BED to Hold Off on Rate Increase

first_imgBED to Hold Off on Rate IncreaseBurlington Electric Department, which had received approval from the Electric Commission to seek up to a 5.9 percent rate increase, has agreed to withdraw the request at this time.The need for the rate hike, largely driven by increased power and transmission costs, still exists, but short-term borrowing will take place while the financial markets settle down. Jonathan Leopold, the City’s Chief Administrative Officer, said that because of the current chaos in the financial market, it would be impossible to sell a revenue bond with affordable terms. BED will place an item on the Town Meeting Day ballot asking the voters to change their approval of a revenue bond, which was favorably voted on last March, to a general obligation bond. This would lower the cost of BED’s long-term debt and influence the size of a rate increase going forward. Once these actions have taken place the rate increase will be decided upon, and the ratepayers will be notified of the date and the amount of the increase; this most likely will happen after the March vote.Both the City Administration and the Finance Board realize that BED will still be in need of a rate increase in the near term because of these expenses beyond its control.In the meantime, BED has advanced its ongoing major capital projects, the McNeil air quality improvements and the East Avenue reliability upgrade, through favorable short-term borrowing arranged through the City. This allows BED to reap the benefits of these projects in lowered operating costs as it moves into 2009 without fully absorbing the cost of the debt the projects will require. “These projects will still need long-term financing in a bond market that is very uncertain, given the current financial turmoil,” said BED General Manager Barbara Grimes. “Though thankfully we have voter support to obtain bond funding, and we prefer long-term to short-term debt, the bond market is currently expensive. It is difficult to say today when the time will be right. But by implementing these cost-effective projects now, we can count on reaping their benefits to lower the amount needed when we do go for long-term financing.”Ms. Grimes said, “Energy efficiency steps remain a customer’s best tool in controlling their electric costs.” All BED customers are encouraged to explore what’s available for reducing their bills by visiting BED’s web site, www.burlingtonelectric.com(link is external), or by calling 658-0300.BED will continue to monitor closely the revenues and the expenses of the department.#30last_img