Thu October 26, 2023

By Jeff Smithpeters

Community Business

Hope Water & Light to raise rates on water, electricity starting in 2024

Hope Water & Light Rate Increases Hwl Board Of Commissioners
Hope Water & Light to raise rates on water, electricity starting in 2024
 It’s official as of this morning. Hope Water and Light’s electric and water rates will be going up, with water rates for the totality of customers going up 15 percent in 2024 and 3.5 percent in the following four years. Electric rates will go up 1 percent a year over the next five years.  Some classes of customers will pay more and some less, depending on their share of the costs for the utility to service them. 

Having presented the new rate structures in a public meeting last night at the Hempstead Hall Auditorium, the utility’s management asked the HWL Board of Commissioners for a vote early this morning and received approval for the new increases. 

The new rates will be applied starting in January and will apply to every class of customer for both electric and water service. The rates for water will be increased at 15 percent in 2024 then at lower rates in the next four years.  

According to General Manager of Operations at HWL Russell Cornelius, speaking at last night’s public meeting, this is because of the water utility’s need for revenue almost immediately, to become eligible for better terms on a $7.5 million bond issue to finance an EPA-mandated project to deal with disinfection by products. 

“It's one of those things that we don't like either, but it's unfunded mandates from the EPA [Environmental Projection Agency]. They tell you what you've got to do and they won’t tell you how you pay for it,” Cornelius said last night. 

HWL General Manager of Administrative Services Charlotte Bradley said later in the meeting the larger increase in 2024 makes up for a five-year period of no increase in rates. 

Dan Kasbohm, a rates manager from Utility Financial Solutions of Holland, Michigan, who said he worked with HWL to develop a set of rate structures that apply over the next five years to both water and electric services, presented those during a slide show, most of which is presented below, which included many tables. 

Here are some specifics about the new rates, as Kasbohm explained them last night: 

·       All rate payers for electric services will contribute to a 1 percent raise in revenue starting in January 2024. The increases will apply regardless of whether a customer is using power or not. 

·       Residential and small general (no demand) customers will experience a 1.2 percent increase in electrical rates annually during the next five years. Small light and power will be charged 1 percent yearly increases during the next five years. 

·       Area lighting service customers will see a two percent increase each of the next five years. 

·       Large industrial electric customers will receive an increase of .8 percent per year in the next five years. 

·       The increase of each customer class is meant to bring each class closer to paying its cost of service over the next five years. 

·       By projecting a one percent increase in revenue per year, Kasbohm said the electric side of the utility will be able to meet its debt obligations and other expenses. 

·       The water utility increases will include debt service toward a $7.5 million project to reduce the byproducts of disinfection treatment that are created in the pipe due to the reaction of chorine with certain dissolved organic compounds of Hope’s water as it moves along a pipe from the Fulton plant to the city. The project would use a tank located on Highway 67 to remove these byproducts through aeration and mixing.  The debt will be in the form of a bond issue. 

·       To become eligible for better rates for the bond issue, the water utility will need to receive more revenue quickly. This is why the 15 percent increase is being imposed to rate payers in 2024 and 3.5 percent is being applied annually in the next four years. 

·       The average HWL customer with full electrical and water services, for 945 kilowatt usage in a month and 4,400 gallons of water, would be billed $155.69 at current rates. Said Kasbohm at last night’s meeting, “That would go up to $161.13, or an increase of about $5.44. When you combine them together, that increase is about three and a half percent. And that's for year one. It's going to be less than that for the following years with the water increase going down to three and a half.” 

 ·       Commercial city water service customers will see increases of 16.6 percent in 2024, 3.9 percent in 2025, 4 percent in 2026, 3.8 percent in 2027 and 3.7 percent in 2028. 

·       Commercial rural water service will see increases of 16.9 percent in 2024, 5.3 percent in 2025, 4.4 percent in 2026, 5.2 percent in 2027 and 5.1 percent in 2028. 

·       Large user and wholesale water services will increase 15 percent in 2024 and raise 3.5 percent in each of the next four years. 

·       No rate adjustment is being made to HWL’s broadband internet service. 

After the presentation, questions were asked by attendees and comments were offered. Ed Darling, Hempstead Quorum Court Justice of the Peace and member of the Hempstead County Economic Development Corporation board said that he had heard repeatedly from potential companies seeing about locating in the city that “our electrical rates are not competitive, and our water rates are okay.” 

Sylvia Brown, VOTE SoAR (Visibility Outreach Touch Engage South Arkansas) organizer, asked a succession of questions starting with whether the new rate structure allowed for discounts for seniors. Bradley said there were no such discounts that could be issued locally under the rules municipal utilities must observe, but that seniors of low income are eligible for relief on their bills through a state program. She referred to HWL’s participation in LIHEAP, to which those eligible can apply through their website or by calling 501-682-8726. 

Brown also asked whether HWL had a program for rewarding customers for installing energy or water saving equipment. Kasbohm said that under the new rate structures, less water usage is going to save more money for customers. “We've currently got a two-tier commodity charge where we're working those two together. So there's not a lower cost for the more you use, the less it is. We're bringing that cost [for more usage] up. That would help conservation.” 

Next, Brown asked if the Arkansas Public Utilities Commission had to okay the new rates. Bradley said that Hope Water and Light is not bound by that commission in setting its rates, “but we do try to follow their rules as close as we can. We're governed by a five-member coalition that is appointed by the city board of directors.” 

Notice for the public meeting was sent to area members of the media October 10th. The sparsely attended public meeting was held last night at Hempstead Hall Auditorium beginning at 5:30 p.m. This morning the HWL board of commissioners voted in favor of the new rate structure, which will be applied beginning in January of 2024.