No increases in electric, heat or water for Willmar utility customers
WILLMAR -- No increases in electric, water and district heating rates are expected in the 2016 budget approved by the Willmar Municipal Utilities Commission this week.Utilities General Manager Wesley Hompe told the commission that rate increases ...
WILLMAR - No increases in electric, water and district heating rates are expected in the 2016 budget approved by the Willmar Municipal Utilities Commission this week.
Utilities General Manager Wesley Hompe told the commission that rate increases in the three divisions are not expected next year.
Electric and water rate increases were last recommended by the Utilities Commission and approved by the City Council this past March and went into effect
June 8. Electric rates went up an average of 4.5 percent and water rates increased by 20 percent.
The increases were based on a 2014 cost of service and rate design study. Utilities officials had said the adjustments were needed to pay for increasing power supply costs, increasing cost of shipping power over the transmission grid, and to pay for needed capital projects such as proposed new service facilities, and improvements between 2017 and 2022 at the city’s two 24-year-old water treatment plants.
Hompe said the utility is assuming electric kilowatt sales will be flat over the next few years, increasing by about 0.5 percent per year after 2015. Hompe said officials will be keep an eye on costs and will advise the commission “if we see something that would change that. We do not anticipate (an increase) for 2016.’’
Water sales are also projected to be flat and no rate adjustment is foreseen as well.
“We’ll be looking at those and make sure our rates reflect what we need to do, and we’ll advise you whether any adjustment would be required later in the year. But we do not anticipate any water rate adjustments,’’ Hompe said.
In the heating division, which serves mainly downtown customers with hot water heating service, the load is falling because fewer customers are buying heat from the power plant to warm their buildings. Hompe said the utility expects to have about four fewer customers in 2016 than in 2015.
“We’ll see how that goes,’’ he said. “We’ve been looking at the rates. They are not high enough to cover the costs.’’
Hompe said heating rates are not competitive with natural gas, so any adjustment in district heating would affect the utility’s competitive position with natural gas.
“It is budgeted not to make money in 2016,’’ he said.
During budget discussion, Hompe said operational costs will be lower because the cost of purchased power will be reduced significantly, which will result in a better overall return if other costs and revenues are similar to those in 2015.
Total operating revenues from the electric, water and district heating divisions are estimated at $32,630,800. Total operating expenses in the three divisions are estimated at $28,643,264, leaving operating income of 3,987,536.
Net earnings, after other income is added and other expenses are subtracted from operating income, will leave an estimated $3,932,624 in retained earnings. After the intragovernmental transfer of $2,136,842 is paid to the city, the utility will have retained earnings of $1,795,782 in additional funds for projects.
Wind turbines output rises
Electric production from the utility’s two wind turbines in November was up significantly from October, said Jon Folkedahl, director of electric production. The turbines produced 983,181 kilowatts in November compared with 802,013 kilowatts in October.
November’s production was 98 percent of what is theoretically possible for that month, he said.
“We had a nice seasonal increase,’’ Folkedahl said.
So far, production of 7,688,843 kilowatts during January through November 2015 is close to production of 7,710,476 kilowatts in 2014.
“If December does as well as November, we should set a new high for production,’’ said Folkedahl. “Hopefully by the end of December 2015, we’ll be up to 8 million kilowatt-hours.’’
Commission President Matt Schrupp said downtime issues have been much improved.
Hompe credited the performance to Willmar Utilities taking over full maintenance responsibility from turbine maker DeWind.
He said Folkedahl and his people “have kept up on those things that have otherwise kept us out of production. They’ve done a really good job and that’s why, in my opinion, things look so good is because he and his people are staying on top of when anything happens.