Claremore electric rates 2nd-highest among GRDA-supplied cities

Reprinted with permission from the Claremore Progress. This article originally appeared on Jun 21, 2016. Support local journalism with a subscription or a day pass for $1.99 :)

Claremore residents paid $1,428,040.07 for 12,865,226 kWh (kilowatt hours) of electricity during the month of September. During several recent meetings regarding electricity, residents questioned how Claremore compares — in terms of rates — to other communities.

City officials say differences in how area electric providers operate make such a comparison difficult.

“There is no comparison,” Claremore City Manager Jim Thomas said Friday. “We set the standard. Electric goes back on quicker than any other provider. Comparing the rates is a real challenge. VVEC, (Verdigris Valley Electric Company), their rates are 2 cents (per kilowatt hour) cheaper, but they charge a $25 service fee — so how do you do a comparison? PSO (public service company of Oklahoma) operates a coal burning plant, and they are a for-profit electric company that is on the New York Stock Exchange.

“It is difficult it to compare. PSO cannot turn electric on as fast as we can, does not hold town hall meetings, or make house calls.”

A look at how Claremore Public Works Authority compares to other municipal-owned electric companies that receive their electricity wholesale from Grand River Dam Authority found that Claremore has the second-highest rates among the 16 cities.

The cost of 1,500 kWh in Claremore is $175, which is calculated by multiplying the .111 per kilowatt hour rate by 1,500 kWh and adding the base rate, or customer charge, of $8.50. The cost of 1,500 kWh for the highest-cost community, Pawnee, is $178. Mannford has the lowest electric rates — residents pay $53.50 for 1,500 kWh.

Claremore is higher than both the average and median rates for GRDA-supplied towns. The average bill for 1,500 kWh is $135.02 and the median, or mid-point, bill is $141.53.

The comparison does not include the fuel adjustment rate that is added to every bill because that rate changes each month, and is usually less than a cent in value, amounting to only a few dollars on any given bill. All GRDA-supplied cities calculate the fuel adjustment rate into each bill.

These numbers focus on electric rates for residential customers only, and do not consider industrial or commercial customers.

Mannford, Tahlequah, Cushing, Lindsay, Pryor, Stillwater, Stroud, Stilwell, Byng, Miami, Wagoner, Skiatook, Collinsville, Sallisaw, Claremore and Pawnee receive electricity from GRDA.

“We have 16 different cities and they all charge differently,” Grant Burget, GRDA superintendent of business development and marketing, said at a Claremore town hall meeting earlier this month. “Whatever the city does with the citizens I am not sure.”

GRDA charges municipal utility providers wholesale, 3 cents per kilowatt-hour and a demand charge of $10.50 per kilowatt.

Each city’s rate for 1,500 kWh was calculated by considering the rate per kilowatt hour and base charge. Some towns — Cushing, Pryor, Stillwater and Stroud — have rate tiers or rates based on the season. If the town has a winter rate, a separate line documents that in the accompanying graph.

Oklahoma cities receive the bulk of their revenue from two sources: sales tax or utility revenues. Oklahoma is the only state that does not allow cities to generate funding through ad valorem, or property, taxes, reducing the diversification of stable revenue available.

“This is the first city I have worked in that does not have property taxes for local government,” Thomas said. “Property tax can provide stability. Instead, cities and towns are relying on sales tax to provide basic goods and services. The challenge goes all the way back to statehood.”

Thomas said at the Oklahoma Academy last week legislators and Oklahoma leaders met to discuss several state issues.

The Academy is a nonprofit member organization that works to find solutions to issues facing the state.

One issue discussed was the inability of cities to be supported by property taxes, which is not allowed by the state constitution.

“When Oklahoma started there was less than one million people who had large plots of land, but it’s time to look at the legislation again,” said Thomas.

Utility revenues provide 65 percent of Claremore’s general fund. The general fund pays for 230 full-time salaries and other part-time and seasonal salaries.

It supports the police department, fire department, public works authority, other city services and administrative costs.

Utility revenues account for only seven percent of the general fund revenue for Mannford, the town with the lowest rates. Mike Nunnely, town administrator of Mannford — which has a population of just over 3,000 — said he keeps rates low because he keeps expenditures low.

“We have 31 city employees and 3,300 residents. I always tell towns they do not have a revenue problem, they have an expense problem. A town should not have more than one employee for every 100 residents,” said Nunnely.

GRDA will be increasing electric rates by 4.022 percent in January for all of its municipal-owned utility customers, and the Claremore City Council has not voted on whether to pass that percentage, or a portion of the percentage, on to utility customers.

If passed on to residents, the four percent will increase Claremore’s electric rate from .111 per kilowatt hour to .115 per kilowatt hour, which would equal about $7 more on 1,500 kWh. the increase could make Claremore the most expensive city that receives electricity wholesale from GRDA.