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Elkhorn electric rates to rise by 8.2 percent

MADISON — Electric bills for Elkhorn residents will increase 8.2 percent next month, the first rate hike since 2005, according to a Wisconsin Public Service Commission order issued Friday.

Residential customers paying $67.84 for 660 kilowatt hours monthly will pay $73.39, or $5.55 more, under the new rates due to take effect Sunday.

The utility in November filed for a rate increase, seeking rates that would yield $504,176 in additional revenue based on a 7 percent return on its infrastructure investment. The PSC approved an additional $404,935 in revenue by applying a 6 percent return on investment.

Electric bills have gone up since the 2005 rate increase because the utility can pass on to its customers increases in the wholesale cost of power it buys.

Not increasing rates during the past several years resulted in cash flow issues just as debt payments were coming due, said Mary Hinske, city finance director.

"We haven't borrowed for several years, but those payments accelerated … and we needed more revenue to make the payments and have funds on hand to buy equipment for new customers," Hinske said.

Only a few new customers have been added recently, but revenue has rebounded from declines in 2008 and 2009, according to documents filed with the PSC.

The need for more revenue also was prompted by the need to accelerate the meter-testing schedule, which had fallen behind PSC standards. In response, the utility added two employees to test meters and now is on pace to test every meter in the city within the next two years, said Hinske.

The utility delayed a rate increase by deferring the purchase of equipment and accounting software and slowing the pace of putting electric lines underground, a program that Art Schmitz, former electrical director, emphasized before recently retiring, Hinske said.

The new rates should improve the utility's profit picture and allow it to resume placing more lines underground, Hinske said.

A better financial foundation also should permit the utility to go another seven years without a rate increase, Hinske predicted.