MADISON — Wanting to head off a revenue shortfall for the third consecutive year, the Brodhead Water & Light Commission is seeking a 7.23% overall increase in electric rates, according to an application filed May 19 with the Public Service Commission.
If approved as submitted, the rate request would add $6.22 to a typical residential customer’s monthly bill. Residential customers currently paying $84.90 monthly for 709 kilowatt hours of electricity, would pay $91.12 under the new rates, according to Ed Hoff, utility superintendent.
The electric utility hasn’t had a rate increase since 2012, and has since seen its costs increase faster than its revenue. After a net income of $27,263 in 2019, the utility had a negative net income of $46,339 last year and estimates that amount will increase to $93,924 this year, according to the rate application.
The new rates are projected to increase annual revenue in 2022 by $265,531 to $3.97 million. After estimated expenses of $3.79 million, the utility should earn a positive net income of $171,607 and a 4.9% rate of return on the value of its infrastructure, according to the application.
The coronavirus pandemic didn’t have a major impact on utility operations last year, Hoff said May 20. More customers than usual fell behind on their bills during the PSC’s year-long moratorium on disconnections and applying interest charges on unpaid bill but all have either paid up or arranged to make payment since the moratorium expired last month, he said.
The pandemic didn’t delay any projects or purchases, said Hoff. Instead, in March 2020, at the onset of the pandemic, the PSC approved construction of a $1.6 million electrical substation. Construction is to begin in July at 11th St. about 350 feet west of 5th Ave. and be completed by the end of the year.
The utility and the PSC deemed the project necessary as one of the city’s substations has a transformer built in 1964, and experienced an outage in 2013 of “a long duration,” according to the PSC’s construction authorization order. The transformer was put back into service but its age remained a concern. Instead of just replacing the 57-year-old transformer, the utility decided to build a new substation that will provide higher voltage, reliability and accommodate larger electrical users in the future
The utility had funds on hand to finance the project and the new substation will standardize voltage across the system, Hoff said.
Before the PSC sets new rates, its staff will analyze the utility’s finances and suggest rates that it concludes would keep the utility financially viable in the near future. A public hearing on the PSC’s recommended rates will be held simultaneously in Brodhead and Madison before a final decision is made.
Hoff expects the process to take several months and anticipates new rates to be implemented in January 2022.