Avilla Raises Electric Rates

Increase will average 4.6 percent for town customers; it’s needed for operating costs
Steve Garbacz – KPC News, June 22, 2017

Electric rates for town residents will increase starting in August to help pay for increasing costs of running the utility.

Town Council members approved new electric rates, which will increase an average of 4.6 percent. That increase will raise an additional $150,000 per year to help cover operating costs.

It’s the first time in more than 10 years the town has had to raise electric rates to help cover the cost of running its electric utility. Avilla has increased electric rates multiple times over the years, but all of those increases were due to higher costs from Indiana Michigan Power to provide power to the town, so the increases were pass-throughs to users.

Avilla first discussed this most recent rate hike last year, but the process was put on hold for several months while the utility was studied by financial consultant H.J. Umbaugh and Associates. During that time, Umbaugh helped discover an issue with meters on several of the town’s large industrial users that were only being billed for about two-thirds of the power they were consuming.

Finding that error and back-billing for the missed electric charges helped to reduce the size of a electric rate hike.

The $150,000 generated annually will help cover the cost of town utility workers, equipment and maintenance of the utility. The new rates will take effect Aug. 1.

“It’s Umbaugh’s recommendation that you move forward with the rate ordinance to keep the electric utility moving in the right direction,” Umbaugh representative John Julien said at the Town Council’s meeting Wednesday.

Avilla is in the process of separating from its power-buying contract with Indiana Michigan Power due to ongoing dissatisfaction with annual “true-up” charges from I&M. Avilla is charged a rate based on the expected cost of generating and transmitting the electricity, but once per year I&M calculates the actual cost of providing power and is allowed to charge or refund the difference.

In recent years, that’s typically been an additional large payment Avilla has had to make and forced the town to pass the added cost on to its customers.

Avilla and other small municipal utilities that buy power through I&M as part of a bloc are exploring options to buy power from other regional generators that will hopefully result in more stable costs.

In other business Wednesday, Town Manager Bill Ley updated council members that the road construction project on Main Street should be complete by July 15. Contractors originally had intended to finish construction by June 30, but rainy weather in late spring delayed progress.

Board members also approved a 10-year tax abatement for Diversified Pattern and Engineering. The company is planning to purchase two new machines at a cost of $360,000, creating two new jobs. The new equipment will help Diversified Pattern and Engineering better serve clients, company representative John Deveau said.

The town also will contract with the Noble County Planning Department for $5,000 for director Kenneth Hughes to update the town’s comprehensive plan. The last plan was developed in the 1990s and is grossly outdated.