CLW eyes rate, customer surcharge hikes for electric

May 18, 2018 10:52:55 AM

Zack Plair - [email protected]


Columbus Light and Water will look to its electric customers to raise $1.4 million in new revenue next fiscal year. 


On Thursday, the CLW board authorized Executive Director Todd Gale to form a budget that would include a mix of increased customer charges for residential and small commercial users, as well as a 2.7-percent rate hike for energy usage for all of CLW's roughly 12,000 users. 


Gale plans to present the budget for board approval in June. If the board OKs the budget, the changes would take effect July 1, when CLW's fiscal year begins. 


"We're just looking at ways to make us more stable," Board chairman Michael Tate said during the meeting. 


The 2.7-percent usage increase will generate about $1 million annually, Gale told the board, while the customer charge bumps will raise another $400,000. 


Those customer surcharges will include another $1.77 increase for residential, bringing it to $17.29 per month. There also would be a $6 hike to commercial customers using less than 50 kilowatts -- a group Gale said made up about 3,000 of CLW's customers -- which would bring that monthly surcharge to $22. 


Gale said even with those service charge increases, CLW would remain below average for what other utilities that buy power from the Tennessee Valley Authority surcharge their customers. The average residential customer charge among those utilities is $19.33, he said, and $23.40 for small commercial users. 


TVA will allow CLW to generate an additional $650,958 next year from raised energy rates. To raise $1 million through rates, though, Gale said TVA would have to first approve a cost-of-service study. 


"We're going to have to justify it to TVA," Gale told The Dispatch. "Basically we're going to do that by showing a loss of revenue because of loss of volume." 


Gale is unsure how involved the "justification" process with TVA will be. 


"I don't really know because I've never been through this before," he said. 




Declining revenue 


With the rate and customer surcharge hikes, CLW hopes to stem a pattern of declining revenue now threatening to wipe out the utility's coffers in just a few years. 


Much of that comes from declining sales, Gale said, due to lack of community growth and the fact existing customers are becoming more energy-efficient. 


By the end of June, Gale said the CLW's reserve fund would fall to less than $5 million. In each of the last three years, he said the utility has suffered net losses of up to $800,000. 


If that trend were to continue, it would take about six years to exhaust CLW's reserves, and it would happen much sooner if emergencies or as-yet unexpected equipment purchases came into play. 


"The bottom line is, you've got to do something to get us out of the hole," Gale said. 


Before Thursday's board vote, Gale and his staff -- along with consultant Chris Mitchell -- had looked at various ways to raise revenue and the impact of multiple levels of increases. 


At minimum, Gale reported CLW needed an across-the-board energy usage rate increase of 1.5 percent to continue standard operations, such as power service, maintenance and servicing $7.4 million in debt from previous capital improvements. 


That did not take into account equipment upgrades, such as the $1 million transformer for East Columbus the utility plans to purchase in 2020. 


By raising $1.4 million more per year, Gale said CLW could pay for the equipment and also begin growing its reserves again. 


Board member Jimmy Graham agreed. 


"I'm concerned that we're not making budget," he said. "We're adjusting (our costs) down every year, but we're not adjusting down enough. ... I'd like to see us at least get flat."  




TVA charges 


Also looming is another nearly 2 percent increase from TVA that could take effect as early as October. 


On Thursday, the CLW board agreed to pay TVA a 0.3 percent grid access fee -- approximately $86,000 -- starting Oct. 1. The fee represents what Gale calls a surcharge for utilities that buy power from TVA and is based on the average of a CLW's last five years of sales. 


TVA also is considering a 1.5 percent rate increase on utilities purchasing its power, an issue its board of directors should decide this summer. 


If that passes, Gale previously indicated CLW would need to pass that rate hike on to its customers, as well. 


If TVA does pass its rate increase, combined with the local increases, CLW customers could see their bill go up $5 per $100, Gale said.

Zack Plair is the managing editor for The Dispatch.