Residents of Troy will pay about 14 percent more for electricity starting in October if the City Council votes to OK a rate hike proposed Tuesday by Mayor Jimmy Lunsford.

Lunsford recommended the increase to offset more than $2 million in increased costs the electricity system has incurred over the past three years.

Electric department salaries are up $200,000, the cost of transformers, poles and other equipment has risen $880,000 and the wholesale cost of power to the city has increased $750,000, according to a report presented to council members at Tuesday’s meeting.

Faced with rising operating costs, City Council President Johnny Witherington said the council will likely support the rate increase.

“We don’t have any choice,” Witherington said. “We’ve got to make a change.”

The ordinance to raise rates was given a first reading Tuesday and will come up for vote on Sept. 23.

Troy residents currently pay 6.8 cents per kilowatt-hour of electricity, on top of a $6.50 minimum monthly charge. Under the proposed change, residents would pay 7.8 cents per kilowatt-hour with a $7 minimum.

Troy owns its electric system and buys power wholesale from Alabama Power. The city’s electric rates were last adjusted in 2005, when the current wholesale contract began.

The contract runs through 2010 but calls for a rate readjustment this year. The city was notified last month that its demand charge, which accounts for about 35 percent of the city’s monthly power bill, will increase from $10.43 per kilowatt-hour to $11.50.

That increase, coupled with higher operating cost, prompted Lunsford to request a rate increase for consumers.

“No one ever likes to vote for an increase, but I’m confident this will keep our system operating,” Lunsford said.

Lunsford told the council that even with the proposed increase, Troy’s consumer rates will be lower than those offered by Alabama Power.

Using a sample bill, Lunsford said an Alabama Power customer currently pays about $159 for 1377 kilowatt-hours of electricity. A Troy customer would pay about $120 for the same usage under current rates, and would pay about $135 under the proposed increase.

The average residential power bill is around 1000 to 2000 kilowatt-hours, Lunsford said.

“I’m encouraged that through our system we are still able to provide cheaper power,” Lunsford said.

The council also gave first reading to an ordinance that will retain Lunsford as superintendent of the city’s utility system through 2012.

In other business, the council heard a report from recent city council candidate Dejerilyn Henderson. She requested the city do more to address dilapidated houses, weeds, erosion and other nuisances in District 5.

“We want District 5 to be taken care of just as well as other districts,” Henderson said.

During city elections last month, Henderson lost a bid to unseat incumbent District 5 representative Wanda Moultry. Moultry did not attend Tuesday’s meeting.

Witherington told Henderson the city works to remove dilapidated houses and other nuisances, but the legal process to do so can take as long as six months.

“The due process of law is agonizingly slow sometimes,” he said.