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September 12, 2012

Fuel cost adjustment approved by council

Derrick Miller The Duncan Banner

DUNCAN — With the change in fuel cost adjustment, Duncan Power customers will be paying $8.43 more per 1,000 kilowatt hours on September’s bill than they did for August.

After three months of discussion, the Duncan City Council approved a fuel cost adjustment for Duncan Power Customers during Monday’s regular meeting. As a result, the fuel cost adjustment will go from $10.97 per 1,000 kilowatt hours to $19.39 per l,000 kilowatt hours.

“This is an item we have discussed in the past,” City Manager Jim Frieda said. “We have given the counsel some idea how the costs are passed to Duncan Power.”

Duncan Power gets retail electric from other electric companies, which pass along such fuel cost adjustments to the municipal service.

Frieda said the city hasn’t passed along those increases to the Duncan customers but the City of Duncan wouldn’t be able to absorb the increased costs any longer.

The fuel cost adjustment is the difference between the estimated cost of fuel and the actual cost of fuel.

Frieda said the majority of the city’s funding comes from the sale of electric and water.

That funding helps to cover operational costs and helps to pay more than 100 employees.

With the increased fuel cost adjustment, the city has felt a larger burden and a limitation funding, Frieda said. By having customers pay for the increase, the city will no longer feel as strapped as it has in recent months.

David Yeager, Duncan Power director, said the fuel cost adjustment will not include back billing to recover any of the funds the city absorbed. Instead, Duncan Power will start fresh with its September billing cycle.

Yeager did provide ideas of the fuel cost adjustments Duncan Power customers may have to pay. Residents using 600 kilowatt hours will see a fuel cost adjustment of $11.64. Residential customers using 1,300 kilowatt hours will see a fuel cost adjustment of $25.22. And residential customers using 7,000 kilowatt hours will pay $135.80 for the fuel cost adjustment.

“We are not trying to make a huge profit,” Yeager said. “We are still very price competitive.”

Frieda said the higher fuel cost adjustment will help the City of Duncan break even on the increase it has been paying for electric services. It will help the city continue the various services it provides, including road, water and park services.

“That money is going back in to support your services,” Frieda said.

Patti Clift, city finance director, said the fuel cost adjustment is an adjustment, not an increase. She said the fuel costs more than what has been expected and the fuel cost adjustment will help to ensure the city can offset that change.

Clift said the city depends heavily on the Duncan Power services because so much of what the city does is funded through that service.

“We’re not just breaking even,” Clift said. “We have to cover the city services. We’re sitting good, but that doesn’t mean it’s clear sailing.”

Chris Deal, Duncan Chamber of Commerce and Industry president, attended the meeting to give his vote of confidence to the council for the fuel cost adjustment.

“It’s imperative we cover our costs,” Deal said. “It allows for stabilization.”

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