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A proposed restructuring of rates charged by the North Little Rock Electric Department is meant to keep the city-owned utility financially stable and continue to provide its customers with reliable service, supporters of the proposal said.

The proposal goes back to the City Council at 6 p.m. today for a public hearing and an expected vote three weeks after several residents and small-business owners told council members that they feared the changes would result in their bills going up.

"Hopefully, through education about the proposal, we've relieved them somewhat of their concerns," said Danny Bradley, the city's chief of staff. "We want to make sure the department is stable financially, and the way to do that is to make sure the rates are correct."

North Little Rock Electric Department has about 38,000 customers in North Little Rock and part of Sherwood.

The changes involve increasing the fixed rate that the utility charges all customers for providing power, while reducing the amount charged per kilowatt hour for electricity used. The net result for the "average" customer, utility representatives have said, would mean little, if any, difference in the monthly bills over a three-year implementation period.

The proposed changes in the utility's rate structure came after Utility Financial Solutions of Michigan was hired to analyze the department's rates and costs. If approved by the City Council, the first adjustments would begin Oct. 1.

"We want to get our rates set so our variable costs show up in the rates and our fixed costs show up in the fixed monthly charge," said Jason Carter, the utility's attorney. "This helps align our interests with our customers. When their energy usage goes down, our costs go down. It keeps us on the same team to keep costs low and to preserve the environment."

The utility has been discounting high-volume users based on the amount of power they used, referred to as a declining block rate. That will end, Carter said, because it's a bad policy that rewards those who use the most electricity.

"Our request is to do away with the declining block rate and go to a levelized rate," Carter said. "Part of it is for simplicity of customer billings. It's easier to understand and is also a better environmental policy."

Bradley said the city has to run its Electric Department "as a business" and know that customers in all rate classes are "paying their fair share for the cost of operating the department."

The change in how the utility charges for power will help keep the utility from taking on new debt while maintaining its distribution service, line switches and transformers, and completing improvement projects in the future, Carter said. The changes will increase the utility's revenue, but "not by a lot," he said.

"We need to maintain our cash reserves at a level where they need to be, to be able to respond to emergencies, perform our capital expenditure plan over the coming years and avoid debt," Carter said. "One of the things we're proud of is we've been paying off debt. If we can keep paying off our debts as we have been, and avoid taking on new debt, we can keep operating our business out of our operational revenue.

"Some of the projects we're planning are really reliability projects, just to keep our system up and running and keep it resilient, so when we have a problem, we can recover from that problem quickly," he said. "Reliability is the No. 1 issue. Keep the lights on. We want costs to stay down, but reliability takes precedence."

Metro on 05/14/2018

Print Headline: Electric-rate plan for NLR to get hearing

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