Rates rising for all GRU services, as usage stalls or falls
Published: Tuesday, July 8, 2014 at 4:58 p.m.
Last Modified: Tuesday, July 8, 2014 at 4:58 p.m.
Gainesville Regional Utilities' $413.7 million proposed 2014-15 budget includes rate increases for electric, water, wastewater and natural gas customers, a situation utility officials attribute to the declining sales of recent years and rising costs.
GRU will present its budget proposal to the City Commission on Monday. That meeting begins at 10 a.m.
Combined, residential customers using the industry average for those five services will see their monthly bill rise from $247.33 to $254.89.
Interim Chief Financial Officer David Richardson noted that, for all utilities, GRU residential customers' average usage is below the levels deemed the industry standard.
Commercial rates also are expected to rise for all utility services, with increases of 1.2 percent to 2.9 percent projected for business electric rates depending on usage.
The proposed increase for electric customers will be substantially less than projected several months ago after steps that included, but were not limited to: lowering the transfer of revenues to the city's general fund; eliminating raises; leaving 59 of the utility's 124 vacant positions unfunded; interest rate swaps; and pursuing the sale of surplus property, including a vacated building at Northwest 43rd Street and Northwest 53rd Avenue.
To try to limit upward rate pressure, GRU also proposes to take more than $4.7 million out of its electric rate stabilization fund next budget year; the utility previously had planned to take $3 million.
GRU is projecting that, for a residential customer using 1,000 kilowatt-hours a month, the monthly electric bill will rise by $2.25, from $139.15 to $141.40. Previously, the utility projected a $9.85 increase, largely from the cost of purchasing power from the Gainesville Renewable Energy Center biomass plant.
Discussing the budget proposal during a Tuesday afternoon news conference, interim GRU General Manager Kathy Viehe said staff spent months working to limit the looming rate increase and solicited input on strategies to do it from hundreds of employees.
"I think everyone is pretty aware our electric rates are not competitive, so that was the focus of our budget this year," Viehe said.
This will be the second budget year in which rates have increased from the biomass contract. During that time, the electric bill for a customer using 1,000 kwh will have gone from $127.67 to $141.40, an approximately 10.75 percent increase.
That increase would have been more substantial without some hotly debated steps taken under former General Manager Bob Hunzinger, including a span where the utility charged electric customers above actual fuel costs to build up a fund intended to limit future rate increases from the biomass contract. That fund was approaching $26 million in 2013, before the commission voted to lower the fuel adjustment charge for the remainder of that budget year.
Discussing next budget year's electric rates Tuesday, Viehe said a $2.25 increase might be better than $9.85 but that the next few years would bring a "concerted effort" to try to limit increases and, eventually, lower rates. GRU staff has an early projection of a $5 monthly increase in budget year 2016 for a residential customer using 1,000 kwh.
With the costs of the biomass contract flowing through the fuel charge on customer bills, the upcoming year will be the second in a row in which GRU has tried to limit increases by lowering the base rate portion of bills, which covers operating and maintenance costs and capital expenses.
The cuts proposed for the upcoming budget year are to operations and maintenance expenses, and Viehe said that, down the road, the utility now has to be "very careful and very surgical" about any additional cuts.
She said the utility is looking at ways to bring in money by pursuing wholesale contracts to sell power or perhaps leasing unused office space in its downtown administration building.
Richardson said diminishing sales and increased costs related to regulatory requirements were factors in the rate increases for water and sewer. He said downward sales were an issue for many utilities and that GRU annual water sales were now near levels from the mid-1990s.
As for the wastewater utility, its regulatory expenses include the ongoing process to stop spreading treated sewage sludge at a ranch near Archer by 2016.