CORNELIUS — Town staff and ElectriCities have recommended an average 4 percent rate increase for the coming fiscal year. If approved, the increase would take effect July 1.

“That doesn’t mean every customer will get a 4 percent rate increase. That means we’ll set rates by rate class so residential might get one percentage and small commercial a different percentage,” Cornelius Finance Director Jackie Huffman told commissioners while presenting the electric budget during an April 7 meeting.

“The way we recommend those changes is to compare with other utilities in the area. If we happen to be a little bit more in say small commercial, we would recommend a smaller increase for small commercial. If we are a little bit below in residential then we would have a slightly different portion. But overall, we have an average 4 percent rate increase.”

ElectriCities manages the joint electric system for Cornelius and Huntersville, though Huntersville has separate rates. Cornelius’ proposed 4 percent jump reflects a 5 percent hike in the electricity wholesale rate.

Operating expenses planned for the coming fiscal year also show an increase made up for by revenues. Additional costs fund a roof repair, area tree trimming and getting all meters automated so workers can drive by to get the reading rather than stopping to get out and write it down.

Kathy Moyer, electric systems manager for ElectriCities, said some of the town’s outages this year were due to limbs. The company wants to cut branches to prevent that. 

Even with the proposed rate increases, Cornelius residents see lower bills than those of Duke Energy or EnergyUnited, Moyer said.

Huffman presented a five-year forecasted electric budget; however, the board would only approve the 2014-15 budget. Projections for the coming years show customers may see increases each year due to wholesale rates climbing and proposed capital projects.

Moyer said the higher wholesale rate is because of a reallocated demand share on each of the 19 cities that are part of the North Carolina Municipal Power Agency Number 1. Demand changes are based on growth and the reallocation will be phased over the next nine years.

While almost all of the years show an average projected wholesale rate increase of 5 percent or less, fiscal year 2016 shows a 8.9 percent climb.

“Fiscal years 15 and 16 are the toughest years that we will experience as far as reallocation demand,” Moyer said based on projections. “The majority will be phased in fiscal year 16 and then it will level out.”

Average estimated customer rate increases forecasted are 6.75 percent in 2016, 7 percent in 2017, 4 percent in 2018 and 2 percent in 2019.

Wholesale price projections don't account for all of the future increases. They may also fund proposed capital projects, including burying utility lines and building a substation to account for town growth.

At that time, the board could decide to hold off on those projects.

During the discussion, Mayor Chuck Travis asked for confirmation that a billing mistake found in early 2012 won’t happen again. At that time, it was noted that ElectriCities had undercharged customers by hundreds of thousands of dollars during the summer months.

Moyer assured him the company has checks and balances for verification, plus it has two billing cycles and it changes their rates for summer and winter. Huffman added that the electric budget is audited each year along with the town.