GRU rates will dip briefly

This artist's rendering provided last year shows the Gainesville Renewable Energy Center that is under construction.

Published: Thursday, July 18, 2013 at 11:45 p.m.
Last Modified: Thursday, July 18, 2013 at 11:45 p.m.

Gainesville Regional Utilities electric rates will decline briefly before they rise.

Late Thursday night, city commissioners voted to cut the fuel charge on electric customers for the last two months of this fiscal year and reduce by $4.4 million the amount in the fund that GRU has built up through that charge over the last few years as a cushion against the looming rate increases from the biomass plant.

That fuel levelization fund was, based on a projection from last summer, expected to reach $21.8 million by the end of this budget year. The most recent projections had it hitting $26.2 million when the budget year ends at the end of September.

The vote Thursday pushed the fund back down to $21.8 million. That will translate to a $12 savings on monthly bills for August and September for a residential customer with 1,000 kilowatt hours of usage.

The move passed 6-1 with Commissioner Thomas Hawkins in dissent.

"For two months we're going to help our customers just a little bit," Mayor Ed Braddy said.

GRU staff said the move likely will not lead to more pronounced rate increases next budget year. Those rates are expected to rise by approximately $10.50 per 1,000 kwh for a residential customer. The rate increase next year is currently uncertain, with City Commission meetings on the GRU budget resuming Monday.

The move to lower rates for the last two months this fiscal year may lead to more substantial rate increases in fiscal years 15 and 16, since the utility will burn through the money in the fund more quickly.

Hawkins said his opposition was based on the fact that the move would "destabilize" rates in the future.

Commissioner Randy Wells voted with the majority while also voicing misgivings whether it was the correct financial decision with "enormous expense" coming in a few months via the biomass plant.

The fund has been a point of contention for the last year since the utility charged customers above its actual fuel costs to build the fund up. There's also uncertainty if GRU staff followed the ordinance governing the fuel charge in building up the levelization fund.

The ordinance stated the fund "shall" be at zero unless the City Commission determines it is in the public interest to build it up. The commission did not have a public discussion on the fund until last summer's budget meetings.

Thursday's vote included a condition that it was in the public interest to have a levelization fund.

Over the last several months, opponents of the biomass contract have routinely pressed to have the utility refund the "overcharge."

On Thursday, Debbie Martinez, who frequently voices concerns about the biomass contract at meetings, said, "you steal from us for three years" and then "you throw us a few crumbs."

Commissioner Susan Bottcher said those who have pushed for a reduction in the fuel levelization fund -- and they sought a far more dramatic decrease than commissioners approved Thursday -- need to take "ownership" of it and any consequences.

"If this is what you want, if this is what you're going to clamor for, then perhaps it's time to own it," Bottcher said.

The vote means the fuel charge of a residential bill will, for two months, drop from $51 per 1,000 kwh to $39. When the new fiscal year starts Oct. 1, that portion of the bill would, under GRU's budget proposal, rise to $71 per 1,000 kwh. That could mean adding some $5 million to the fund again in one month because GRU would be charging customers for the biomass plant costs before the plant is commercially operable.

Commissioner Todd Chase, who requested that the item be put on the agenda, said the move to lower bills for the next two months "is the right thing to do, the right message to send."

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