City to review fuel adjustment policy

Published: Thursday, March 7, 2013 at 8:00 p.m.
Last Modified: Thursday, March 7, 2013 at 8:00 p.m.

On Thursday, the Gainesville City Commission sent the issue of its electric utility's fuel adjustment charge to committee.

The commission voted 5-0 to send the ordinance governing the fuel adjustment charge to its Regional Utilities Committee, currently comprised of Lauren Poe, Susan Bottcher and Mayor Craig Lowe, for review and recommendations on potential changes

The fuel adjustment charge has been a hotly debated issue for several months.

The crux of the dispute is the approximately $23 million "levelization" fund that Gainesville Regional Utilities has built up over about three years through electric customer fuel charges. The utility intends to spend down the fund to try to limit rate increases when the 100-megawatt biomass plant comes online.

While other utilities lowered electric rates in recent years in response to the drop in natural gas prices, GRU held the line on rates and collected some 20 percent above actual fuel costs to build up the levelization fund.

Under the current ordinance language, the City Commission is to determine it is in the public interest to build up a levelization fund. The commission did not discuss the issue publicly until last summer's budget hearings.

City Attorney Nicolle Shalley released a legal memo earlier this week stating that the utility used the charge to cover allowable costs. But the legal opinion stopped short of saying the use of the charge complied with the current ordinance, which dates back to 1985.

Instead, Shalley recommended changes to the ordinance to reflect "desired rate practices" and to ensure that the utility's use of "industry standard rate tools are more transparent to the public."

Commissioner Todd Chase recommended sending the issue to committee, saying the use of the fuel adjustment charge is a "shell game" to mask the rate impact of the biomass plant.

Several opponents of the biomass contract demanded refunds to customers at Thursday's meeting.

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