PWC Adopts Electric Rate Adjustments
Fuel Costs a Major Factor in First Increase since 1990

March 22, 2006

The Fayetteville Public Works Commission voted Wednesday to adopt new electric rates,

marking the first permanent electric rate increase in 16 years. The last time PWC raised electric rates was 1990 and since that time, total inflation has increased 22% and fuel costs have seen an unprecedented increase.

PWC CEO/General Manager Steve Blanchard outlined for the board a history of how PWC has managed costs over the last 10 years to avoid increases. Most recently, PWC was able to pre-pay Progress Energy on its long-term power supply. The savings of this deal was used to minimize the impact of the increases. Without it, Blanchard says the increases would have been higher.

"These adjustments are necessary to continue providing reliable electric services to our customers and have not come without extensive staff and board member evaluation, " said Blanchard. "Over the last 10 years, we have provided reliable services without a rate increase as all other costs have continued to rise. "

Fuel costs are the major factor behind the increase. The new rates include $6.2 million of a projected $9.5 million in fuel cost this year. A fuel adjustment will continue to appear on customer billing, however the monthly costs is expected to be considerably lower.

Blanchard also noted that PWC has undergone extensive evaluation of its electric services and adjusted rates to more accurately apply costs to its numerous types of customers.
PWC Board members were concerned about the impact on fixed income customers and to lessen the impact, the rates for the first 500 kWh saw less than a penny per kWh change.

Those customers can expect to see a total increase of $1.13. Customers using 1000 kWh will see a $5.27 increase. The average PWC residential customer uses slightly over 1000 kWh.

With the adjustments, the board agreed to unbundle its street light costs from the electric rates. PWC's annual cost to provide street lighting is $1.5 million and continues to grow. Blanchard said that customers have always paid for these services but it was included in the rates. With the change, a $1.75 street light charge will now be listed separately on bills.

Despite the increase, PWC's electric rates remain the lowest in our service area and among the lowest in the state and southeast United States.

Rates will be applied to bills mailed to customers after May 1, 2006. Customers will receive information in their April bills.