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Murray Journal

Murray City Council approves three-year power rate adjustment

Sep 08, 2023 12:59PM ● By Shaun Delliskave

Murray Power lineworkers adjust a new power line. (Photo courtesy of Murray Power)

As energy prices continue to shift, many municipalities are revisiting their strategies. Murray City Council, at a special July 18 Public Hearing, recently approved a phased three-year power rate adjustment, informed by an in-depth study examining energy pricing trends and their implications for the city.

Murray City Power Manager Greg Bellon shared his observations, stating, "Last winter was unprecedented in the power industry. I hope I never see anything like that in my lifetime." 

Historically, Murray has enjoyed relatively stable power rates. "We've been fortunate with consistent power rates over the years," Bellon said. 

The past winter's events considerably strained the city's financial reserves. But as Bellon pointed out, these reserves played a pivotal role in assisting the community during such times and "helped our ratepayers and the citizens of our region" during these particularly challenging periods.

Earlier in the year, sensing the impending financial crunch and its ramifications, Bellon introduced the idea of an urgent rate adjustment to address the issue. Councilmembers, understanding the gravity of such a decision and its potential implications for Murray’s residents, advocated for a comprehensive rate study before making any decisions. This decision led to a partnership with Dave Berg Consulting. Their collective effort resulted in the Electric Cost of Service Rate Design Study—an examination of Murray Power’s financials.

"Though the power rate usually covers costs, the recent energy cost spikes resulted in financial challenges,” Berg said. It was found that maintaining the current rate contributed to a notable $10 million shortfall.

From the study, two primary adjustment pathways emerged:

Option #1: A direct increase of 13% for general service small customers and 27% for other categories.

Option #2: A phased set of yearly adjustments over three years—7% per year for general service small customers and 14% annually for other groups. By the third year’s end, Option #2 rates would exceed those of Option #1 by 15%.  Roughly going up from $3.35 kWh to $10 kWh by 2026.

Berg also introduced a revision to the SCA (Supply Cost Adjustment) formula, which would allow for monthly bill adjustments to reflect real-time power costs. He noted that, comparatively, "Murray's rates have remained among the state's lowest."

In consideration of the proposals, Bellon remarked, "The proposed increase aligns with trends seen in other utilities. A $10 (kWh) adjustment is deemed appropriate for this time."

As councilmembers deliberated on these options, they heavily considered the community's needs. Option #2 emerged as a preferred solution for many members, balancing the immediate financial needs with the community's ability to adjust. Councilmember Pam Cotter was among those who favored this phased approach, stating, “I really appreciate that we have that option.” Bellon echoed her sentiment, expressing, "This is not my favorite thing to do...but it's the facts."

"We have to be vigilant on what that looks like and be prepared for the future," Councilmember Rosalba Dominguez said. "It's crucial to anticipate future scenarios and be prepared."

Additionally, Councilmember Diane Turner stressed the community’s need for supportive resources, especially during rate changes: "It's vital for residents to know about the HEAT program during these trying times, especially with the impending increase. It's essential they're aware of resources available, so they don't feel desperate."

Concluding their deliberations on July 18, the council opted for Option #2, combined with the revised SCA formula, charting a way forward for Murray's energy framework. The adoption of Option #2, by a 3-0 vote (Councilmember Phil Markham had resigned and Garry Hrechkosy was absent), in tandem with the integration of the revised SCA formula, marked a new chapter in Murray's energy strategy.

More information on the Murray City Utility Relief (HEAT) Program can be found online at:λ