Avilla Considering Electric Rate Increase

February 18, 2016

Published by KPC News – Steve Garbacz, February 18, 2016

Electric rates in town may be rising again, but this time the increase would go to fund operating costs of the utility instead of increased payments to American Electric Power.

The town has been forced to hike rates multiple times recently to pay for “true-up” costs demanded by electricity provider AEP, town officials said. Those are set by AEP based on the cost of supplying power to the town, and Avilla typically has passed on those year-to-year increases directly to customers.

But Avilla hasn’t raised rates in order to cover the costs of operating the town department since 2002, officials said.

“That was the last time we actually took more money from the pot,” Town Council President Paul Shepherd said at Wednesday night’s meeting. “Every other time it’s been AEP.”

The town’s electric utility has been bleeding money for the last five years, Town Manager Bill Ley said. Avilla has spent $364,000 more than it’s brought in over that period. Most of that deficit was in 2015, which it overspent by $227,000.

The red ink from 2015 is in part due to another AEP true-up the town hasn’t recouped the cost of yet. Avilla also purchased a new bucket truck last year to replace an aging vehicle with mechanical problems.

Ley suggested that the town have financial consulting firm H.J. Umbaugh and Associates review the electric utility and do a rate study. It’s been several years since that was last done, and it’s time revisit rates for residences, commercial buildings and large industries, he said.

“I think it’s time to do a rate of service study to make sure our different classes of customers are paying their fair share,” Ley said.

It’s the second time in less than a year that Avilla is having to find additional operating income for its utilities. In the fall, the town did a rate study and then approved an increase in water rates due to deficits in that department.

Residents and business owners also are likely going to have to pay more in property taxes this year after tax rates increased due to the loss of the Federal-Mogul plant last year. The town lost millions of dollars of assessed value when the plant shuttered and removed its equipment, Ley said.

Spending in the town hasn’t significantly changed since 2015, but the major loss of assessed value caused the town’s tax rate to rise.

In other business Wednesday night, the Town Council agreed to pay half of the cost to upgrade to a 100-watt repeater system that will help increase reliability and expand coverage of the town’s fire paging system, Fire Chief Jonathan Harris said. The town currently operates a 50-watt system, which is attached to the water tower.

Board members also showed some hesitancy about a large project to make a block of downtown commercial buildings disabled-accessible as part of a downtown improvement program being discussed.

Due to the varying height of entrances and available space, Ley said the town likely would need to build a large ramp system that would force it to expand the sidewalk, narrow Albion Street and move a water main.

The project could cost $300,000 to $500,000 to improve access to three storefronts.

Council members said that was a lot of money to consider, especially since some of the buildings are currently vacant. They agreed that before making any decisions, they would want to hear some commitment from building owners about making improvements to their properties and working to attract businesses.

Board member Philip Puckett Jr. said he’d want to hear that individual owners were committed to each doing their part in an effort to improve the appeal of the entire downtown.

“I’d like to see it done, but I think that’s a lot of money to do it without knowing if it’s worth it. It’s a lot of money. I don’t want to be negative about it and I’d like to see it work,” Puckett said. “How much are you going to do for your place to help the vacant place next to you?”


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