The Edinburgh Town Council discusses a matter before them on Monday.
Leeann Doerflein | Daily Journal
Customers of the town of Edinburgh’s electric utility will see an increase in their bills starting in May.
The Edinburgh Town Council voted unanimously among the members present to approve the first rate increase in five years. All customers will see an increase of just under 10% per kilowatt hour. Rates will go into effect in April and will be reflected on May bills, said Stephen Clark, the town’s electric utility superintendent.
The council opted to go with the lower of two increases recommended by rate studies completed for the utility. The increase of just under 10% per kilowatt hour will allow the utility to raise enough money to complete several needed projects to expand the town’s electric capabilities for expected growth.
The rate increase is final with the council’s decision as the utility is an exempted utility, meaning it is not overseen by the Indiana Utility Regulatory Commission.
About the increase
The utility is operating under rates that were established in 2019 and those rates are not bringing in enough money to fund the utility, Clark said. Materials cost more and electric demand across town continues to increase with each new business and home that comes in. Now, about $1.5 million in additional annual revenue is needed, studies from Baker Tilly and Alpha Electric Inc. concluded.
“These rates that got placed in 2019 are way out of date, so we are not capturing the revenue we need to,” he said at a previous council meeting.
In the last five years, the industrial electricity demand has increased nearly 12%, while the number of kilowatt hours used has gone up 72% — a “big jump,” Clark previously said.
Upcoming maintenance projects and a new substation are expected to cost around $19 million, with the substation alone expected to cost $9 million, he said.
The new substation is currently on order and is expected to arrive in 2026. It is needed because the utility is nearing its maximum demand, Clark said.
“We are a not-for-profit utility, meaning that we are not looking to make a bunch of money, but we need to not lose a bunch of money,” Clark previously said. “All of the routine maintenance that we need to do to our infrastructure, all the expansion, the substation we are getting ready to build, all of the additional circuits; we need to fund that somehow.”
Another project the utility will undertake soon is burying electric infrastructure along State Road 252. This is being done in conjunction with the State Road 252 project that the Indiana Department of Transportation is planning for 2025 to 2026 in Edinburgh from Eisenhower Drive to Lincoln Street. The road will be widened and sidewalks will be installed as part of the project, as a result, all electric poles in this area have to move, Clark said.
The project hasn’t been bid yet, but it is expected to cost several million dollars, he said.
What you’ll pay
The rate increase will impact both residential and business customers, with industrial customers facing the largest increase. The across-the-board increase will be greater depending on the electric demand of each customer, as the ultimate cost of an electric bill reflects how many kilowatt hours were used by the customer, Clark previously said.
“The logic behind the rates that they are proposing is that everybody pays their adequate portion,” Clark previously said. “We need to achieve about a $1.5 million per year increase in total.”
The current rate for an average household using 1,500-kilowatt hours per month is nine cents per kilowatt hour, which would make their bill $135. The proposed increase would elevate the rate to just under ten cents per kilowatt hour, which would add $10-$12 to a home using 1,500 kilowatt hours, Clark said.
While residential customers are billed solely based on their individual energy consumption, Clark said industrial clients are subject to both consumption and demand charges due to their heavier impact on the department’s output.
“Billing is done with two different methods,” Clark previously said. “Kilowatt hours, which is basically how much energy you consume; the second one is the demand, and that is basically how much energy is consumed over a time frame.”
Large industrial customers’ bills are measured by their demand for electricity because they put a “heavy tax” on the electrical grid, Clark previously said. These customers have fluctuations in energy consumption as well as demand throughout each day and month. It is important to accurately assess demand to ensure the department is capable of supporting an industrial customer, he said.
For industrial customers, the department analyzes their maximum amount of demand every 30 minutes, and that is what they are billed on, he said.
