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    Thursday, November 30, 2023

    Norwich Public Utilities proposes electric, water, natural gas, sewer rate increases

    Norwich — Norwich Public Utilities officials presented a budget totaling $95.88 million with proposed rate increases for the four utility divisions — electric, natural gas, water and sewer — for the first time since 2016, when electric rates dropped by 4 percent.

    The budget calls for a 5.4 percent electric rate increase, an 8.68 percent water rate increase, a 9.1 percent increase in natural gas rates and a 6.54 percent sewer rate increase. The Board of Public Utilities Commission will hold a public hearing at 6 p.m. April 24 and could vote on the budget at its May 22 meeting. New rates would take effect July 1.

    NPU will discuss the proposed budget with the City Council at 7 p.m. April 5.

    NPU General Manager John Bilda said contractual obligation, regulatory requirements and other cost increases are driving the need for rate increases, especially after two years of no increases. He said NPU rates remain competitive in the region, and electric rates would be 3.4 percent lower than investor-owned utilities.

    The proposed electric operating budget totals $57.1 million, a $454,595 increase over this year. The proposed 5.4 percent rate increase would add $6.24 per month to a residential customer’s bill that uses 600 kilowatt hours, NPU officials said. Bilda said after two years of no increase and a 4 percent rate decrease in 2016-17, Norwich ratepayers’ bills would be about $1 higher per month than in 2015.

    The electric division budget would use $2.35 million in rate stabilization funds generated by the Connecticut Municipal Electric Energy Cooperative allocated to NPU to offset some expenses, NPU Division Manager Steve Sinko said.

    The proposed water division budget would total $10.4 million, a $1 million increase over this year. The 8.68 percent rate increase would add $4.34 per month for a resident using 7 CCF — centrum cubic feet — or 5,236 gallons. NPU officials said part of the increase is caused by the need to make mandated water quality improvements. They said Norwich would be “in the middle of the pack” in the region for water rates.

    The natural gas division has been growing steadily in recent years, with voter-approved expansions funded by new customers added to the system. The natural gas operating budget would total $20 million, a $1.9 million increase over this year. Gas rates would jump by 9.1 percent, an added $9.49 to an average residential customer’s bill. NPU natural gas rates have not been increased in four years, NPU officials said.

    The sewer division is the smallest of the four divisions. The proposed sewer operating budget would total $8.24 million, an $884,087 increase over this year. The proposed 6.54 percent rate increase would add $4.13 to an average residential customer’s bill.

    Bilda said starting next year, NPU will change its budgeting process to use an annual cost of services study expected to result in smaller but more frequent rate changes, avoiding wide fluctuations like those seen in recent years.

    About 42 percent of NPU’s customers receive only electric service, and 30.2 percent have only electric and gas service. Only 11.4 percent have electric, water and sewer, and 16.3 percent have all four services. For residential customers with all four divisions, an average combined monthly bill would increase by $24.20.

    Bilda stressed to the commission that NPU contributes both direct revenues and numerous in-kind services to the city. The city charter requires NPU to contribute at least 10 percent of gross revenue from electric, water and natural gas divisions each year to the city. NPU maintains city fire hydrants, provides technical support to city agencies and this summer will replace streetlights with energy-efficient LED lights. NPU also maintains streetlights at no cost to the city.

    The 10 percent gross revenue payment to the city totals $8.4 million in next year’s budget. The total is based on audited NPU revenues in the 2016-17 fiscal year. Bilda said over the past 10 years, NPU has contributed $80.3 million to the city in the charter-required payments.

    The City Council last June passed a resolution calling for the utilities commission to bump its contribution to the city to 12 percent of gross revenues. The request was slow to reach the commission, however, and Bilda said the proposed budget would keep the payment at 10 percent.

    “In order to get to 12 percent,” Bilda said, “we would have to build it into rates.”


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