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The Municipal Utility has a large manufacturing facility located <br />in its community that accounts for 25 percent of the utility's en- <br />ergy sales. It is also a significant employer and is a critical <br />piece of the local economy. The manufacturing facility is fo- <br />cused on controlling its operating costs and has made direct <br />requests for electric rate relief. The manufacturing facility oper- <br />ates three shifts and takes advantage of the time-of-use rates <br />available from the Municipal Utility. The Municipal Utility <br />knows it will be implementing overall rate increases going for- <br />ward. The primary issue has become the willingness of the <br />Municipal Utility to grant rate concessions to the manufactur- <br />ing facility and pass additional costs onto the remaining <br />customers. <br /> <br />The Municipal Utility acknowledges the importance of the manufac- <br />turing facility to the local economy and to the utility. Loss of this <br />customer could have a devastating impact on the community and on <br />all utility ratepayers. On a philosophical basis, the Municipal Utility <br />is willing to consider rate considerations for this customer, particu- <br />larly as it relates to the levels of future rate increases. The critical <br />issue for the utility is that it makes informed decisions related to <br />rates and costs to provide service. This will require a detailed cost-of- <br />service analysis to estimate the true cost to serve all its customers. <br />The Utility Board has agreed in principle to accept a smaller overall <br />margin for this customer and a higher margin for remaining cus- <br />tomers. However, the board will not put its remaining customers in <br />the position of subsidizing energy sales to the manufacturing facility. <br />By varying the margins by rate class in the cost-of-service analysis, <br />the utility can arrive at a rational approach for providing rate relief to <br />an important local facility. <br />The Utility Board has agreed in principle; to accept a smaller overall margin for this <br />customer and a higher margin for remaining customers. <br />www.APPAnet.org SEPTEMBER 2009 19 <br />