FRONT ROYAL - Citizens may see their monthly electric bills increase from between $3 and $5 by 2021 as the town contemplates raising rates for the first time in a decade.
The proposed changes were recommended during a Town Council work session on Monday as the result of an electric rate study by GDS Associates Inc., an engineering and consultant firm. While rates have not been raised in 10 years, David Jenkins, the town’s energy services director, said power cost adjustments charges have increased to over 2.3 cents per kilowatt-hour.
Power cost adjustments are fees charged when the town’s cost to purchase power increases.
Jake Thomas, of GDS Associates, recommended reducing the power cost adjustment to 1 cent in the fiscal year 2020 and further decreasing it to slightly less than a penny in 2021. At the same time, he said the base rates should increase to reflect higher power costs, which would give the town a more stable stream of revenue.
He said the average bill for residential users would increase from between $3 and $5 per month by the fiscal year 2021.
Thomas recommended that the average commercial bill increase between $150 and $200 monthly by 2020. He said the new rates would also carry about a $100 increase for about 80 percent of town customers.
Town Manager Joe Waltz explained that power cost adjustments allow on-the-fly fixes for extreme weather and increased costs, but they do not allow the town to stock its reserves for needed capital improvements to the electric system.
In the next three years, the town has about $3.9 million planned in capital improvements for its electric system, but could only fund about $1.45 million of that with today’s rates.
Jenkins said the power cost adjustment fees would decrease, but the base electric rates would increase, which will provide the town a more stable stream of revenue.
Mayor Hollis Tharpe said that despite any increases, the town does not profit off electric bills and customers are paying less than they should.
Waltz said the changes would be advertised for a public hearing and if approved would likely not take effect until March.