GENEVA – Geneva residents will see an increase in their electric rates, but how much and for which customers has not yet been decided.

According to results of an electric rate study, the customer charge would go from $6.75 to $8 a month, the first 500 kilowatt hours used would go from 11.2 cents to 13.06 cents and over 500 kilowatt hours would go from 10.05 cents to 10.26 cents.

The current average charge for residential electricity is $107.06, according to an earlier rate presentation. That includes $100.31 for the electricity and $6.75 for the customer charge.

The proposed rate would increase the electricity cost to $108.73, which would be $116.73 including $8 for the customer charge.

A kilowatt hour (KWh) is a unit of energy equal to one kilowatt of power sustained for one hour and is commonly used as a billing unit by utilities. A kilowatt (kW) is a measure of the rate of electricity used.

For more than an hour, alderpersons at the Committee of the Whole meeting July 3 heard Superintendent of Electrical Services Aaron Holton and Eric Kamm of Stanley Consultants present the rate study.

The city’s electric utility has fixed costs that have to be passed on to customers regardless of how much or how little power they use.

Fifth Ward Alderperson Craig Maladra said the electric utility’s infrastructure is the same no matter the usage.

“Even if we only use the lights for one hour a month, we expect the lights to come on when we turn the switch,” Maladra said.

“We’re talking about paying for the mechanisms or infrastructure that enables us to do that. In reality, whether we are consuming less with high efficiency appliances … or we’re energy hogs with wasteful appliances, the infrastructure cost is still the same to both of us,” Maladra said. “What we’re really talking about is how to make it different for people who use less and more for people who use more. But in reality, the expectation that this stuff works when you hit the switch is the same for all of us.”

In addition to maintaining the electric utility infrastructure, the rates need to generate enough revenue to pay off $30 million in bonds to build more substations for the industrial areas being developed on the city’s east side, Kamm said.

“Debt service is where you start to see a pretty major change and that really has to do with the industrial build out … that you have all been working on over the past several years,” Kamm said. “So we need to make sure we cover for that. … If you project out to 2028, it’s about a $3.5 million shortfall.”

“We see a need to increase the overall revenue by just under $4 million,” Kamm said.

It’s more than the $3.5 million shortfall because it’s based on current revenue, he said.

Kamm said the rate study does not anticipate major industrial growth in kilowatt hour sales because there aren’t any contracts at the moment.

If there is large industrial growth – as anticipated – rates can be reevaluated to consider the additional power demands, Kamm said.

The recommendation from alderpersons when the study first was discussed in January was to step out the increases in rates over time.

This would mean a 3% to 3.5% increase every two years, in 2024, 2026 and 2028, Kamm said.

The overall revenue increase requirement by 2028 is 11.45%, Kamm said.

Most ratepayers are residential, 8,597 accounts. The true customer charge to be connected to the city’s electric utility is $27.24 – not the $8 that is being proposed.

“Obviously, we’re not coming anywhere close to that in collecting $6.50 or the proposed $8 per residential meter,” Kamm said. “We’re not trying to get to that point, but it’s just to note that there is quite a large fixed cost associated with each account and it’s only going to grow with each rate class.”

The average residential electric customer uses 751 kilowatt hours in a month, Kamm said.

“The reason for a blocked rate charge like this is to recover additional fixed costs,” Kamm said. “You’re collecting an extra $14 in that first block per customer. … That’s the real purpose for a block rate like this.”

Alderpersons also will consider how to manage customers with solar power and how to handle an expected increase in electric vehicles.

The presentations are on the city’s website, www.geneva.il.us.