Claremore Daily Progress
April 17, 2013
GRDA rate hike termed ‘bait and switch’
Peak usage this summer to add surcharges
Grand River Dam Authority is passing on rate decreases and raising peak usage fees creating a potential for significant increases to Claremore Electric customers.
On Monday, GRDA Superintendent of Rates and Quantitative Analysis Jennifer Weatherford presented the proposal to the Claremore City Council.
The rate decrease will result in approximately $1.3 million in savings; however, city officials report the newly added surcharges could result in a $6 million cost to the city.
The new rates and charges will go into effect in July.
The plan provides for a decrease in Power Cost Adjustment, PCA cost, a portion of the base rate charged to customers.
Weatherford described some of the changes in rate structure as “revenue neutral” but acknowledges with the city’s current rate structure there would need to be some adjustments by city officials.
The City of Claremore uses electric revenues to significantly fund city operations and its current rate structure does not allow for the new surcharges.
Peak usage will directly impact surcharge rates.
GRDA has established the months of June, July, August and September as super peak usage from 1 to 9 p.m. daily.
Weatherford suggested the city encourage power users to “change their behavior” during peak hours.
The City of Claremore is the eighth largest wholesale customer of GRDA, however charges one of the highest markups to customers, according to Weatherford.
The council voiced a range of concerns calling the change “nothing more than a bait and switch.”
Weatherford presented the rate increase, as an $8 a month decrease per $200 spent, however did not accommodate for the impact the surcharges will have on residential customers.
The surcharges are intended to impact only businesses.
The final impact will be determined by how city officials decide to spread the cost on to customers, according to Weatherford.
GRDA has been providing power to Claremore for 60 years and recently the city renewed their contract for another 30 years. In 2009, GRDA increased rates to provide for maintenance of the GRDA system.
Although the rate decrease will return wholesale rate levels to 2009 amounts, the surcharges will likely raise the overall expense far beyond those figures.
Weatherford said that increasing Environmental Protection Agency regulations and environmental improvements to coal burning or other facilities account for the increase in charges.
City officials have not received the final numbers from GRDA and do not know at this time what the precise impact will be.
Weatherford suggests the city change their current rate structure to accommodate for the change.
Another issue for the city is to possibly consider reducing their dependence on electric revenues for general operations to lower the impact to area businesses and residents.