RICHLAND -- Richland officials announced Friday that they are postponing further discussions of a proposed electrical rate increase.

The city council on Jan. 4 gave preliminary approval to an ordinance that would raise user rates for the city's electric utility by 5 percent for residential customers and 10 percent for all other types of accounts.

That amounts to a $5 increase on a $100 residential bill or a $10 increase on a $100 bill for all other customers.

The council planned to have a public hearing during its meeting Tuesday and to take a final vote Feb. 7, but city officials said Friday that the city will take more time to consider a rate structure and likely bring a plan to the council in the fall.

Energy Services Director Bob Hammond has told the council that an increase is needed to catch up to the cost of providing service, especially as the Bonneville Power Administration moves to a new rate scheme affecting the city.

Otherwise, the electric utility could be looking at a $5 million revenue deficit for 2012, Hammond said.

Richland officials said Friday that the city will use existing cash to cover expenses not covered by existing rates while the Utility Advisory Committee and city staffers work on a new rate plan.

The increase proposed by Hammond was based on an analysis of how much it costs to provide electricity to the city's homes and businesses. Richland's electric rates haven't been raised since 2004, but the cost of buying power has increased in recent years.

Hammond proposed offsetting half of the projected deficit by putting less money aside for capital projects and purchases so an extra $2.5 million will be available for operating costs.

The proposed rate increases would have brought in about $3 million.

* Michelle Dupler: 509-582-1543; mdupler@tricityherald.com