HAMILTON ¡ª Increases in the demand for coal worldwide haven't translated to rate increases yet for Hamilton, but the volatile commodity market has city officials wary.

In addition to increased demand in China, City Manager Mark Brandenburger said the downturn in the economy might have something to do with prices as well. He said when the stock market is shaky, wealthy investors begin buying commodities like coal or oil, instead of stocks.

The combination equals coal prices now topping $115 a ton. Hamilton has coal locked in at less than $75 a ton through the end of 2009 to supply its power plant on Third Street. However, Deputy City Manager Charles Young said that doesn't mean the city is out of the woods.

"The last time we saw something like this happen (with market prices), we saw a lot of coal companies go bankrupt," he said.

Which means all contracts associated with the company become null and void. However, Young said there is nothing to indicate such an occurrence would take place.

An increase in the market price could mean a jump in the rate residents and business pay for electricity in the city. The city last increased its electric costs March 1 and took considerable flak from its largest electric customer Mohawk Fine Papers.

While the fossil fuel market could remain volatile for some time, city officials say there is a light at the end of the tunnel in 2013 that could help Hamilton better control increases in rates.

A second hydroelectric plant will begin operations on the Ohio River. Also, Prairie State, a clean coal power plant in Illinois will begin supplying a portion of the city's power for prices as low as $10 a ton for coal.

"Come the year 2013, it might allow us to reduce electric rates for the first time in a long time," Brandenburger said.

At the very least, Young said the new ventures should keep electric prices more stable.

"We will definitely, definitely be less bound by the world coal market," he said.

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