Utility rate adjustments will essentially balance out for residential customers

Hannibal utility rates will be changing when the new fiscal year begins July 1, but there will be virtually no net impact on the average residential customer as the decrease seen in one fund (electric) should be just about equal to the combined increases seen in two other funds (sewer and water).

Under the rate structure that was approved by the Board of Public Works Board during its June 13 meeting, electric rates will be dropping for just residential customers.

“This cut is comprised of an increase in the residential customer charge of about 3.3 percent and a decrease in the residential kilowatt-hour usage charge of about 2.6 percent,” said Abe Gray, BPW finance director, who projects the average residential customer will see a reduction of “about $2.50,” which will offset planned increases to water and sewer rates.

Electric rates will remain unchanged for commercial and industrial customers.

“About two years ago we performed a cost-of-service study that recommended a reduction in industrial rates, which was carried out in the fiscal year that began on July 1, 2015,” said Gray. “We feel we are now in a financial position in the Electric Fund to pass a rate cut on to our residential customers.”

After the residential rate hike in 2015, electric rates were not adjusted in 2016. Last year marked the first year without an electric rate increase since 2011.

Water rates will be going up by 2.3 percent. Gray noted that the increase will be “applied equally on a percent basis across the board on all rate classes.”

“This increase was placed on the meter charges with no increase in the per-gallon charge,” he said. “With this proposed change, residential customers would see their water bill increase by $1.25 per month.”

As for the sewer rate, it will increase by 3.7 percent. As with the water rate hike, the new sewer rate will be applied equally on a percent basis across the board on all rate classes.

“About 60 percent of this increase was placed on the meter charges with the remainder coming from an increase in the per-gallon charge. With this proposed change, the average residential customer would see their sewer bill increase by about $1.30 per month,” said Gray.

Water and sewer rates have steadily been rising for the past decade. This year’s 2.3 percent water increase will be smallest since rate hikes of 3 percent were implemented in 2010 and again in 2015. As for the 3.7 percent sewer rate increase that will take effect on July 1, it is the smallest since a 3 percent hike occurred in 2010.

Regarding the structure of the budget, Gray told the Board that it was drafted so that a “majority of the proposed rate increases (were placed) on the fixed charges paid by our customers each month.”

“We feel that in the long run having our rates designed this way will lead to more stable rates and will provide accurate price signals to our customers,” he said.

Reach reporter Danny Henley at danny.henley@courierpost.com