Muscatine, Iowa – In July 2010, Muscatine Power and Water expects to raise its electric rates for the first time since 2002.

At Tuesday evening’s  meeting, MP&W staff submitted the utility’s proposed 2010 operating budgets to the Board of Water, Electric and Communications Trustees. The Board will vote on the budgets at its November meeting.

The budget for the electric utility included a 4 percent rate increase effective July 1, 2010.

MP&W general manager Sal LoBianco said the rate increase is needed to offset decreased demand, which resulted in heavy losses in 2009. The utility is now projected to lose $10.4 million for the year.

“It has to do with the continued decline of wholesale energy revenue and the continued decline of native sales revenue,” he said.

MP&W can generate more power than local residents and businesses can use. In the past, it has sold excess energy on the wholesale market and used the income to subsidize local rates.

In an attempt to trim costs, the utility will also delay a $4.4 million generator overhaul and rewind for Unit 9 until 2011.

Even with the rate increase and maintenance delay, the electric utility is still budgeted to lose $8.1 million in 2010. The utility will end 2010 with $18.2 million in cash and investments.

Barring unforeseen borrowing, the electric utility will be debt free in 2012.

Water rate increase

The water utility is budgeted to have a 3 percent rate increase effective April 1, 2010. For most customers, the increase will be less than

$1 per month, LoBianco said.

The increase will help offset increased labor and chemical costs, and fund capital improvement projects.

“We have old infrastructure that has to be replaced,” LoBianco said. “The water utility has stuff that’s 100 years old in some places.”

The water utility is expected to make $139,000 in 2010.

Cable increase

 MPW Digital TV subscribers can expect a 5.5 percent increase Jan. 1, 2010, and Internet subscribers who do not have MP&W Digital TV will pay $5 more per month.

Despite the increases, the utility is expected to once again end the year in the red with a net loss of $932,000 in 2010.

MP&W: We’re still a good deal

Despite the proposed rate increase announced Tuesday, MP&W general manager Sal LoBianco says Muscatine residents pay less for electricity than almost anyone in Iowa. “You’d be hard pressed to find places where rates are lower than ours,” he said.

Below are figures for comparison, provided by MP&W, for 2007:

Average cost per kilowatt hour

Muscatine residents - 7.2 cents

Iowa publicly owned utilities - 8.1 cents

Iowa investor-owned utilities - 9.5 cents

Cooperative utilities - 10.1 cents