City trying to avoid another electric rate hike
by Nikki Wiley
December 08, 2013 12:10 AM | 2411 views | 0 0 comments | 16 16 recommendations | email to a friend | print
MARIETTA — The director of Marietta’s power and water utility says there are several options on the table that could ward off a power rate hike and prevent customers from bearing the brunt of a $5 million wholesale increase.

The Marietta Board of Lights and Water is facing a $5 million deficit following increases by its wholesalers, particularly its electric provider, the Municipal Electric Association of Georgia.

Some cost increases are a definite to pass on to customers, like the 4 percent hike in water rates approved by the Cobb County-Marietta Water Authority in September. The Water Authority’s board members include local political leaders such as Marietta Councilman Grif Chalfant, Smyrna Mayor Max Bacon and County Chairman Tim Lee.

But an electric power hike is more avoidable, said Bob Lewis, BLW general manager. Power, water and sanitation utilities fees are placed on one monthly bill to BLW customers.

Customers ‘frustrated’ by repeated rate hikes

“We’ve seen increases over the last five years. I know people are frustrated in terms of seeing those increases but when our costs go up $5 million, we can’t just suddenly cut our staff or suddenly decide not to do our capital projects that are on hold or that we have in engineering and are ongoing, so what do you do?” Lewis said.

The BLW board will consider its choices at a meeting at noon Monday at City Hall. After the utility board meets, the City Council will discuss billing options at a non-voting work session at 5:15 p.m. Monday, also at City Hall.

Any rate increase would have to be approved by council, which has its next voting meeting at 7 p.m. at City Hall on Wednesday.

Discount for paying bill early could be cut

A 10 percent discount given to customers who pay their bills within 13 days could also be decreased to 5 percent. The discount offered now takes about $8.5 million from the BLW, Lewis said, and cutting it in half would raise about $4.3 million.

That discount is to encourage customers to pay their bills early so the utility does not have to borrow money for operating expenses, Lewis said, although the BLW doesn’t face cash flow problems and doesn’t have to go to great lengths to get its payments on time.

Some council members previously said decreasing the discount is the equivalent of a rate hike on customers and could discourage businesses from locating in the city because 60 percent of the customers who take advantage of the discount are commercial accounts.

Lewis agrees it would be a fee increase.

“It is an increase. There’s no two ways about it,” Lewis said. “It is an increase for the person who’s been paying the discount rate. But the question you have to ask is are they worth 10 percent more?”

Some money could be saved elsewhere

The remaining $700,000 needed to prevent a $5 million deficit could come from a fund the BLW pumps money into for the expansion of Plant Vogtle, a nuclear plant south of Augusta, a plan introduced by Councilman Philip Goldstein.

The city won’t see the money it’s setting aside until 2036 or 2037, Goldstein has said, but there’s a period of about 10 years before then, from 2025 to 2035, when the utility will have paid off its debt and won’t yet see a return from the expansion of the nuclear plant.

That’s when it could recoup costs, Goldstein believes.

If board members don’t want to take from the Plant Vogtle fund, the cash could come from the BLW’s $7.5 million surplus reserve account.

Lewis wouldn’t say exactly what kind of impact those options would have on the average bill.

Mayor Steve Tumlin said the highest priority is to figure out the best way to avoid a rate increase, but he also wants to re-evaluate how the city transfers $11.5 million annually from the BLW’s accounts to pad its own general fund that pays for most city expenses.

“We’ve got to balance what’s good to the bottom line and what’s good to the ratepayer and stay competitive,” Tumlin said.

Councilman Chalfant agrees.

“I think we’ve got to come up with as many ways as we can to keep from actually tacking it on to our customers,” Chalfant said.

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