GRU budget debate continues focus on tiers

In this image from video, Gainesville city commissioners Todd Chase and Yvonne Hinson-Rawls take part in a meeting on the budget for Gainesville Regional Utilities on Monday.

Published: Monday, July 22, 2013 at 10:37 p.m.
Last Modified: Monday, July 22, 2013 at 10:37 p.m.

The possible overhaul of the tiered electric rate structure was again a hot button issue as the City Commission's discussion and debate of Gainesville Regional Utilities proposed budget continued Monday.

As a measure intended to promote conservation, the city has three rate tiers for residential customers: up to 250 kilowatt-hours, 250 kwh to 750 kwh, and above 750 kwh. Charges rise per kwh as a customer's usage moves up through the tiers.

As part of its proposed budget, GRU staff recommended an option of going from three to two electric tiers with 1,000 kwh as the dividing line.

That move would have a minimal rate impact for a customer with monthly usage of 1,000 kwh, which is just above the utility average for a single-family home. But the rate increases would be more pronounced for customers who use less or more electricity monthly.

During Monday's lengthy meeting, Commissioner Randy Wells said the proposal to increase the dividing line for the tiers to 1,000 kwh was “the opposite of a conservation strategy.”

Commissioner Lauren Poe said he continued to support a “legitimate conservation rate” with the dividing line between the tiers set below the average customer usage. One option on the table for Thursday's upcoming budget meeting would set the dividing line at 750 kwh.

Mayor Ed Braddy said the current rate structure and one that set the dividing line at 750 kwh would both be punitive to a middle class family of four. He said a family has to practice conservation more to use 1,000 kwh than a single adult in an apartment would to use 750 kwh.

Poe said he did not feel the tiered structure was punitive since customers with higher usage still pay the lower rates for the first 750 kwhs.

“It's not meant to punish,” he said. “It's meant to incentivize.”

With biomass coming online and pushing up rates, if the existing rate structure is maintained, GRU had projected a monthly rate impact of $10.48 cents per 1,000 kwh for a residential customer.

During the first budget meeting last week, commissioners voiced misgivings over one of several moves GRU proposed to hit the utility's target rate impact -- the use of $17 million in money typically set aside for construction and capital projects to go toward debt payments.

Their concerns focused on potential negative financial effects in the long term, including a potential credit downgrade or the need to borrow more, from a move to limit rate hikes in the short term.

Staff prepared a rate scenario showing the impact of reducing the contribution from that fund to debt payments by several million dollars. Under the existing rate structure, it showed a more pronounced projected rate increase of $13.38 per 1,000 kwh. That would put a residential bill for that usage at more than $141. A GRU comparison showed that as the highest bill among 13 peer utilities in the state. Thursday's meeting is expected to again bring revised electric rate numbers.

Some commissioners also would like to consider a staff proposal to end Gainesville Area Chamber of Commerce membership, a move that would save some $5,300 in dues out of a roughly $400 million utility budget.

That discussion comes with an ad hoc Chamber committee studying the utility's governance and issues such as the amount of its revenue transfer to the city's general fund. Last week, the Chamber held a public meeting to have concerns aired on the utility's governance and rates.

Commissioner Thomas Hawkins questioned if GRU should remain in the Chamber in light of the “overtly political nature” of meetings such as the one last week.

Braddy later questioned if city commissioners objected to the “overtly political nature” of the Chamber a few years back when the business organization came out in public support of the biomass plant.

Hawkins said he saw that as a policy issue when some comments at the meeting last week focused on future city elections.

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