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City Utilities budget, rate hikes up for vote Sept. 21

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Springfield City Council members heard from 10 people, all with widely varying viewpoints, who showed up at Tuesday night’s meeting to air their views on electric rate hikes proposed by City Utilities.

CU is seeking approval of a $520.7 million operating budget for fiscal 2011 and, in a separate bill, a 7 percent electric rate increase to be implemented incrementally during a three-year period. After listening to supporters and opponents of the increase during the public hearing, council members will vote on the bills at a Sept. 21 lunch meeting.

If approved, CU’s electric rates would increase by 3 percent starting October 2011 and by 2 percent in each of the following two years. The average residential customer’s bill would increase $2.34 per month the first year and $1.75 per month each of the next two years. The average business bill would also increase, said CU spokesman Joel Alexander, but amounts vary depending on usage. Small business would see a roughly 2.5 percent increase, which would increase monthly bills by about $2.40, while CU’s largest users would see a 7.5 percent hike and monthly increases of just under $15,000, he said.

“We’re now in the process of reviewing three rate increases totaling $5.84,” said Joe Jenkins, co-owner of Diesel Exchange, who spoke in favor of the increase. “My brothers and I own and operate a small business. … We are directly affected by power outages. One hour lost due to loss of electricity costs us about $2,600 in lost revenue.”

Objections raised by opponents to the rate increases included the additional expense during a time when many already are struggling due to the recession, as well as a request for an explanation as to why it seemed electric rates increased during the summer months.

“One of the things that disturbs me is that we seem to be paying an energy-efficiency penalty,” said Fred Ellison. “Because whenever we decrease our demand, they have to increase our rates.”

Mayor Jim O’Neal asked the city manager to issue a report answering questions voiced by speakers before council votes on the bills. The report will be posted online at the city’s Web site when it is completed, said City Manager Greg Burris.

CU is working on providing answers to those questions, Alexander said, adding that CU doesn’t change its rates in the summer.

Read more about the Sept. 7 City Council meeting in the Sept. 13 print edition of Springfield Business Journal.

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