City of Minden energy cost formula unchanged

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Several people have noticed lower City of Minden utility bills, while others are still facing higher cost.

Minden Mayor Tommy Davis said that it is important to remember the utility bill may include charges for other services other than electricity.

“It is also the water and sewer bill. Not just the light bill,” he said. “While I’m glad to hear some people are seeing lower bills, cost are not lower because of the new meters. Those will help us keep a close to 30 day billing cycle and will bring meter reading up to speed.”

Davis said any accusations of adjusting the formula to calculate electricity charges are unfounded. However, he did explain there is a variable in the formula that takes the demand and usage of electricity into account.

“Our demand charges are more, because our usage is way down. In the winter time, when we do not buy as much electricity as in the summer time, the electricity cost a great deal more,” he said. “If we didn’t have adjustments in the demand charges, people’s bills would be extremely high.”

Davis said the formula, called the Power Cost Adjustment, has remained the same for longer than 15 years, but that each variable in the formula changes from month to month.

Two components make up the electricity charges the customers see on their bill from the city.

The power cost adjustment on consumers bills is the product of a formula used to determine charges from SWEPCO, the city’s electricity provider. The city does not see any revenue from these charges and revenue is used to pay SWEPCO.

However, the kilowatt hour rate, which was set in the city’s ordinance in 1995, has been used since it was in enacted to generate revenue for the city.

“A portion of this revenue pays for the operation of the electrical system, the operation of the steam plant, maintenance of electrical poles, lines and so forth,” Davis said.

While consumers work to find ways to adjust their monthly budgets to allow for higher energy cost, Davis and city leaders are pursuing options to create long term solutions.

According to the mayor’s office, during August fees totaling over $300,000 were passed on to the city for power transmission and congestion by Southwestern Power Pool (SPP) and MISO Energy, which are the companies that manage the electrical grid system.

“The problem is we buy energy from SWEPCO, which is under SPP,” Davis explained. “While Minden geographically resides in the MISO territory, our electricity is brought in on Entergy lines.”

Davis said leaders have reached out to MISO in attempts to get relief from being charged twice for transporting electricity to Minden.

“These regulatory organizations are supposed to have the consumer in mind at some point,” he said. “But we were told because MISO/Entergy has the tariffs in place, they will continue to charge.”

SPP and MISO operate under the authority of the Federal Energy Regulatory Commission, and were created to oversee the bulk electric grid and wholesale power market in the interconnected transmission network.

A Washington D.C. based law firm, Betts & Holt, LLP, which specializes in energy contracts, has been hired by the city to investigate the legality of additional charges.

City leaders have said they hope to void the current contract with SWEPCO and be able to negotiate lower electrical rates.

“Whether the city is able to break the contract with SWEPCO is ultimately in the hands of the Federal Energy Regulatory Commission, which will take time,” Davis said in a letter to the community.

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