Some Austin Utilities customers may experience an increase in their electric rates on their first bill of 2010.

The Southern Minnesota Municipal Power Agency’s 4 percent rate increase went into effect Jan. 1. The increase was approved during the SMMPA’s September board meeting to help cope with an estimated $9.7 million increase in expenses in 2009.

The SMMPA provides power to communities like Austin, Rochester and Owatonna. The rates for many Austin Utilities customers will increase to meet the SMMPA’s increase; however, Austin Utilities customers’ rates won’t necessarily increase by 4 percent.

According the Kelly Lady, energy services consultant with Austin Utilities, the cost for Austin Utilities to purchase power from the SMMPA is only one of the factors that determines rates. Increases will vary by customer classification. For example, a small business customer who was paying 9.47 cents per kilowatt hour will now be paying about 9.69 cents per kilowatt hour — a 2.3 percent increase.

A large portion of the SMMPA’s $9.7 million increase in expenses — a 4.8 percent increase — were related to increased costs of fuel, debt service, purchased power and state mandated renewable energy programs.

“While we understand that no one likes a rate increase, even a modest one, the board made a good decision balancing the needs of the agency and the impacts upon the customers,” said SMMPA CEO Ray Hayward in a press release. “Our primary focus is to be reliable and affordable for our members and their customer, now and well into the future. To accomplish these combined goals requires a rate increase at this time.”