Holly Trustees Reject Electric Rate Tariff Increase

Holly Depot

The Holly Board of Trustees unanimously voted not to pass an ordinance which would have modified the electric rate tariff schedules for the town.  Those trustees who spoke against it prior to the vote, Campbell, Jones, Lyons and Sitts, said they could not support the size of the increases which would have fallen to the town’s irrigation customers. 

City Administrator, Marsha Willhite, explained the city utility finances that drove the need for the increase in the customer and demand charges for the various user classifications.  Willhite provided a history of electric rate comparisons dating back to 1982 for Holly residents.  The proposed changes would generally have increased customer charges for the various classifications while decreasing the energy charges paid per kilowatt hour.  She said a study of the town’s power usage incorporated the new school building, the construction of Reyman’s expanded grocery and included the potential power use of an project calling for 900 HP in irrigation needs for a proposed dairy farm south of Holly which would double the energy demand realized during the irrigation season.  “We want to make certain there won’t be a negative impact on our customers as far as raising their bills unnecessarily,” she said, explaining the need for the rate study.   

Irrigated customers were the most vocal in their opposition to the proposed increases, claiming they were bearing the brunt of the increases.  Based on horsepower usage, the rates would go from $0.45 per HP/MOS to $0.96.  Monthly customer charges would rise from $7 to $15, Demand Charge would increase from the current $1.75 to $1.92 per horsepower per month and the Energy Charge would stay the same at $0.1405 per kWh.  The ECA, Electric Cost Adjustment Rate, would initially drop from $0.042 to $0.0382.  The anticipated 11.7% increase was projected out to the next three years to help cover the deficit of $53,303 that stemmed last year from the lack of use of electricity by the irrigation customers.  That increase would come from the Customer and the Demand charge.  The energy charge would not alter from last year at $0.1405.  Willhite explained that the town’s General Fund cannot be used to continue to offset the lack of revenue from that classification.  She stated the revenue from the 2013 irrigation load was $32,443 and the associated cost for services was $85,746, or a loss of 164%. 

Several of the irrigation customers at the hearing expressed concerns that they were singled out to offset the losses, asking for a more detailed explanation about the services they received to result in an almost $86,000 cost.  One customer asked, “Why don’t I just ask to get cut from this service and get my power from the REA?”  Mayor Brad Simon explained that option was not available to customers and they would be served by the town.  He added that, “The cost of service versus what we collect from the irrigators…we’re losing money on that portion of it.  So in order to make up for that portion of loss…the other people in the system, the other rate classes are making up for that, because of the way the ECA system works.  That’s what she means when she says the rest of the rate payers are subsidizing the irrigators.”  Whillhite added that the 11.7% increase is not necessarily a fixed cost, stating that in a normal irrigating year, the need for the 11.7% charge could decrease as it would  offset by more irrigation use and purchase of electric power.  She said it would be checked each year according to use.  Administrator Willhite stated that any consideration of a rate increase would not be considered this year, but the Nebraska Municipal Power Pool, NMPP, allows for annual reviews of the electric rate structure.  She said updated information, when available, would be provided to the Trustees for their review. 

In other action, Jerry Jones, Johnnie Lyons and Anthony Moldlenhauer took their oaths of office for their Trustee’s seats and Brad Simon was sworn in as mayor for another term.  The Trustees approved renewing the city’s airport liability insurance coverage with Brase Insurance for the same annual premium paid last year for $1,725.  The Trustees also approved a bid from Western United/Howard Industries for $33,525.77 for a 1.5MVA Substation Transformer.  The company submitted the lowest bid from five received.  The Trustees also received a letter from LAWMA stating their water shares would be at 81% for the year.
By Russ Baldwin