Local cost-of-living to rise on October 1,
electric, water and sewer rates increase

By CHRIS WILSON
Staff Writer

The higher cost of energy means rate increases for all three of Amory’s utilities.
The City of Amory Board of Aldermen approved the higher rates to be charged local consumers for electricity, water and sewer, at their regular Tuesday meeting, last week.
According to Amory Utilities Manager Tony Swan, the increase in the price of electricity to consumers, is a direct result of a rate hike to power distributors being charged by the Tennessee Valley Authority (TVA).
Electric rates for Amory customers will go up 7.85 percent overall beginning Oct. 1. All but 1.94 percent of that increase is a result of TVA’s price increase, which is merely being passed on to customers, Swan said.
Residential electric customers who were previously paying a $9 minimum bill will now be paying $9.75 minimum. The average residential customer uses about 1,073 kilowatt hours (kwh) of power a month.
Under the old rates, the average customer’s electric bill was $77.88 and it will now be $84.09 per month.
The price increase from TVA is primarily based on rising fuel costs, and the cost of available electric power it buys from other power companies.
TVA increase wholesale electric rates to its power distributors 7.5 percent during late July. The quasi-government utility is also budgeting about $340 million this year for clean air measures and plans to restart its Browns Ferry Nuclear Plant, TVA’s first nuclear plant.
Browns Ferry is located on 840 acres beside Wheeler Reservoir on the Tennessee River, near Athens, Alabama. That nuclear power facility consists of three General Electric boiling water reactors. Unit 1 is scheduled to return to service in 2007 following upgrades.
TVA Chairman Bill Baxter said the rate increase was necessary because of soaring coal and natural gas prices, as well as for clean air improvements.
In September of 2003, the city upped its electric, water and sewer rates. At that time the electric went up to 6.419¢ per kwh.
The new rate for electric after October 1 will be 6.928¢ per kwh.
Swan said that compared to the inflation that has occurred with other things such as gasoline and milk, electric rates have not really risen as much over the past 20 years. The electricity rates have only increased about 2.5 cents per kwh over the rate charged 20 years ago.
Swan said the electric department will be putting its new substation into service in 2006 and he doesn’t foresee many major expenditures in the system in the next 10 years.
“If things stabilize in the economy, we should be several years before we look at another rate increase,” Swan said. “We’re at the mercy of the economy just like everyone else is. This all stems from a crazy two years of price increases.”
Swan said the petroleum market drives a lot of things besides fuel. He said PVC pipe that the water department uses and electric transformers are all getting very expensive based on petroleum prices.
Water & Sewer
The city’s water and sewer customers will also be experiencing a rate hike in October.
Residential water users who were previously paying a minimum of $5 for the first 2,000 gallons and an additional $3 for every additional 1,000 gallons, now will be paying a minimum charge of $7 for the first 2,000 gallons and $3.50 for each additional 1,000 gallons.
The average residential water user in the city uses about 5,000 gallons of water per month. Under the old rate structure, their monthly water bill was an average $14 per month, and it will go up to $17.50 with the rate hike.
Swan said the Water Department was spending $3.36 to produce 1,000 gallons of drinking water and was selling it for $3. He said the rate increase was necessary because they could not continue absorbing that loss.
Amory operates six water wells and with treatment costs and other expenses associated with supplying water to customers, the rate hike is needed, Swan said. The city last increased its water costs in 2003 and prior to that in 1998.
Besides rising costs for supplies and equipment, Swan said the past two summers were unusually wet and people did not purchase as much water as usual, pushing up the costs for the city.
Swan said he also expects the department to have bigger maintenance costs in the coming years since much of the city’s water and sewer infrastructure is about 40 years old.
Swan said he is budgeting $125,000 this year to film and repair aging sewer lines.
Sewer rates will remain unchanged at $5 for the first 2,000 gallons. But for amounts over 2,000 gallons, the cost will go up from $1.25 per 1,000 gallons to $1.50.
On a positive note, Swan said the city recently got a renewal from the state for its sewer lagoon permit. While the process for renewal is costly and extensive, the permit for releasing treated water from the lagoon is good for a period of five years.
Swan said he regrets to have to increase peoples’ utility rates, but that all of the power companies he knows of in the TVA region are passing the electric rate hike on to customers. He said Amory has a tradition of good, reliable service and that it takes money to maintain high levels of service. “We will strive to keep rate increases at the bare minimum,” he said.