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Electricity costs to rise in Zelienople

| Thursday, Nov. 13, 2003

Although the tax rate will be stable, the cost of electricity will rise in Zelienople in 2004.

Borough officials on Dec. 11 plan to adopt a budget that anticipates $300,000 in new revenue from a hike in electric rates.

The borough buys power from FirstEnergy Corp. and then sells it to borough residents and businesses. The cost currently is 10 cents per kilowatt-hour. The increase will be about 10 percent, raising the rate to about 11 cents per kilowatt-hour. With a 10 percent rate increase, customers' bills also would increase by 10 percent if they don't reduce electricity usage.

The borough sells power to 2,100 customers. Council Vice President Russell Robertson said the hike was needed to close a $600,000 gap between projected revenue and expenditures for 2004.

"This year, putting together the 2004 budget has been a struggle," he said.

Among the costs that have increased are liability insurance, workers compensation, and pension contributions.

The council could defer some expenditures, but Robertson said revenues had to increase in one of three ways -- raising property taxes, raising water rates or raising electric rates. Raising electric rates was determined to be the most fair because it spread the burden across all users.

Robertson noted that the borough has a number of tax-exempt properties owned by nonprofit organizations and unlike private property owners, those organizations would share the burden of a tax increase.

The electric rate hike is expected to generate about $315,000 in new revenue. Total electricity sales revenue is projected at about $500,000 for 2004.

Councilman Jim Zeigler said he would approve the rate increase only if council agrees to reconsider it at the end of the year. If the borough's financial condition improves, the rates should be rolled back, he said.

Although the rate increase leaves $300,000 of the original shortfall unaccounted for, Robertson said, the borough will refinance its bonds, which should fill that gap.

The budget for 2004 is 3 percent higher than 2003, with next year's projected to balance at $8.3 million, as compared to 2003's $8.03 million. The property tax rate is to remain 5.8 mills, with 1 mill generating about $20,000 in revenue.

While the budget is scheduled to be adopted Dec. 11, the electric rate increase is scheduled for approval at the Dec. 8 council meeting and would take effect Jan. 1.

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