The Marietta Board of Lights and Water plans to ask its governing board and the City Council to approve a rate increase effective Jan. 1, said Bob Lewis, general manager of the city-owned utility.
Lewis said the need for the increase follows price hikes from wholesalers, such as the Cobb County-Marietta Water Authority, the city buys its water from.
The authority’s board members include political leaders such as Marietta Councilman Grif Chalfant, Smyrna Mayor Max Bacon and County Chairman Tim Lee. That board approved a 4 percent increase in September.
“We have our power costs (going) up about $5.4 million for calendar year 2014, and our cost of water is anticipated to go up by 2 percent,” Lewis said.
Marietta’s utility now plans to pass those rising costs on to residents.
The proposed increase is 1.6 percent for water, another 1.1 percent on sewer, and 4.5 percent on electric.
Electricity, water, sewer and garbage pickup are billed on one statement each month to Marietta residents. Any increase would first have to be approved by the utility’s board, which meets Nov. 11, and the City Council.
Mayor Steve Tumlin and Councilman Philip Goldstein have proposed alternative ways of preventing a rate hike and plan to discuss those ideas with the council at a committee meeting at 5:15 p.m. on Wednesday at City Hall.
There’s no question, Tumlin said, the utility has to pass increasing costs on to its consumers.
“If we do nothing, then the BLW is made weaker,” Tumlin said. “You have to recover your costs.”
Tumlin wants the city to take half of the franchise fee it charges for electricity service, estimated at between $800,000 and $1 million every six months, and return it to the utility.
Franchise fees are charged to customers and help pay for the right-of-way used by the utility to deliver its services. The fees are paid by customers of all utilities that use city right-of-way, including Internet and natural gas providers, not just BLW customers.
Marietta expects to receive about $5.77 million from franchise fees this year.
Tumlin’s proposal would help to make up for an $11.5 million transfer from the utility to the city’s general fund that the council approved earlier this year.
Transferring money from the utility to the city’s budget has become commonplace and helps the city pad its general fund, which pays for most services, but it leaves the utility looking to make up the difference.
“We’d literally give it back to the BLW,” Tumlin said of this proposal.
But returning franchise fees would leave the city with a shortfall.
“We would have to come up with $1 million to cut if my proposal goes through,” Tumlin said.
The mayor doesn’t have any ideas for where to cut that cash, he said, but is open to suggestions from his colleagues.
Goldstein maintains taking revenue from the franchise fee account isn’t a good idea because those fees go into the city’s budget — not the budget of the utility.
He wants to keep those budgets separate.
Goldstein’s proposal doesn’t require cutting costs outright and takes money from a fund set aside for the expansion of Plant Vogtle, a nuclear plant in Waynesboro south of Augusta that supplies some electricity to power companies in Georgia.
“We’re currently setting aside some money each year toward the expenses of the new nuclear plant which we won’t get back until around 2036 or 2037,” Goldstein said.
There will be a period of about 10 years, from 2025 to 2035, Goldstein said, when the utility will have paid off its debt, but won’t be seeing a return from the expansion of the nuclear plant. That’s when it could recoup costs, Goldstein said.
Using funds set aside for the plant expansion will address an immediate need, Goldstein said.
Yet Tumlin said the city has an “obligation” to put things in place for future generations.
Neither proposal represents the thoughts of the utility, said Lewis, who believes there are other places that could be cut.
An increase in the base rate customers pay for labor and infrastructure could be eliminated or decreased, Lewis said. A 10 percent discount given to customers who pay their bills early could also be decreased.
“There are four or five different things we can do to help defray some of this cost,” Lewis said.