Utility expenses have raised alarms

INDIANA - The Evansville-Vanderburgh Levee Authority District is on pace to spend more than $673,000 for utilities in 2008 and 2009, an unprecedented amount that has alarmed both city and county officials looking for ways to save money as they prepare their budgets.

That figure marks a 471 percent increase from 2006 and 2007, when the Levee Authority spent a combined $117,788 for utilities.

The Diamond Avenue pumping station, like all Evansville-Vanderburgh Levee Authority District pump stations, has its own Vectren substation. The three giant pumps at the Diamond Avenue station each take 4,160 volts.

City Councilmen Curt John and Keith Jarboe say they are alarmed by the spike and plan to appeal to the state for help.

"This is having a profound effect on the city," said Jarboe, D-at large.

The $78,000 the Levee Authority budgeted for utilities in 2008 ran out in April. It owes Vectren more than $95,000 in utility expenses for the first six months of the year. But Vectren isn't charging the Levee Authority late fees, said Bob Mangold, Levee Authority superintendent.

And there's no chance Vectren will turn off the power. The Levee Authority's 19 pumps keep the city from flooding when the Ohio River rises.

Mangold and City Controller Lisa Acobert have met with Vectren officials to discuss the increases and ways to reduce the Levee Authority's rate, but a resolution has not been reached.

The Levee Authority plans to ask the state for an additional appropriation of $281,000 — $265,000 of which will be used for utilities — to cover its outstanding balance and the remaining six months of the year.

But even with the appropriation, the Levee Authority may run out of money before the year is over.

The increase was triggered in September, when the Indiana Utility Regulatory Commission approved changes to the high-demand rate that Vectren charges the Levee Authority.

Vectren charges the Levee Authority a regular rate based on the pumps' usage. Each pump has its own power station, and the Levee Authority receives a separate bill for each of the pumps.

The high-demand charge is a separate commercial-class rate that Vectren says is necessary to have power available for the pumps any time it is needed.

The Levee Authority's original high-demand rate was established about 14 years ago. Since then, Vectren has upgraded transmission lines, installed more substations and made other improvements to ensure the Levee Authority could activate the pumps at any time.

"They pay a charge that effectively reserves generation capacity to supply the energy they need," Vectren spokesman Jeff Whiteside said. "And so if they run their pumps, and they peak out at a particular amount of energy, we have to reserve that generation capacity for them."

Under the new billing structure, the high-demand rate is determined by the highest usage during one cycle within the last 12 months. The Levee Authority pays 60 percent of that amount each month.

For example, if the Levee Authority received a bill for $10,000 in January and the bills for the rest of the year were less than that amount, the Levee Authority would pay a high-demand charge for the next 12 months of 60 percent of that amount, or $6,000.

The reason the Levee Authority is paying so much for electricity this year is because of the significant rainfall the city received in March and April. The bills for those two months were $40,085 and $50,165, respectively — a total more than $12,000 greater than its entire 2008 budget.

When Evansville received a record 6.4 inches of rain on March 18, the Diamond Avenue pump station, the largest one in the county, ran for 24 hours straight. Mangold said that was the longest the Diamond Avenue pump ever had run without stopping.

Rainfall for March and April, based on National Weather Service data, set records for Evansville, so the high bills were an aberration.

Unless the current rate structure changes, the Levee Authority will continue paying the high-demand charge for that record month through April 2009.

Whiteside said the administration and company officials have discussed the bills, but he was unaware of any specific plan that had been proposed to lower their rates. Mangold referred all questions about negotiations with Vectren to Acobert.

Acobert said attorney Joe Harrison Jr. is representing the city in this case, and she referred questions to him. Harrison did not return a phone message.

The $281,000 appropriation to pay utilities for this year is scheduled for a first reading at the Levee Authority's Aug. 19 board meeting. The Department of Local Government Finance then has 15 days to approve the appropriation. If both are approved, the appropriation would become final if it is approved a second time at the Levee Authority's meeting on Sept. 2.

Several local leaders who attended the joint budget hearing and were caught off-guard by the increase say they plan to contact state representatives for help.

County Council President Marsha Abell said she discussed the Levee Authority's bills with state Sen. Vaneta Becker, R-Evansville, and hopes to meet with Vectren.

"I think I have to talk to them...." Abell said. "We should be able to get something back on the tail end if we don't use that power all the time."

Jarboe, the City Council president, said the high utility bills, such as increasing costs for fuel and insurance, "is one of those things that we're getting caught with."

"We're hit just like everybody else is. But the utility (increase) was something that I don't think any of us anticipated."

So far, the Levee Authority has not contacted the state utility regulatory commission, spokeswoman Danielle Dravet said.

"The director of electricity and the director of consumer affairs were unaware of the Evansville-Vanderburgh County Levee Authority's current situation with its electric bills," Dravet said in an e-mail.

"Based on the information we have available to us, it is too early to determine what process the Levee Authority should go through with the commission."