Utilities Bumping Rates to Cover Rising Costs, Smart Meters

September 30, 2009

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While the cities of Fort Collins, Colo., and Milwaukee, Wis., are still debating proposed price hikes by local utilities, in some cases to pay for the installation of new technologies such as advanced metering, Xcel Energy in Minneapolis has received approval to raise prices in order to pay for rising costs of power distribution.

Despite opposition to utility price hikes across many U.S. cities, a new report from the American Council for an Energy-Efficient Economy indicates that increasing total energy capacity by adding energy-efficiency measures continues to be cheaper than adding new sources of electricity, such as conventional coal-fired plants.

The city of Fort Collins says in order to keep pace with costs and technology, it has proposed increases in water, wastewater and electric service rates in its 2010 budget that combined would add about $10 to monthly bills, reports The Coloradoan. About half of the increase would come from electricity through a 9.5 percent increase.

Officials say the increase is needed to cover higher expenses passed along by the city’s wholesale supplier, Platte River Power Authority, or PRPA, as well as to invest in an updated system for measuring and monitoring electrical use, according to The Coloradoan. Installation of an advanced metering infrastructure, or AMI, which includes about 90,000 smart electric and water meters installed at every household and business, would cost about $21 million over two years, according to the newspaper.

We Energies in Milwaukee is proposing a $189 million increase for electricity as well as increases proposed for local natural gas charges and steam bought by Milwaukee and Wauwatosa businesses, according to the Milwaukee-Wisconsin Journal Sentinel.

Customers’ concerns center on increases due to the utility’s lost revenue and pension plans as a result of the recession, along with compensation paid to top officials, although several utility suppliers, business group leaders and utility employees testified in favor of the hikes, reports the local newspaper.

Under the Public Service Commission’s proposal, We Energies’ rates would rise by 4.9 percent, or $125.2 million from where they are today, down from an increase of 7.4 percent or $189 million, submitted by the utility, reports the Milwaukee-Wisconsin Journal Sentinel.

Xcel Energy, which filed a request with the Minnesota Public Utilities Commission last November to boost electric rates by 6.05 percent due to increasing costs of making and distributing power, received approval for a price hike at about 70 percent of what the company had first proposed, reports WCCO.com.

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