Norwich utilities explains rate increases
Norwich Public Utilities and our employees, once again, earned statewide praise for our recent storm response and have contributed $82.6 million to the city budget over the past 10 years.
But what about rates?
To answer that question, NPU initiated a more detailed review of our costs than we’ve ever done in the past. This rigorous “cost-of-service” approach has enabled NPU to set rates based on actual, detailed expense components to provide safe, reliable utility service to our electric, gas, water and sewage customers. Previously, NPU set rates based on annual budgets.
The rate plan, approved at our September board meeting, implements modest increases over the next three years covering all costs except the Purchased Electric Adjustment or Purchased Gas Adjustment, which are adjusted at most 1-2 times a year and are market driven. We are expecting a small PGA increase to go into effect in January.
In response to customer input, we are approving the rates for three years instead of annually. This will allow customers to budget accurately and provide more long-term certainty on their utility costs.
NPU commissioners have approved the following.
Electric: No increase for next year — for the third year in a row — setting NPU residential rates more than 20% lower than investor-owned utilities in the region. Rates will then go up 1.5% per year for years two and three.
Gas: No increase for the next year, keeping rates very competitive, with increases of 2.3% in years two and three.
Water: No increase for three years for our system, which has recently undergone significant modernization.
Sewer: Increases of 6% in each of the next three years for the smallest portion of four-service customers’ bills needed to pay for long-overdue, state-mandated modernization of our entire decades-old wastewater system. NPU worked with the state for years to negotiate for the most cost-efficient system to significantly clean Norwich’s harbor, attract economic development, and improve water quality in the Thames River and Long Island Sound. NPU’s 7,000 wastewater customers and some neighboring towns that use the facility will share the cost.
So, what is the bottom line?
At the end of the next three years, typical four-service homeowners will see increases of about 2% per year over the three years, which is comparable to expected inflation. Customers who use fewer than four services will see smaller increases.
The current NPU Board has been focused on bringing this vital organization back on track following years of turmoil and controversy.
Greater transparency, reasonable rates and strategic investments are the next steps to keep NPU marching forward.
Robert Staley is chairman of the Norwich Board of Public Utilities Commissioners.