For the next three months, Columbia residents will see a temporary 9.5 percent increase in their electricity bill.
The increase is the result of a new power contract with AmerenUE, rising natural gas prices and rising electricity transmission costs, said Jim Windsor, manager of rates and fiscal planning for Columbia. For an average household, which uses 1,200 kilowatt hours a month, the increase will be $7.46. The rate increase will be in effect for the months of July, August and September. In October, the City Council will be asked to raise electricity prices permanently with the passing of the city budget.
“We’re evaluating the amount of rate increase required as we go into the next budget year,” Windsor said.
The Fuel Adjustment Ordinance, established in 1972, enables the city to contend with market validity without constantly changing the electricity rate. The ordinance has not been used since the late 1980s, but was frequently used during the late 1970s and early 1980s.
AmerenUE is the major provider of electricity for the city. The previous contract, in place for the past 15 years, expired at the end of May. The new contract will cost $2.2 million more during the summer months because of higher market costs for electricity, which account for higher transmission costs and natural gas prices. Natural gas is a major source of summer electricity supplies, Windsor said.
The new contract began June 1, 2004and expires at the end of 2007. Columbia Water and Light is in the process of evaluating several options for power supply beyond that date, including renewing a contract with AmerenUE or forming new contracts with the Peabody Prairie States Energy Project or the Wisconsin Electric Power Company.
For now, the major providers of electricity, in addition to AmerenUE, are Nearman Power Plant in Kansas City, Sikeston Power Plant in Sikeston, and the Columbia Municipal Power Plant.
The Columbia Municipal Power Plant has a gas turbine, but coal is the primary fuel used to provide the base amount of power. Windsor said it is preferable to use the gas turbine as little as possible because of the rising price of natural gas. Natural gas turbines are used during peak power hours when there is a large jump in electricity use, which usually happens during the middle of the day. The amount of power used increases during the summer because of people running air conditioners.