RPU announces a proposed 8% electric rate increase and a 5% water increase effective January 1

ROCHESTER, MN—Rochester Public Utilities (RPU) announced today, a proposed 8% electric rate increase and a 5% rate increase for the water utility effective January 1. If the increases are approved by the Utility Board and the City Council, combined they will raise the average residential customers bill by approximately $6.08 per month.

The electric increase is driven primarily by RPU’s increase in wholesale power costs. RPU’s wholesale energy provider, Southern Minnesota Municipal Power Agency (SMMPA) recently announced an increase of 8.5% for their member utilities, of which RPU is one of 18 members. The increase from SMMPA will be passed through to customers, without RPU adjusting the 2007 operating budget from the previous year. Continued increases in fuel costs, higher projected wholesale market prices, and an increase in rail costs to transport coal, are the largest factors putting upward pressure on retail rates according to SMMPA. This rate increase, from SMMPA, raises RPU’s projected purchased power cost for 2007, to almost $80 million.

RPU is also proposing a 5% rate increase for water customers. RPU’s water rate continues to be among the lowest in the area when compared with similar size water utilities. The proposed increase will help to fund final construction on a well in southeast Rochester, continued implementation of automatic meter reading, and other infrastructure needs.

Adjustments are also being made by RPU management in order to absorb rising operating costs without having to take a rate increase above the SMMPA rate increase. “We realize that today’s energy market is very volatile and to mitigate the effect of this to our customers we are making adjustments to ensure fiscal responsibility and reliability to our customers,” said Larry Koshire, RPU General Manager. Proposed budget adjustments include:

• No additional full-time employee hiring
• Maintain a level operating and maintenance budget from 2006
• Minimize fleet additions
• Increase revenue through market sales

Despite budget adjustments, RPU will not propose cutting back funding for energy efficiency programs, renewable energy, and environmental stewardship programs.

The City Council will have to approve any increase recommended by the Utility Board. The next Utility Board meeting will be held on December 14 and the next City Council meeting will be on December 18. For more information go to www.rpu.org or call (507) 280-1540.

About Rochester Public Utilities

As the municipal utility of Rochester, Minn., for more than 110 years, RPU provides high-quality and reliable electricity to over 45,000 customers. Water customers number more than 34,000. RPU continually investigates innovative technologies to help customers realize the best value from the services they receive. Current initiatives include fuel cell research, wind power, and photovoltaic offerings.

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