Crawfordsville Electric Light & Power’s proposed new rate schedule calling for a 14.5% increase in residential bills by 2022 cleared another hurdle Monday.
The Crawfordsville City Council passed the first reading of an ordinance adopting the new rates, which utility officials said would help pay for the construction of a new substation on Memorial Drive and other equipment upgrades.
If approved, the three-phase rate hike would begin as soon as this fall with a temporary 3.2% rider, raising an average residential customer’s bill by $2.82 per month. The rider seeks to make up the money the utility didn’t receive from the last rate increase four years ago due to a formula error in the rate design.
Appearing last week before the council’s fiscal affairs committee, which gave a favorable recommendation to the new rates, a rate study attorney explained that CEL&P “has lost millions of dollars since 2016 by having that small under-recovery accumulate over time.”
On Monday, CEL&P manager Phil Goode sought to clarify the utility’s financial picture, distributing copies of annual financial results and a four-year capital plan to the full council.
After reporting negative annual income for two of the past four years, the utility brought in a net income of nearly $520,000 from 2015-2019. Over the same period, the utility averaged $4.76 million cash on hand.
Almost $4 million worth of system improvements have been completed over the past three years, according to CEL&P. The utility still has nearly $7.7 million in projects on the list, with the bulk of the money going to the planned Memorial Drive substation.
The second phase of the planned increase would kick in next June, followed by the third installment a year later. The average residential customer would pay an additional $12.83 per month for electricity by 2022 under the new rates. Increases are being stair-stepped due to the COVID-19 pandemic.
“We do need the funds to finish this capital plan. It was a [Utility Service] board and management decision to slow-roll this because we would be able to fulfill our projects,” Goode said, also citing the utility’s high reliability rates.
The proposed rates drew support from councilman Andy Biddle, who chairs the fiscal affairs committee.
“I think it’s really imperative that we keep control of our municipal electricity,” Biddle said. “I think that’s why I’m totally in favor of this because we don’t want some bigger company coming in and buying our electric utility out and then we would have no control.”
CEL&P customers have seen an 11% decrease in rates since 2015 thanks to lower wholesale rates and the previous rate schedule. Indiana has the 14th lowest electric rates in the country, according to a report from the American Public Power Association.
A final vote on the new rates is expected from the council later this summer. The rate increases will take effect if approved by state utility regulators.
In other business, the council:
• Approved resolutions finding multiple companies in substantial compliance of tax abatements. The companies include International Paper Company, Closure Systems International, California Pellet Mill, Pace Dairy, Crown Cork and Seal, Indiana Municipal Power Agency, Penguin Random House and Historic Whitlock Place LP.