PUC learns of potential increases in buying

electricity

Transmission costs only part of consumers' bills

By RON LARSEN

Journal Staff Writer

NEW ULM -- The cost of purchasing electrical energy could double as early as next year, the New Ulm Public Utilities Commission was told Tuesday night.

TRANSLink, a power supplier combine, which includes Xcel Energy, will petition the Federal Energy Regulatory Commission for permission to increase rates to possibly as high as 200 to 300 percent, Interim Utilities Director Dan Sonnek said.

"The problem is that we will need to be a part of the operation in order to fight it," he explained, "as of right now municipals are blocked out. In becoming a part of it, we would need to turn over control of our 7 1/2 miles of transmission lines to TRANSLink with an estimated pay-out of $2-$7 million. Those are some pretty heavy numbers."

Sonnek emphasized that even if the increase comes about, it doesn't mean that the rate customers pay would double.

"Transmission costs are just a part of the equation," Sonnek said. "Undoubtedly, there would have to be some increase to the customer, but it would only be a fraction of the transmission cost increase."

Sonnek urged a "wait-and-see" approach on the commission's part because it will be at least six weeks before FERC receives the petition, "and the way FERC operates it could be another year before the decision is made."

Right now, the Utilities Department purchases between 90 and 95 percent of the power used in the system, Sonnek said. While the city has the generating capacity to provide all the city's power, Sonnek said it's not cost-effective because TRANSLink can provide power at a lower rate.

"Even with the cost increase, it still won't be cost-effective to go with our own power generation."

With state hearings on Hutchinson Municipal Utility's bid to build a natural gas pipeline ending, Sonnek said Hutchinson's chances of getting state approval are improving.

"The Department of Commerce appears to be swinging from opposing the plan to encouraging it," Sonnek who testified in behalf of Hutchinson's application said. "Hutch is expecting to have bids back in 30 days, and we're expecting to have preliminary design for our pipeline next week."

Sonnek said the Utilities Department is planning to use public right-of-way to construct the 5-mile, 6- or 8-inch supply line from near Essig to KC Road on the outskirts of New Ulm.

Commission President James Hogan reported the search for a new director hit a snag when "the top candidate withdrew." Attempts are being made to find additional candidates; the first batch of candidates were all from out-of-state.

"That means we could be two or three months away from having a new director," Commissioner James Schuetzle said.

The commission also approved Sonnek's plan to make the high-efficiency air conditioning rebate program an on-going project. Because only $29,100 has been spent out of the required $133,423, Sonnek said he preferred "letting it run year-around rather than stopping and starting it again next year."

The commission also noted the monthly financial report wasn't the greatest, even though year-to-date net income is over budget.

"Fuel prices are lower than projected, but sales are down," Sonnek said.

Despite a $214,076 net-income loss for June, the Public Utilities funds showed a year-to-date net income of $1,459,262, which is $322,445 ahead of 2002 budget.

Total revenues for the first six months of 2002 amounted to $15,721,454, which is $894,503 below budget and $2.1 million less than 2001 revenues. Total net income trails 2001 by about $150,000.

Natural gas net income is $504,035 ahead of budget but trails last year's year-to-date net income by about the same amount. June figures showed a net loss of $14,541, which was $144,203 over budget.

The electric fund is showing negative numbers for both year-to-date and June net income. On year-to-date revenues totaling $6,616,148 -- nearly $1 million less than budget -- the division is showing a net loss of $84,205, $192,961 below budget. June's net loss was $157,128, $224,554 below budget.

The district energy fund (steam heat) continues to roll ahead of budget. For the first six months, the fund is showing net income of $195,803 on total revenues of $535,129. For June, there was net income of $6,005 on revenues totaling $53,198.

The water and wastewater treatment funds are showing for the first six months net losses totaling about $180,000 on revenues totaling just over $2 million.