Electric Rates

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Le Sueur is trying to keep the lights on.

At its July 12 meeting, the Le Sueur City Council approved a plan restructuring the city’s electric billing to fund additional investment in the city’s electric infrastructure. The change comes after the city received the results of an Electric Rate Study by DGR Engineering, which concluded the city would need to raise revenues over the next decade to support capital investment and restore the unrestricted cash reserve balance.

The approved changes seek to better reflect disparities in electrical use and support the costs of maintaining and expanding the grid.

For the average residential user consuming 600 kW a month, the rate restructuring will add a $5.36 per month increase to their electric bill. The average small rural property will pay an additional $7.38 per month, and the average general service commercial property will spend an extra $0.57 per month.

Rate changes for other commercial classes in the city are highly variable depending on the size and usage of the business. Overall, city revenue will decline 4.7% per unit in the large general service class, fall 3.7% per unit in the small industrial class, drop 12% per unit in the large industrial class, but increase 9.9% per large rural unit.

Among the biggest adjustments is the implementation of time-of-use rates, which would reflect the varying power supply costs based on the time of day and week of use. Only large industrial properties will be subject to time-of-use rates initially, but staff anticipate all other properties will eventually transition to this new rate structure.

“A lot of this is because of metering upgrades and our utility billing system upgrade,” said Public Services Director Rich Kucera. “With those two components, we’re able now to get this data to move forward with this.”

The city will also restructure rates to reflect seasonal changes in power supply costs. Electric rates will be higher in the summer when demand peaks and lower in the winter when usage falls.

All classes will also see an increase in the flat monthly customer charge to accommodate the fixed costs of providing power. Kucera said this charge would allow the city to generate revenue to support power infrastructure, even if it is rarely used.

“We get some revenue for the infrastructure we put out there, even if it’s one day a year,” said Kucerea,

Electric franchise fees and underground fees will be discontinued and instead rolled into the regular rates to maintain revenue.

Offsetting some of the charges is the elimination of the current Energy Cost Adjustment. However, the city is retaining the right to impose the ECA if necessary.

“If, in the future, something happens that drastically affects us, this would allow us not to have to come up with those funds and pass them along to this customer,” said City Administrator Jasper Kruggel. “We hope that it doesn’t happen, but at the end of the day, it could.”

Reach Reporter Carson Hughes at 507-931-8575. ©Copyright 2021 APG Media of Southern Minnesota. All Rights Reserved.

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