Editors Note: This article was originally published in the Feb. 14, 2024 issue of the Chronicle Progress. Some information may be outdated.
Council members vote to add 2 cents per kilowatt hour; 3.3-cent surcharge set to end
Fillmore City Council members voted last week to increase the electricity base rate charged by the city by 2 cents per kilowatt hour.
The vote to raise the rate—a more than 20 percent increase over the former base rate—followed a well-attended public hearing on the matter at last Tuesday’s regular council meeting.
Electric customers in the city have already watched as their energy costs have skyrocketed. A 3.3-cent per kilowatt hour surcharge started to appear on electric bills last year following the city’s loss of more than a million dollars due to unexpected and exorbitant wholesale power costs.
The city’s electric base rate had been previously set at just over 9 cents per kilowatt hour. The last time the city changed its electricity rates was in 2016.
Last winter when the city was forced to go onto the open market to source wholesale power to sell residents and city businesses, officials were forced to pay as much as 17 cents a kilowatt hour some months, blowing a giant hole in the city’s electric fund.
City officials are hopeful the 3.3-cent surcharge will fall away as the community recoups the million dollars lost over the past year.
Still, the 2-cent base rate increase may be just the beginning. A new rate study is underway. When finished, city officials may need to raise rates again depending upon the study’s findings. The study is expected to be completed within three to six months, Mayor Mike Holt said.
Eric Larsen, the city’s Utah Associated Municipal Power Systems (UAMPS) representative, who also sits on Intermountain Power Agency’s board of directors and represents Kanosh, Meadow and Holden as well, said there’s but one culprit in the city’s electric rate predicament— coal, or lack thereof.
“The past few years the electric industry has suffered greatly. Especially in Utah. Especially in Fillmore and other members of UAMPS’ organization because of a lack of coal,” he told council members.
Larsen explained that the city typically gets half its wholesale power from a power plant in Emery County. But that plant has had to curtail power generation due to a lack of coal. One giant contributor to the problem was a mine fire at the Lila Canyon Mine in Carbon County that started in 2022 and forced the mine’s official closure in December.
“I’ve heard two different numbers. One is it supplied about 40 percent of the coal for the state of Utah. Another one I heard was it was 25 percent of the coal (burned by Utah power generators). I don’t know which one is true. But that’s a lot of coal,” Larsen told city officials. “The Lila Canyon Mine is not going to reopen. Other mines are struggling also.”
Power generators are running at less than 100 percent capacity as a result, often stockpiling coal during the winter to be prepared for the high-demand summer months, Larsen said.
The electricity market for UAMPS members isn’t expected to improve anytime soon, either.
Larsen told city officials that UAMPS forecasters predicted a bumpy ride through 2024 and probably through 2025. Holt said the city continues to spend about $150,000 more a month on wholesale power than it did just two years ago.
Larsen said once IPP Renewed—the natural gas and green hydrogen plant replacing IPP’s coal-fired plant outside Delta—is online, rates should start to stabilize.
“Without being able to meet the needs that we have, we had to go out on the market to purchase energy, which basically quadrupled, at times, the cost of power,” Larsen explained.
City officials are hopeful a new solar plant scheduled to open at the end of this month near Plymouth will offer some relief. That project had been scheduled to open in September, but was continuously delayed by supply chain issues, Larsen said.
Fillmore’s long term energy planning also suffered last year from the loss of the NuScale compact nuclear reactor project. The city and UAMPS was a partner in that project. But after a decade of planning, the project was abruptly mothballed, a combination of higher construction costs, inflationary pressures and lack of participation from more municipalities willing to purchase the power the project generated.
City Councilman Dennis Alldredge said the days of low cost electricity in the city were over. In fact, operating the city is costing more and more and those costs will fall eventually on residents and businesses.
“We’ve been spoiled. The problem we may have had is we’re starting a little bit late to catch up with the rest of the world,” the city councilman said. “But reality is slapping us right now. And everything is going up…our ability to take care of the city is all going up.”
