Increase in Electric Bills Shock Collinsville, Okla., Residents Source: Knight Ridder/Tribune Business News Publication date: 2000-10-05

Oct. 5--Until now, customers were not being charged for the extra cost of natural gas. The rising cost of natural gas has caught up with electricity customers in Collinsville, where the cost of power has risen 40 percent to 60 percent in the last month.

Residents and business owners served by the Collinsville Municipal Authority said they were waylaid by the sharp, sudden increase in their electric bills.

"We have a lot of people on fixed incomes," said Mayor Michael Sirmon. "They've been hit tremendously hard by this."

Until now, customers of the Collinsville electric utility were not being charged for the extra cost of natural gas, a key ingredient in generating electricity, said City Manager Steven Whitlock.

Collinsville has been purchasing wholesale power from Public Service Company of Oklahoma since 1993. More than half of PSO's electric generation is produced by gas-fired power plants.

Until this year, fuel costs for power plants have remained relatively flat, said Shane Woolbright, executive director of Municipal Electric Systems of Oklahoma Inc. Spot market prices for natural gas are up more than 100 percent from last year. Fuel costs for Tulsa-based PSO have risen more than 80 percent since 1997, Woolbright said.

"Every consumer in Oklahoma saw some considerable increase in their power bill this year," he said.

But most electric utilities passed along the higher fuel costs to consumers in monthly increments, Woolbright said. City officials in Collinsville did not pass the escalating cost of fuel on to consumers until last month. As a result, electric bills skyrocketed between billing cycles.

"They could not ignore it any longer," Woolbright said. "They started seeing the first effects of higher fuel costs in May."

Collinsville's wholesale electric bill for August totaled $547,627, including $175,251 for the cost of fuel, or 3.2 cents per kilowatt hour. The adjustment amounts to $76.42 per customer, city officials said.

"The only thing we could do was pass it on," Sirmon said. "The city covered $26,000 of the fuel charges. We passed the rest on at the exact rate that we're getting charged."

Collinsville, located north of Tulsa, has a population of about 4,200. The city's electric load has increased about 40 percent since 1993.

"I'm very upset," said Collinsville resident Linda Rake, who received a $387 electric bill, including a $109 charge for fuel costs. "We won't be putting up Christmas lights this year."

In a letter to Collinsville's local newspaper, the Collinsville News, city officials said PSO's fuel charges have increased 39 percent since December 1999.

"It should be stressed that the City of Collinsville/Collinsville Municipal Power Authority will not see a significant increase in revenues as a result of this increase," the city wrote.

The sudden rise in electric costs has led to at least one change in customer billing in Collinsville, Whitlock said. The cost of natural gas now will be factored into each bill.

"We are going to pass along the fuel adjustment as long as it is assessed to us," Whitlock said.

City officials said they were surprised by the sharp, sudden increase in electric costs. In July, PSO failed to assess the city a fuel cost adjustment. The error played a role in the unexpected increase in wholesale power, Sirmon said.

Collinsville is under a 10-year contract to buy wholesale power from PSO. That contract expires in three years.

Until 1993, Collinsville bought its electricity from the Grand River Dam Authority, a state-funded, nonprofit utility. The city started buying power from PSO after PSO slashed its wholesale rates.

Seven years later, Collinsville residents may be questioning that decision because GRDA's power plant near Pryor is fueled with coal, a cheaper form of fuel.

"If they hadn't switched providers, they would be paying the same costs they were seven years ago," Woolbright said.

In July, PSO warned its retail customers that their electric bills could rise about 20 percent due to the increased cost of natural gas. In August, PSO levied a 13 percent increase in fuel costs against residential customers, a PSO spokesman said.

"There's really nothing new here," he said. "The big change has been the skyrocketing cost of natural gas."

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-- Martin Thompson (mthom1927@aol.com), October 06, 2000

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Maybe I should quit posting these types of stories. They are all beginning to sound alike.:)

-- Martin Thompson (mthom1927@aol.com), October 06, 2000.