A cost-of-service study recommends that Washington’s electric customers should have their overall electric rates (per kilowatt hour) reduced by 5.64 percent, with residential customers receiving a 2.52 percent reduction.

The study, presented by Booth & Associates spokesman Terry Brege to the Washington City Council on Oct. 19, will be used by city officials (including council members) in determining what, if any, rate changes might be made in the next several years. The study also recommends increasing some fees, including facilities charges, related to providing electric service.

Effective Aug. 1, some Washington power customers had their rates reduced by 6 percent.

A cost-of-services study, among other things, should be used to fairly assign charges to cover the costs of providing services to each customer class, Brege told the council. Brege said that, based on analysis of the city’s current customer rates and projections of costs and revenues associated with it providing power, it appears the city might be able to avoid increasing its rates until April 2017. Although the city likely will see an estimated 2.8 percent increase in the wholesale cost it pays for power come April 2016 and an estimated 3-percent increase come April 2017, according to Brege, it looks like the city’s revenue from power sales in coming months will allow the city to avoid a rate increase for about 18 months.

“The cost-of-service study shows that we could justify just under a 1-percent decrease for residential, a 6.4-percent decrease for small general service, a 14.8-percent decrease for medium general service, an 8.9-percent decrease for large general service and about 5-percent decrease for industrial service, about a 23 percent decrease for coincidence-peak demand service and (outdoor) lighting showed about a 13.5-percent decrease could be justified,” Brege said.

Brege noted the study breaks costs into three areas: consumer-related, demand-related and energy-related.

“When it breaks out into customer-related, it breaks it out into a number of different ways,” Brege said. “The customer-related column, those are costs that get allocated based on the number of consumers, a weighted number of consumers. It has to do with the service meter, customer accounting, billing, meter reading and those types of expenses. It shows that for residential you can justify a charge of — consumer-related costs, customer-related costs — of just under 10 dollars and five cents.”

Brege said a reason the city might want to consider increasing the facilities charge — at least in the customer column and over time mover it closer to the distribution column — is it produces rate stability, revenue stability. “Right now with a low facilities charge, your customer charge, you see tremendous swings in electric revenue based on the weather. The higher you can get that fixed charge, the more stable the revenue will be from year to year,” he said.

Brege said the goal of the study and its recommendations is to fairly distribute the costs of providing power to the different rate classes so they pay their fair share based on their power consumption and associated costs of providing service to them.

Mayor Mac Hodges asked Brege how long the city likely could hold off raising rates if the study’s rate and fees recommendations are adopted and implemented in the face of expected increases how much the city pays the N.C. Eastern Municipal Power Agency for electricity in the future.

“The rates we’re proposing here should hold the city until April 1^st of 2018, when they’re (NCEMPA) looking at another 3-percent increase,” Brege said.

Councilman Doug Mercer asked Brege to provide him with more information concerning the data the studied used to reach its recommendations. Brege said that information is a considerable amount.

“I’d like to see it,” Mercer said.

Brege said he would provide the information.

Mercer said possible reductions in NCEMPA’s administrative costs could result in any future power cost increases to the city being less than projected. He believes those reductions can be made.