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Council hears concerns from businesses over electric rates

May 5, 2020

A group of Webster City area businesspeople representing several industries shared their concerns about electric utility rates Monday night during the Webster City City Council meeting. They also sought the City Council’s help in finding answers as to why the rates increased when demand remained consistent.

Lori Mason of Seneca Foundry provided the foundry’s largest energy usage comes from powering two 4,000-pound induction furnaces.

“These furnaces are melting raw materials such as scrap metal, iron and metal at temperatures exceeding 2,700 degrees Fahrenheit,” Mason said.

She said the coincidental demand and power supply-based demand charges have been trending higher and have had a significant negative impact on Seneca Foundry. She shared several graphs with the council which showed the historical trends over several years.

One graph looked at the trend over the past 18 years. She said the foundry had seen a rate kilowatt go from an average of 4.82 cents in 2002, to exceeding 9.43 cents in 2019.

She said her graphs show that there is no correlation between increased or decreased usage and the rate per kilowatt hour.

Next to labor, Mason said electricity is the single most expensive cost for her firm.

“We watch the coincidental peak each month to try to minimize the negative impact,” she said.

She said that in 2019, the foundry saw a slight decline in the total annual usage, but the average rate continued to rise. Most concerning, Mason said were the rates experienced in the first three months of 2020.

“Our monthly usage has declined with the current market conditions,” she said. “The rate per kilowatt has soared to average of 14.8 cents per kilowatt. That is just short of doubled since our 2017 average.”

“What has changed? What is different? Those are the questions I need you to answer,” she told the council.

Brent Johnson of Tasler Pallet echoed Mason’s concerns.

“The bill can swing $10,000 a month,” he said.

Sherri Behrendts of Vantec offered information from a survey of Fareway Stores across the state. Webster City proved to have the fourth highest electric rate, according to Behrendt.

Behrendts suggested that Mid-American Energy might be a better option for Webster City and could provide lower rates.

City Manager Jeff Sheridan said the city entered into a wholesale power agreement in 2011 with CornBelt Power Coop and North Iowa Municipal Electric Corporation.

“The utility is one of the most valuable assets that a city can own,” he said. “Locally owned means local control.“

But the business owners were concerned about the lack of transparency from CornBelt who told them that the rate structure is confidential.

City Attorney Zach Chizek confirmed that detail, saying there was a confidentiality clause in the contract with CornBelt.

Mason said she felt it was time to audit CornBelt and asked if the city was doing its due diligence in reviewing the billings properly before the costs are passed on to customers.

Mayor John Hawkins said they council will investigate the matter.

“We’ll hopefully have some answers for you next meeting or the one after,” he said.


View the article as it originally appeared in the Daily Freeman-Journal.

Last modified: May 5, 2020

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