Energy generation costs with Dairyland Power may force the residents of Forest City to pay more in electric bills in the future. The Forest City Council heard from its Electric Department Manager Duane Kuhns over what appears to be a need to increase electric rates.
Kuhns asked the Council to approve an electric surcharge to recover the estimated additional cost for power to be purchased. The proposed surcharge amounts to an additional $.011 per kilowatt hour and is needed to ensure the debt service ratio is covered. Kuhns explained to the council that costs have been going up over the last two fiscal years.
Dairyland Power supplies power to all area electric utility companies in area cities. However, at the end of the contract year, Forest City must pay what is called a true-up or an outstanding balance which in this case is nearly a million dollars. This deficit is caused by unforeseen increased energy generation costs and according to Dairyland Power, the closing of a coal fired plant, and the city establishing an electrical base rate that isn’t charging enough to cover these costs.
Councilmember Dan Davis introduced the first reading of Ordinance No. 829, An Ordinance to Implement a Fuel and Purchased Power Cost Adjustment for the Electrical Utility System. Kuhns explained the ordinance.
While this increase may go into effect after two more official readings by the city council, Forest City remains on the lower end of rates in the state according to Kuhns.
The council will hold its second reading of the proposed ordinance in their next meeting on the 15th.