The City of Red Deer’s portion on power bills will rise an average of 5.3 per cent for residential customers, starting Jan. 1.
City council approved changes on Monday to the local distribution tariff, a fee that Red Deer’s Electric, Light and Power department uses to recover its cost for running the utility system.
Leaders also supported a one-per-cent increase to the Local Access Fee, a charge levied by the municipality to the electric utility. The Balancing Pool rebate was kept at the same level as 2010 at $0.0027.
Department manager Ligong Gan said most city customers will see an increase, with the overall one being 5.3 per cent for residents.
This percentage applies to the delivery of power service only versus the entire bill, which includes the commodity or energy charge. “Even with the rate increase next year, we’re still looking at a very competitive electrical system compared with many other communities,” said Gan.
Residents on average will see charges from the city increase $1.58 per month.
That city’s portion of the monthly bill would then be $31.49 — the system access charge and distribution access charge for a total of $27.50 plus a local access fee of $5.23 minus a provincial Balancing Pool rebate of $1.24.
Last year’s residential bill would have been $29.91. General service customers, like a fast food outlet, will experience an average 9.1 per cent increase. Large industrial/commercial customers will on average see an 8.5 per cent increase on their bills. Small commercial users would see an average increase of 5.5 per cent.
Councillor Chris Stephan suggested the general service and large industrial/commercial users should get a bit of a break since the city is trying to encourage growth in these areas. He recommended an average 6.5 per cent increase for each of the industrial, small commercial and residential users, but that proposed amendment was defeated.
“If you (apply the 6.5 per cent) to all the classifications, chances are some customers may pay more than their fair share of the cost,” Gan said later. “Other customers may pay less than their share. It really creates a subsidy situation between customer classes.”
Gan said the increases in delivering power to Red Deer are needed to pay for an $1.76 million operating cost in 2011.
One cost for next year includes upgrading the Sunnybrook neighbourhood to a 25 kV (kilovolt) system from a four kV system. Other neighbourhoods will follow suit.
“We want to increase the reliability of the system,” Gan added.