC has about 9,904 water customers and 2,887 wastewater customers.

CUC and Georgetown described this rate proposal as “just and reasonable.”

Electric base rate and LEAC

The joint petition also proposes a rate increase for CUC’s electric base rate effective Feb. 27, 2012. This is expected to generate an additional $3.72 million annually. CUC and Georgetown believe that this increase is necessary to enable CUC’s electric division to meet its financial obligations.

They cited four reasons for seeking the rate change: the significant decrease in billed usage that must be adjusted; substantial increase in retirement contribution this fiscal year from 37 percent to 61 percent; the need to account for Commonwealth Development Authority dividend payments beginning 2012; and the additional expenses that must be paid for as a result of the adoption of Telesource’s change order no. 5.

If this rate proposal is adopted, the average impact for a residential user of 250 kWh per month is to see a $1.89 increase in his or her monthly charges; for residential user of 500 kWh per month, the impact is $2.64. According to CUC, majority of residential ratepayers use 500 kWh or less per month.

For the LEAC, CUC/Georgetown proposes lowering the existing LEAC rate of $0.30791 to $0.03071 per kWh. LEAC reflects fuel consumption and related costs. CUC said 78 percent of its budget is spent on fuel.