City of Union officials say it will probably be March before they know the impact of an increase in wholesale electricity rates by the Piedmont Municipal Power Agency on local customers.

PMPA’s board agreed Thursday to raise its rates by 4.9 percent. The agency is the wholesale power provider to 10 member cities including Union. PMPA members purchase power generated by the agency’s share of the Catawba II Nuclear Generating Station in York County as well as supplemental power from the agency.

Finance director Walker Gallman said Union is different from other PMPA members because it doesn’t actually purchase any power from the agency but instead buys all of its electricity from Lockhart Power.

“This rate increase effects each member city differently due to percent of ownership, load factor and growth,” he said. “On May 1, 2009, the city will experience a 2.7 percent adjustment in rates over last year due to the cumulative factors referred to above.

“The City of Union is different from the other nine members of PMPA because we are not directly connected to or receive any power from them,” he said. “The city has a separate billing agreement with PMPA which is adjusted each January. This billing agreement has been unfavorable for the city for the past several years, but for 2009 changes in the electric industry have made our agreement more favorable.”

Gallman said the impact of the PMPA rate increase on the rates the city charges its customers will probably not be known until the budget work sessions in March. He added that the city’s rates could also be affected by changes in rates charged by Lockhart Power.

“The city is a wholesale customer of Lockhart Power which has the ability to generate hydroelectric power at its facility in Lockhart, but most of the power the city purchases comes from Duke Power through Lockhart Power,” he said. “Lockhart Power has recently negotiated a 10-year contract with Duke Power. Tthe effects of that contract will also have an effect on the city’s contract with Lockhart Power now and in the future. Any rate adjustment we receive from Lockhart Power company will also be effective May 1, 2009.”

Gallman said city staff is working with consultants to determine what effect the changes will have on future electrical rates.