Electric rate costs still unknown

Published 6:44 am Tuesday, April 18, 2006

By By ANDY HAMILTON / Niles Daily Star
NILES - The City of Niles is close to signing a long-term contract for the city's municipal electric system.
The affect on customer rates the new contract will have is currently being evaluated by a cost-of-service study, said James Lehmkuhl, manager of the Niles Utilities Department.
Details of the contract will not be disclosed until they are presented in a review session to the Niles City Council, which is expected to be held early next month, Lehmkuhl added.
Lehmkuhl said a tentative agreement has been reached with American Electric Power (AEP) for the city's wholesale power contract. The new agreement would take effect on July 1, 2006, when the existing eight-year contract expires, Lehmkuhl reported.
Lehmkuhl referred to the agreement as a “long-term, formula based, cost of service” contract.
He said the agreement would be for 20 years but would contain some defined “off ramps” that would allow the city to cancel the contract sooner under certain conditions.
The city will also be able to check the accuracy of the contract on a yearly basis. A “true-up” process allows the city to compare the actual power costs charged by AEP with those estimated by the company and make adjustments at the end of each year.
Reaching the tentative agreement has taken a year worth of negotiating with electric wholesale providers, in part because of recent deregulations within the electric utility industry that have complicated power contracts, Lehmkuhl said.