The Lafayette Utilities System is asking the city council to approve a three-year rate increase plan for electricity, water and sewer to offset rising capital and operating costs.
The request comes as LUS bills have risen sharply this summer thanks in large part to a massive increase in the price of natural gas, which is a key component of electricity generation for LUS and other electricity suppliers from which LUS purchases excess electricity to meet its needs.
LUS uses two rates to determine how much to charge customers for electricity: a base rate of 4.764 cents per kilowatt hour and a fuel royalty rate that fluctuates with natural gas prices every two to four weeks.
The fuel charge is calculated to pass LUS’s fuel costs directly to customers, while the base rate is set by the city council to pay for other utility expenses, such as staff, equipment and capital projects.
These expenses have increased Director of LUS Jeff Stewart said, especially over the past year. But the LUS base rate has not been adjusted by the board since 2017.
Stewart said he was unhappy about applying to the council for a rate increase, especially as electricity bills rose this summer.
But he warned that LUS would take a massive financial hit over the next five years with no increase due to the rising costs of purchasing equipment and maintaining LUS’s existing infrastructure.
“It was all based on service costs for what it takes to do what we do every day. That’s what it’s based on,” Stewart said.
Why now? What is the cost for families?
“It’s never an easy time or a good time to do it. And the last thing I wanted to do in my first five months was offer a rate increase. But the study that we conducted, the justifications that we have, I have the impression that it had to be proposed.
At the current base rate, LUS’s annual budget for necessary equipment and upgrades could drop from $4 million this year to negative $8.7 million by 2025, leaving the utility without the funds. it needs to maintain its infrastructure, according to LUS’ financial calculations.
To avoid this, LUS is asking for 3% increases in its base rate each year for the next two years. It is also asking to increase water rates by 8% and sewer rates by 9.5% per year for the next three years.
The cumulative impact for an average home using 1,200 kWh of electricity and 5,000 gallons of water per month would equate to an $8 increase in monthly bills starting in November, then another $9 per month year-round. next and an additional $5 the following year, LUS estimated. . This equates to a total increase of $22 per month by 2025 in this scenario.
Council requests revised plan
City council members balked at considering the proposed rate increase at a budget hearing on Tuesday, with a majority of five council members saying the timing was extremely unfortunate given the sustained rise in the fee on LUS fuels.
“I’m very concerned about this because the increases my constituents have seen on their bills range from $400 to $700 or $800 over previous months, previous years,” Councilwoman Liz Hebert said.
Lafayette Utilities’ fuel costs are falling.Customers will save on the electricity tariff.
“I’m just terrified to see this on top of what they’ve already seen in increases. Seeing this increase on top of that is…I don’t know how some people will be able to afford to have utilities,” added Hebert.
“There’s no perfect time, but it seems like the perfect storm is happening right now between the cost of fuel and interest rates and everything,” City Council Speaker Nanette Cook said.
The board asked Stewart and his staff to consider delaying any equipment purchases and other expenses to reduce the proposed rate increase and present a revised plan to the board at its Aug. 30 budget hearing. .
As it stands, the board is expected to initially consider the rate increase at its Aug. 16 meeting and vote at its Sept. 6 meeting.