Electric rate increase ordinance advances

The Petersburg Borough Assembly unanimously approved, on second reading, an ordinance that increases electric rates during the next two years.

Before assembly members voted on the ordinance, Patrick Wilson, Petersburg Fisheries (PFI) plant manager, spoke before the assembly to request that the electric rates stay consistent with past year's schedules.

Wilson said that even though the percent increase represents a small dollar amount, the increased cost will make PFI less competitive in an increasingly competitive industry.

"It (the new rate schedule) represents, I think about 8.6 percent increase, which is a lot more than we had anticipated, if you were to take the two schedules and put them together over a two-year time. And I think that's substantial," Wilson said. "It's not a huge increase when you look at the dollars, being the corporation that we are, but it's still money that we could spend on improvements and other areas of the factory."

Wilson added that those improvements would not only help PFI to stay competitive but also keep the community, which relies heavily on the fishing industry, strong.

"As you know, the town here in Petersburg relies heavily on the fishing industry, it's the life blood of this community," he said.

The updated electric ordinance was drafted after a revenue requirement study was presented to the assembly last December. The requirement study showed Petersburg Municipal Power and Light (PMPL) has had an average operational loss of $266,000 a year since 2010.

"The electric rates are insufficient right now to recover the necessary revenue requirement that you do have," John Heberling, the D. Hittle & Associates engineer and consultant who performed the study, said at an assembly meeting last December. "The bottom line is that we're going to be looking at a little bit of a rate increase in the process."

The current electric rates are set up in a declining block—the more electricity a customer uses, the less they pay on a kilowatt hour basis. This rate structure was established more than 25 years ago to encourage electric usage. The declining block rate, combined with the rise of oil prices, contributed to a large conversion from oil to electric heating. But, beginning around 2012 that conversion began to level out.

In the updated ordinance, rates are still on a declining block schedule but less so, PMPL Superintendent Joe Nelson said. "We're flattening them (rates) out."

This flattening out will help reduce the large price difference small and large commercial customers experience under the current rate structure.

Nelson said that the large commercial users that were taking advantage of the cheapest rates will see the largest increase if the new rate schedule is approved by the assembly. Sue Flannery, PMPL's office manager, said that there are currently about 30 businesses in that category, ranging from the canneries to the grocery stores to the schools and other public buildings.

The ordinance must be approved by the assembly on one more reading before rates are officially raised.

Note: The Pilot previously reported that the electric ordinance raises rates by four percent over the next two years. The ordinance would actually raise rates to increase PMPL revenues by four percent over the next two years.