City keeps 3-tiered rate structure
Surprised commissioners scramble to cover $712,000 in lost revenue
Published: Thursday, July 25, 2013 at 10:00 p.m.
Last Modified: Thursday, July 25, 2013 at 10:00 p.m.
With the biomass plant slated to come online in a few months, Gainesville Regional Utilities’ budget, and the electric rate increases it will include, continued to take shape Thursday.
After much debate and two failed votes, commissioners decided to stay with the current three-tiered rate structure for residential electric customers.
Under that scenario, the monthly bill for 1,000-kwh usage would rise about 10.5 percent, from $127.67 to $141.15. As a point of comparison, of the 33 municipal utilities in the state, only Newberry and the Panhandle community of Chattahoochee had higher bills for that usage level in May, according to the most recent monthly report available from the Florida Municipal Electric Association.
Commercial electric rates that already hovered toward the high end in the state will also rise. An office using 1,500 kwh would see its bill rise from $222.50 to $250.50. A GRU staff comparison with 13 other Florida utilities showed that as the highest bill for that commercial usage. It exceeds Vero Beach, which was second highest, by some $50 and was more than $100 above comparable rates in Tallahassee.
For a grocery store or “big box” retailer using 30,000 kwh a month, the bill is projected to rise from about $3,804 to $4,274. The utility staff comparison with those 13 other utilities showed the GRU bill as the highest at that usage and nearly $2,000 above Lakeland, which had the lowest bill.
Throughout Thursday’s meeting, Commissioner Todd Chase kept noting the wide gap between GRU and other utilities on the electric rates that businesses pay.
“I cannot reconcile the disparity in our commercial rates,” he said. “It is very, very concerning.”
Commissioners pieced together their policy direction on rates for next year’s budget in a series of votes Thursday. The formal vote to approve the budget and rates will not come until September.
Like prior budget meetings of the last two weeks, there was significant debate over potential changes to the tiered rate structure, which is designed to promote conservation among residential electric customers.
Under the current tiers, a customer’s charge per kwh rises with their usage, with thresholds for the increases set at 250 kwh and 750 kwh.
One GRU proposal would have gone to two tiers with the split at 1,000 kwh. That would have minimized a rate increase at that level, which is often the industry point of comparison for a residential customer, but it would have increased rates more substantially for customers using more or less.
That proposal failed to get majority support. A commission proposal for two tiers with the split at 750 kwh also failed to pass. Commissioner Lauren Poe supported it, saying a true conservation rate system should set the threshold below the average usage.
Mayor Ed Braddy said he felt the 1,000 kwh threshold promoted conservation for a family living in a home. A back and forth verbal salvo between Braddy and Commissioner Thomas Hawkins ensued. Hawkins questioned if Braddy had data to support that statement or if it was based on something “imaginary.” Braddy said he had as much data as Hawkins had for supporting a split at 750 kwh.
Eventually, the vote to maintain the current tiers passed 6-1, with Braddy in dissent.
While electric rates will increase, the spike would have been far more substantial without a series of moves that GRU and the City Commission have taken. They include a bond refinancing and the use of $8.5 million in money that would go toward capital projects to pay off debt. There’s also the controversial use of the current customer fuel charge to build up a “levelization” fund intended to cushion future rate hikes from biomass.
After a commission vote to return some $4.4 million from the levelizaation fund, it will stand at nearly $22 million at the end of this budget year.
Also Thursday, commissioners lowered the threshold for the lowest tier of the water rates from 7,000 gallons to 6,000. They also voted down the establishment of a new water rate for apartment complexes.