electric

City Council members John Copeland (left) and Dick Robertson, Clerk-Treasurer Debbie Ottinger and Mayor John Lasley listen to an elecric rate increase presentation by (on screen, from left) IMPA chief financial officer Chris Rettig, Lebanon Utilities General Manager Mike Martin and IMPA chief operating officer Gayle Mayo.

Reporter photo by Rod Rose
Lebanon Reporter

Electric bills for Lebanon Utilities customers will increase 7.5 percent in January.

For a home using 1,000 kilowatt hours (kWh) per month, the increase will be $6 to $7 per month, Lebanon Utilities General Manager Mike Martin told the City Council Monday.

In July, a Lebanon homeowner using 1,000 kWh paid $79.40. After January, that same homeowner will pay about $86.

The increased cost of producing electricity is a major reason for the increase, said Gayle Mayo, chief operating officer of the Indiana Municipal Power Agency.

Lebanon and 51 other Indiana cities and towns are IMPA members. IMPA owns electricity generating plants in several cities and buys power from several sources.

Generating electricity is 75 to 80 percent of the wholesale power price IMPA charges members, Mayo said.

Beginning Jan. 1, IMPA will increase the wholesale rate 13.6 percent, to 6.674 cents per kWh.

It is the largest increase in wholesale power prices in two decades, Martin said.

Lebanon Utilities will raise rates 7.5 percent across the board, Martin said.

“Costs are going up across the country,” Mayo said. Double-digit increases in generating costs are “likely to persist for some time in the future,” she said.

Three-quarters of IMPA’s power comes from coal-fired generating plants, she said. Fuel costs for those plants has risen almost 400 percent since 2003.

“I guess,” said Mayor John Lasley, “there’s not a whole lot we can do about it.”

Mayo agreed; IMPA must raise its wholesale price because it has no other way of making money.

At that, neither IMPA nor Lebanon Utilities will show a profit on the increase, Mayo said.

“If our costs go down, your rates will go down,” Mayo said.

Much of the wholesale increase is driven by “skyrocketing” global demand for energy, Mayo said. While the per-ton cost of coal has dropped to about $74 per ton, “coal prices are not going down the way gasoline prices are,” she said.

Other factors are the difficulty of opening new coal mines in the U.S., which Mayo said was caused partly because of stiffer mine safety regulations and a shortage of skilled miners, the “enormous” Chinese demand for coal, flat production, increased costs of moving fuel and the sagging value of the dollar against other world currencies.

IMPA has tried to control costs through long-term contracts, said Chris Rettig, the agency’s chief financial officer.

Some of IMPA’s electricity comes from the Prairie State generating plant, he said. IMPA bought a 30-year supply of coal at 2002 prices for that facility, he said.

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