In a special meeting on Thursday, October 12, the Utility Advisory Commission considered whether or not USD 231 should continue to have a distinct classification in the city’s electric rate schedule. Staff photo by Rick Poppitz
Special to The Gardner News
The only item on the agenda at the special meeting of the Utility Advisory Commission (UAC) on Oct. 12 was consideration of the USD 231 school district electric rate classification. The question before commission was not to consider the rate itself, but whether to recommend to council that the school continues to have a distinct classification in the rate schedule.
Gonz Garcia, utilities director presented background and staff recommendation to approve keeping the school district classification in the Electric Rate Classification Schedule.
The city is planning an electric rate study in 2018. Before beginning the study, they must know if the structure of the Electric Rate Classification Schedule schedule will remain as it is now or be revised.
The current schedule is defined by Resolution No. EUB-013 and Ordinance No. 2445, last revised in October 2013.
Presently, there are nine classifications in the schedule, 1- Residential; 2- Residential with electric heat; 3- Commercial without Demand; 4- Commercial with electric heat; 5- Commercial with Demand; 6- Large Commercial; 7- Electric heat with separate meter; 8- School District 231; 9- City of Gardner.
The option was to eliminate the School District 231 classification by merging the school district into another classification, such as Large Commercial or City of Gardner.
After the presentation there was about an hour of discussion, with all members participating.
Mark Baldwin, chairman, said he was on the commission in 2013 and could provide information about those decisions. He said the classifications were recommended by the APPA (American Public Power Association) and adopted prior to 2013.
“When we looked at them again in 2012 and 2013 we talked about there being main goals. The first was that the rate should be revenue neutral. So whatever it costs that’s what we should be charging. […] The second was that each of the classifications should stand on their own. So Commercial with Demand should not be subsidizing Residential with Electric Heat, and vice versa and every other group,’ said Baldwin.
Duane Waldman, vice chairman questioned why a separate classification was needed for the school district.
“I don’t see how, if they’re equivalent, how one could come out to be revenue neutral so much, if it’s the same type of connection and expense put into providing that service, why it would be any different than Commercial With Demand,’’ Waldman said.
Baldwin said it was a complex formula that spreads operation costs of electric facilities out equally among all groups, but costs associated with demand and other factors are formulated by classifications. He said it was past time for a study because right now we don’t now what the rate should be.
Clint Barney, commission member, asked if the study could be done both ways – with and without the school classification.
The answer was that it would require two separate studies and double the cost.
Waldeman said that if one classification was paying a lower rate than another for the same cost of services, that was preferential treatment.
“It still does not mean they’re getting preferential treatment, if the rate classifications are neutral. If the issue is that one rate right now is twice as big as another rate, that does not mean it’s being subsidized” he said.
Several members commented that since the last study was done in 2004, it isn’t really known what the rates should be today or if classes are revenue neutral. That’s why a study is needed.
“These are rates that were established a decade ago. It’s a completely different situation that we’re in. We need to be able to get fresh data before we make decisions,” said Andrew Krievins, commission member.
“Everything’s changed. We’ve got four new schools, you have more residents, you have different commercial, so the landscape is different the system is bigger. The numbers may change (after the study),” said Baldwin. Earlier, he had said the school’s current electricity rate will likely change after the study.
Krievens said discussion of rates was moot until the study is done, because there is no data to base it on, and reminded members that the only question to consider at this meeting is whether the study be done with current classifications or a revised classification schedule removing the school classification.
Barney made a motion “for the school district rate structure to remain as part of the current electric rate classification schedule.”
Motion was seconded by Krievens and carried with a 3-1 vote. Waldman was the ‘no’ vote. The commission recommendation will now be forwarded to city council.