Beginning in January, wholesale supply costs are slated to rise 7.5 percent through the Wyoming Municipal Power Agency (WMPA), the electric provider for Powell and seven other member towns throughout the state.
The city is seeking to pass some of that increased wholesale cost on to residents and businesses.
City Administrator Zane Logan told councilmen that the 5 percent increase “is the bare minimum we can get by with.”
“We’re going to be lucky to break even,” he added.
Logan, who also serves on the WMPA board, said that the wholesale increases are related to a steep decline in the market for surplus electricity and low rates of return on investments.
“There are signs that the surplus sales market maybe improving so the hope is the future wholesale costs might stabilize,” Logan said in an email to the Tribune.
The downturn in the market has sparked continued electric rate increases since 2008. (See related table.) All of the rate hikes were directly related to increased wholesale costs.
The proposed January 2013 increase of 5 percent is significantly lower than the 15 percent hike city residents experienced in January 2012. At that time, the city was dealing with a 22 percent increase on wholesale costs.
Logan said the city has tried to keep rates as low as possible.
“With the other increases, we’re just trying to do the absolute minimum we can get by with,” he said.
For the average residence that uses 620 kilowatt hours of electricity each month, the proposed increase amounts to about $3.20 more per month.
If the council approves residential and commercial rate increases Monday night, they will take effect next month.