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Higher costs driving Troy electric rate increase

Troy Mayor Jimmy Lunsford is finalizing his recommendation to the city council concerning an increase in city electric rates to take effect in October.

City Council members are expected to get their first look at the suggested increase when they meet Tuesday.

Lunsford expected to work on the issue through the weekend, and said he feels the increase will be larger than he first thought.

“We are going to have to increase our electric rates and it’s going to be more than I originally anticipated,” Lunsford said.

The change will be the first rate adjustment since the city entered into a new wholesale electric contract with Alabama Power about three years ago. It’s also the first time in more than 10 years the city has changed its rates to reflect the higher cost of operating the electric system.

Operating costs for the city’s electric system have risen “dramatmically,” according to Lunsford.

“It’s getting to the point that it’s exceeding what we are billing,” Lunsford said. “We can’t get in a situation where we are not covering all the expenses of the system.”

Troy electric customers have seen periodic increases in monthly fuel charges added to power bills, but the base electric rate has not changed since the city entered into its most recent contract with Alabama Power.

Currently, Troy electric customer pay 6.8 cents per kilowatt hour of electricity used on top of a minimum $6.50 charge, according to the city’s Web site.

The city’s wholesale electric rate with Alabama Power will remain unchanged until 2010, but the city has seen increases in its demand charge, which accounts for about 35 percent of the city’s monthly power bill.

In adjustment the city was notified its demand change would increase from $10.43 per KW to $11.50.