SMU files for electric rate increase

More costs shift to meter charge
By: 

Kevin Murphy, Leader Correspondent

Shawano Municipal Utilities is seeking a 1.94 percent rate increase, or about $1.30 per month, for average residential customers, according to Brian Knapp, SMU’s general manager.

SMU’s mean average residential electric customers using about 612 kilowatt hours monthly currently pay $67.18 in energy and meter charges. The increase will result in a $68.48 monthly bill for those customers, Knapp said.

The typical single-family residential customer, using 1,000 kwh, will pay $114, up from $112 monthly, including taxes and fees.

Actual costs will depend on individual customer usage and how the PSC determines the cost of service should be applied to each customer group, including residential, commercial, industrial and public authority customer classes.

Instead of requesting a specific customer charge, SMU asked the PSC to set it based on the cost to serve the various customer categories.

The utility’s last rate increase went into on Aug. 1, 2014, Knapp said.

The utility has fallen short of the 6 percent rate of return on its infrastructure the PSC authorized in setting rates in 2014, Knapp said, and earned only a 2 percent return during the most recent monthly report.

The rate application seeks a 5.5 percent of return, a percentage the PSC recently has been granting municipally-owned utilities.

The new rate should increase utility annual revenue by $429,607 to $22.6 million. With expenses estimated at $21.84 million, SMU should have a $756,337 annual net income, according to Knapp.

SMU requested that the new rates become effective Jan. 1 and be reflected on bills that will be mailed in February.

PSC staff will review the application, recommend a revenue amount and set a public hearing in Shawano before finalizing new rates.

SMU is following the industry practice of shifting more of the cost of maintaining wires, poles and other fixed assets from the energy charge to the meter charge, Knapp said.

Typical residential customers currently pay a $6.56 monthly meter, or customer, charge.

“The PSC staff … told us that they’ve taken a (measured approach), gradually increasing the fixed meter charge over the next several rate adjustments based on a cost of service analysis,” Knapp said.

SMU’s annual revenues have decreased from $24.1 million in 2012 to an estimated $22.17 million this year, according to the rate application.

Meanwhile, total expenses also have decreased from $22.31 million in 2012 to an estimated $20.44 million this year.

One of the leading expense categories has been administrative and general salaries, which went from $167,374 in 2012 to an estimated $236,300 this year, according to the application. Employee benefits and pensions followed a similar pattern, from $221,957 in 2012 to an estimated $257,850 this year.

Knapp said a key factor explaining the variations was the sale in 2014 of SMU’s retail fiber operations. General salaries and benefit expenses have decreased since 2012, but the electric department now pays the bill for all of the utility employees; prior to the sale, some of them were allocated to the fiber operations.

SMU’s workforce was reduced from 17 to 15 through layoffs and retirements.

Another IT specialist will be hired this year, bringing the number of full-time employees to 16, Knapp said.