Groton Utilities seeks to redesign electric rates
Groton — Groton Utilities outlined a plan Wednesday to redesign electric rates by raising the monthly base charge for residential customers and lowering their energy usage charge, thereby stabilizing the utility’s income even if customers use less power.
The three-year plan would be almost a wash for residential users, with overall increases of 0.5 percent in the first year, 0.4 percent in the second year and 0.3 percent in the last year, according to consultant Mark Beauchamp, president of Utility Financial Solutions LLC.
The main change is that residents would see a higher rate to stay connected to the utility, but a lower rate for power usage.
Customers pay a monthly charge of $11.50 to stay connected under the current system. That charge would increase to $15 in the first year, $18 in the second year and $20 in the third year under the proposed change. Rates for using power would decline at the same time, Beauchamp said.
Groton Utilities also can draw on the rate-stabilization fund through the Connecticut Municipal Electric Energy Cooperative to cushion an increase, Groton Utilities Director Ron Gaudet said.
The purpose of the rate change is to remove seasonal and other swings occurring with electric use and gradually increase collections. Last month, a cost of service report concluded Groton Utilities spends $16.7 million to provide service to residential customers, but takes in $15.9 million in charges. Groton Utilities ultimately needs a base rate, or “distribution rate,” of $27 per month for residential customers to recover the cost of maintaining the system, Beauchamp said.
With the addition of solar power, setback thermostats and other technology, utilities are seeing more volatility in their incomes but still must maintain the same systems, Beauchamp said. Using a system that charges for basic distribution helps steady that income and ensures all customers pay for system maintenance, he said.
Groton Utilities also recently increased water rates to put cash reserves in place to help pay for a $54 million water treatment facility upgrade. Water rates will increase 4 percent on Jan. 1, another 4 percent on July 1, and 4 percent on July 1, 2019, Gaudet said.
The commission will schedule a public hearing on the electric rate proposal before taking a vote on it. The proposal then will go to the City Council for review and approval.
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