October bills show first of two rate changes from biomass
Published: Wednesday, October 30, 2013 at 5:22 p.m.
Last Modified: Wednesday, October 30, 2013 at 5:22 p.m.
The October bills for electric customers of Gainesville Regional Utilities show the first of two rate increases scheduled for this budget year with the biomass plant coming online.
Bills sent out this month to residential customers show higher rates than in August and September. Still, they are below the rates in place for 10 of the 12 months of the budget year that ended on Sept. 30.
The more significant increase will come in December, the month the biomass plant is scheduled to go into full commercial operation.
For a residential customer using 1,000 kilowatt-hours a month, the October bill is $124.15. That is an increase from the $115.67 bill for that usage level in August and September. But it is below the $127.67 bill that a residential customer using 1,000 kwh a month would have had from October 2012 through July 2013.
In December, when this budget year's full rate increase from the biomass plant kicks in, the bill for 1,000 kwh usage will rise to $141.15.
One thousand kilowatt-hours' usage is commonly used as the measuring stick in comparing electric rates. It is above the average GRU residential usage, a result attributed to conservation and the large number of apartments in this college town, but close to the average usage for a single-family home in the GRU service area.
As a point of comparison, the lower GRU rates in place during August and September moved the utility's bills for 1,000 kwh usage from one of the highest in the state to the 11th-lowest among the 33 municipal utilities in Florida, according to the monthly report from the Florida Municipal Electric Association.
The rate change looming in December might leave GRU with the highest residential bills for 1,000 kwh usage. In the September FMEA comparison, a $141.15 bill for 1,000 kwh would have been the highest among the state's 33 municipal utilities. While that September comparison is the most recent, it does not include any rate changes for the budget year that began Oct. 1.
A September report from credit rating agency Standard & Poor's projected that, with biomass coming online, monthly rates would increase by a combined $33.50 for 1,000 kwh usage.
At Commission meetings, GRU General Manager Bob Hunzinger and Commissioner Thomas Hawkins have said they believe there are long-term benefits of the 30-year contract to purchase power from the plant, including reducing reliance on fossil fuels and eventual cost savings from the largely fixed prices.
Outside GRU's downtown administration building Wednesday afternoon, customers had varying views on their recent bills.
"This is the time of year when my electric bill goes down because of the weather," GRU customer Jim Meehan said. "I don't need heat. I don't need air. I'm using less."
Customer Timothy King, on the other hand, said his costs are on the rise for all utility services, with electricity as the largest single piece of the monthly bill.
"It's up," King said. "It's definitely going up."
Another resident, Ernest Brockington, said the lowest combined bill he has seen over the past several months was $175. Typically, they are closer to $230, he said. Brockington said poor residents bear the brunt of rate increases.
The fluctuation in electric rates during recent and upcoming months is the result of the 2013-14 budget year increases associated with the biomass plant and multiple commission votes in recent months to change the fuel adjustment charge.
The fuel adjustment charge is the part of a customer's bill through which the costs to purchase power from the biomass plant will flow. It is also the charge the city has used in recent years to collect above actual fuel costs from customers in order to build up a fuel levelization fund to limit the future rate increases associated with the biomass plant.
In July, when that fund looked to be building to more than $26 million, commissioners cut the fuel adjustment charge from $51 on 1,000 kwh to $39 in order to cap the fund at approximately $21.8 million at the end of the past budget year.
That decision led to the lower rates in August and September.
For this new fiscal year, the approved budget lowered base rates but, because of the biomass plant, significantly increased the fuel adjustment charge to $71 per 1,000 kwh usage.
After the budget was approved, commissioners, with Mayor Ed Braddy in dissent, set that fuel adjustment charge at $54 for October and November because the city was not going to be paying the full contract rate for biomass until December. Braddy supported setting the charge lower than that.
With the charge set at $54 per 1,000 kwh, the utility will charge customers above actual fuel costs in October and November, with a projected $3.5 million going into the fuel levelization fund, according to information provided by GRU.
The fund is expected to stand at about $11 million at the end of this budget year, the target amount commissioners discussed during budget meetings, according to GRU.