Kokomo Tribune; Kokomo, Indiana

November 8, 2012

Peru electric rates could increase

Cost-of-service study says residents should pay more

By Carson Gerber
Tribune staff writer

Peru — Peru City Council is considering an ordinance that would increase electricity rates for city and county residents and lower rates for large power-consuming facilities served by Peru Utilities.

A recent cost-of-service study commissioned by the city says residents should pay on average 3.3 percent more for electricity, while rates for large companies and facilities — like Armour-Eckrich Meats, Square D Co. and the Miami Correctional Facility — would decrease on average 7.5 percent. Rates would also increase for commercial buildings by more than 4 percent.

Peru Utilities General Manager Roger Merriman said for homes that use 700 kilowatt hours a month, the rate increase comes out to an extra $2.21 a month. In total, residents will pay $300,000 more for power.

He said 11 facilities qualify for the lowered electricity rate, which currently pay in total $5.8 million for power. The new rate would lower that by $443,000.

Indianapolis-based Umbaugh & Associates Certified Public Accountants completed the 70-page study in September. Merriman said the city hasn’t commissioned a cost-of-service study in 20 years, and the current electric rates are out-of-date.

“From a rate-making perspective, the study is what it is,” he said, noting Umbaugh used objective standards to determine rates. “Peru Utilities doesn’t have any bias in this one way or the other.”

The last rate hike came in 2007, which increased electricity prices 9 percent across-the-board for all Peru Utility customers.

Merriman said the company brings in $21.5 million annually from electricity payments. The company services 95 square miles in Miami County, including parts of Grissom Aeroplex.

Council will vote on the rate changes during its regular meeting in December. A public hearing will be held before the meeting.

Carson Gerber is a Kokomo Tribune reporter. He may be reached by phone at 765-854-6739, or by email at carson.gerber@kokomotribune.com.