The Ames City Council is beginning the process to evaluate electric fees for the city of Ames.

Tuesday night, Mark Beauchamp, president of Utility Financial Solutions, gave a presentation to the City Council and members of the Electric Utility Operations Review and Advisory Board, giving some information about the process. He also talked about why such a study is necessary and what information it will provide.

A cost of service and a rate study for the Electric Utility Board of the city of Ames will be conducted.

Beauchamp talked about the need for periodically doing these studies, which is to avoid things like “inter-class and intra-class subsidies” as well as “generational subsidies.” Inter-class and intra-class subsidies means that through the electric rates, one class is subsidizing the other, and generational subsidies mean when one generation’s rates do not cover costs for future maintenance or repairs and a later generation ends up paying the bill.

These studies can also maintain stability in the long term, he said.

Another topic of discussion was rate structures. Currently, Ames has a declining rate structure for its electric utilities, which charges customers less the more electricity they use.

Beauchamp talked about three different types of rate structures: declining block rates, inclining block rates and flat rates. Inclining block rates encourage energy conservation, but also come with challenges, he said.

No action was taken, as this meeting was just for information.