Logan Mayor Russ Fjeldsted will recommend cutting Utah State University's power rates by $300,000 after the school threatened to cancel its contract because electricity is cheaper from Utah Power & Light Co.

Fjeldsted said Tuesday the move will require some "budget juggling." But he also told the municipal council that USU is the city's biggest electrical power customer and that rates must be competitive with UP&L.To save the contract, Fjeldsted has suggested cuts in operating expenses, increases in other utility rates and possibly a tax increase. The municipal council has the final say.

Logan took over supplying power to USU in 1988 after a bitter fight with UP&L that concluded with a Utah Supreme Court decision saying municipalities have the exclusive right to supply power within their borders.

USU's contract with the city pays for the price of the power plus 15 percent. Last year, that amounted to $2.2 million.

UP&L has since extended a special rate to large corporations and universities that would allow the utility to provide power to the school for about $350,000 a year less than what USU currently pays Logan.

School officials have demanded that the city match that rate or relinquish the contract, Fjeldsted said.

"Now, USU is arguing that the university has a responsibility to taxpayers to buy power at the lowest cost possible," he said.

Council members have previously said they did not want to reduce the cost of electricity to USU at the expense of other commercial and residential customers.