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updated: 5/15/2014 10:00 AM

Batavia to dip into reserves to ease electrical costs

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Batavia aldermen have recommended taking another $2 million out of reserve funds to use to pay for electricity this year and stabilizing the rates customers are paying.

But only about $100,000 is available, according to a memo from city finance director Peggy Colby. The rest of the projected reserve is spoken for, including a certain amount that has to be kept to meet the terms set by lenders on debt payments the city owes for nearly $30 million it borrowed in 2006 for electrical system improvements.

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The city council will vote on the recommendation Monday night.

The city established the rate stabilization fund in 2009, and authorized spending up to $2 million. In March the council raised the limit on the rate stabilization fund to $5 million.

The money comes in part from a variable charge customers pay, called the purchased power adjustment factor. When the costs of purchased power is lower, the factor charge replenishes the fund.

The electrical fund will also receive more money, starting in early fall, from a sales-tax increase that takes effect July 1. The council added a half-cent sales tax on to general merchandise people buy in Batavia, promising to use that money to help pay for the rising cost of electricity, rather than pushing the increased costs totally on to utility customers.

Colby expects the sales tax to raise about $1.5 million annually.

The city council wanted the sales tax increase to end automatically after three years, but state revenue authorities have said that's not possible. City council members then agreed to talk about eliminating the additional tax in spring 2017.

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