[Press Release] : Fuel Adjustment Allowance Initiated to Help Control Increased Electric Costs

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FOR IMMEDIATE RELEASE 

Contact: Dan Dasho, Director, Jim Windsor, Manager of Rates/Fiscal Planning or
Connie Kacprowicz, Communications Specialist (573) 874-874-7325

Fuel Adjustment Allowance Initiated to Help Control Increased Electric Costs

COLUMBIA, MO (June 15, 2004) -- Columbia Water and Light's wholesale electric power costs have gone up significantly. The increases are due to a new purchased power contract that started June 1, 2004, increased natural gas prices (an important source of fuel for electric power plants in the summertime), and increased electric transmission costs. By initiating a fuel adjustment allowance during July, August and September, a significant portion of the additional costs can be recovered.

The Water and Light Advisory Board has recommended using the Fuel Adjustment Allowance to help cover increased costs. The amount will be $0.006217 per kilowatt hour which is a 9.5% increase for a residential customer. It would add $7.46 per month for the average residential customer using 1,200 kWh during the summer months.

In Columbia, our municipally owned utility has a variety of power supply options. This includes electricity produced in Columbia, power from regional plants that are jointly owned by Water and Light, and the wholesale electric market. Supply and demand coupled with natural gas price increases have caused higher costs for electricity in the Midwest. Regional power plants built in the 1980's have reached their production capacity while the population and the need for more electricity continue to grow. In the summer months, air conditioning units drive demand even higher. Columbia Water and Light was also faced with renewing a contract that started June 1, 2004, that reflected the market's higher costs. All of these factors have lead to the utility paying a higher amount for the electricity Columbia uses even though electric rates have not changed. 

The Water and Light Advisory Board has reviewed the impact that the new wholesale electric power purchase contract would have on the electric utility's
financial standing. For the months of June, July, August, and September, the new contract will cost the utility $2.2 million more than the previous contract. In the past two years, Water and Light has absorbed cost increases of nearly $4.5 million without increasing rates. Implementation of the Fuel Adjustment Allowance will help to make up the difference between increased wholesale costs and customer rates. 

Columbia Water and Light will use cash to cover $300,000 of the four-month increase and implement a Fuel Adjustment Allowance to recover the remaining $1.9 million. The Fuel Adjustment Allowance will be utilized for the three months, July, August and September. This will enable Columbia Water and Light to temporarily cover the increased costs associated with the new power supply contract. A permanent rate increase will be considered and reviewed by the City Council with a proposed implementation in October 2004.

Established in July 1972, the Fuel Adjustment Allowance ordinance specifies that when average costs exceed a certain value, the Fuel Adjustment Allowance can be implemented. It is an additional amount added to the electric rate so money can be collected to pay for unexpected higher costs. The Fuel Adjustment Allowance enables the utility to deal with market volatility without constantly changing the electric rate.

The Fuel Adjustment Allowance for the summer months will be an increase of $0.006217 to the kilowatt hourly rate. The current rate for a residential customer is 6.17 cents per kilowatt hour (kWh) plus a monthly base charge of $4.50. For an average residential customer that uses 1,200 kWh per month, the combined cost for the base charge and kWh charge is $78.54. The Fuel Adjustment Allowance will add $7.46 or 9.5% to the monthly bill. 

Columbia's electric rates are comparable with other utility rates in the area, even with the addition of the Fuel Adjustment Allowance. Other utilities are also forecasting price increases in the next year due to increased wholesale electric costs. 

ELECTRIC RATE COMPARISON
Summer Residential Charges for 1200 kWh
(without taxes)

Columbia W&L (with Fuel Adjustment Allowance) $86.00 
Boone Electric	$87.25 
Ameren (4/01/04)	$98.93 
Springfield MO	$75.26 
Independence MO	$104.70 
Springfield IL	$79.58 
Empire (Joplin) - current	$95.03 
Empire (Joplin) plus $13.44	$108.47 

Conservation Programs
Conserving electricity will help the utility and Columbians control increased costs. Columbia Water and Light offers the following programs to help with conservation efforts. Customers can sign up online at www.GoColumbiaMo.com or by calling 874-7325.

Super Saver Loans - Columbia Water and Light offers electric customers fixed-rate, low-interest loans for energy efficient improvements such as adding insulation, installing high efficiency heat pumps, replacing window air conditioners with energy-efficient central units and upgrading inefficient central units.

The Energy Audit Program - Customers can receive a free, in-home audit by an energy conservation expert who will show them ways to save energy and water. Many of the tips are easy do-it yourself projects or simple maintenance tips.

Load Management - This voluntary program gives electric customers with central air conditioners the opportunity to receive a 3% discount on summer bills. During hot summer periods of high electric use, radio controlled switches installed on central air conditioners and heat pumps are activated. These switches turn off approximately 13,000 compressor motors around the city for 7.5 minutes every half-hour. This enables Water and Light to rotate air conditioner use, controlling the amount of electricity demanded at any one time and greatly reducing the city's total demand. Although compressors are off, circulating fans continue to operate, circulating cool air throughout participants' homes and businesses.

Tree Power and Trade-a-Tree Programs - Well-placed shade trees can reduce a customer's utility costs by 30%. Through the Tree Power Program, Columbia Water & Light offers electric customers free landscape energy audits and a free shade tree. 

Utility Assistance - CASH (Citizens Assisting Seniors and Handicapped) helps seniors and the disabled. HELP (Heat Energy and Light Program) assists families with children. Funds for these accounts are made through donations from the community. The programs are administered through the Columbia/Boone County Health Department's social services division. For assistance, customers can call 874-7355. To make donations, call Utility Customer Service, 874-7380 or Boone Electric at (573) 449-4181

Conservation Tips

Easy Ways to Save This Summer
* Set the thermostat no lower than 78 degrees and turn it up a few degrees when the house is unoccupied. 
* Leave window shades that receive direct sunlight down during the day. 
* Try to use the oven, dishwasher and other appliances that produce heat during the late evening and early morning. 
* Wear comfortable, loose-fitting clothes. 
* Keep fireplace chimney dampers closed.

Seal Up Your Home
* Insulate! Check the attic, outside walls or next to unheated areas, floors above areas that are not heated or cooled, foundation walls. Water and Light recommends R-38 (about 12 inches) in ceilings and R-19 (about 6 inches) in floors over unheated spaces. 
* Insulate ducts where they run through hot and cold areas, like attics. 
* Install storm windows and doors. 
* Weatherstrip and caulk! Check for drafts around windows, door frames, foundation cracks, electrical outlets, etc. 
* Don't block vents and cold air returns with furniture, drapes or rugs. 
* Insulated attics need proper ventilation so they can 'breathe'. 
Maintain Electrical Equipment 
* Maintain your heating and cooling system by replacing air filters at least four times a year. 
* Buy energy efficient appliances and use them efficiently. Look for Energy Star appliances.
* Clean dust and lint away from appliances (heating/cooling unit, refrigerators, hot water heaters, etc.) on a regular basis so the motors run more efficiently. Either move appliances out to get behind and below or use a special cleaning brush available at hardware stores.
* When choosing new appliances, base your decision on what your needs are - don't buy something too big for your needs. 
* Consider moving your extra refrigerator or freezer out of the garage to the basement and your appliance won't have to work so hard to stay cool. 
* Make sure gaskets on the doors of refrigerators and stoves are tight. 

Live an Energy Efficient Lifestyle 
* Light only the area where you are working, not the whole room. 
* Turn off lights and appliances when they are not being utilized. 
* Close vents in rooms that are not being used on a regular basis and close the door. 
* Run full loads in dishwashers and washing machines. 
* Choose stove burner to fit the size of the pan you are using.

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