Monticello Council Reviews Rates for Electricity
The Monticello City Council met with Electric Cities of Georgia (ECG) representative Michael Ivey and Municipal Electric Authority of Georgia (MEAG) representative Paul Warfel in a work session Tuesday night to discuss the city’s electricity rates, and found that they are likely to be going up.
Mr. Ivey is a representative that works for the city and did an internal look at the rates for the city and found that the rates had not been properly adjusted in over 20 years. He discussed rate recommendations that would work best for the city over a period of time.
In the opening comments of the meeting, Mayor Bryan Standifer told the council that costs are going up everywhere and electricity is going up. He informed the council that the presentation was for information purposes and that no action would be taken. Mr. Ivey added that this wasn’t a pretty situation for the city, however it was a solution.
He said that the city of Monticello does not have enough industry and large companies to support and take a load of the usage off of the residents, and still maintain a balanced budget. He said that the money has to come from somewhere and right now the residents are taking the hardest hit.
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He showed a graph of the city of Monticello as compared to other cities, and Monticello falls in the middle of the pack when it comes to rates. Some cities were cheaper, others were more expensive. He did note that Motnicelllo was not the only city dealing with increased rates, that there were several.
Mayor Standifer spoke up and told the board that at the end of the day, we [the council and others] need to think of creative ways to decrease the costs.
Mr. Warfel mentioned that industry was just one option, not the only option. Mr. Ivey added that “you don’t want to put all of your eggs in one basket. If you put them all in the industry basket, when it dies, so does the city.”
Councilman Randy Strozier asked why Central Ga. EMC’s rates were less right now, and got the response that these things go in cycles. That right now, they are in a cheaper cycle, and Monticello is in the expensive one.
Mr. Ivey’s finding showed that the city is making money on commercial classification businesses and losing money on the residential side. He said that they key would be to even out the percentages so that they are more aligned with one another.
He started with the basics and told that electricity is measured in kilowatts per hour (kw/h). He said that each place is classified by how many kw are used and this is the basis for the billing.
He said that the residential rate is so in the hole, and the rates so outdated that they need to be updated. He proposed rates that have to be increased in order to cover the current deficit.
Mr. Strozier asked about the power cost adjustment. Mr. Ivey offered a clarification of the adjustment stating that it’s simply a snapshot in time, that the city of Monticello PCA is a piece of the rate, and it has continued to rise to keep up with costs through time.
He said that costs are broken down into three parts:
1. Customer costs, which are base costs for the meter, the meter reader, transformers, power poles, etc.
2. Demand costs, these are how big is the equipment being used and
3. Energy costs which is (amount) used.
The PCA comes into play to get from year to year. With the rates not being restructured in 20 years, that affects the PCA.
Mr. Strozier asked why to pass that burden onto the customer, to which Mr. Ivey said, “Where else would it come from.” He said that revenues have to come from somewhere, so there needed to be other sources to offset that burden.
Mr. Ivey informed the board that the current PCA is $0.272 cents and it will reset at 0 when rates are restructured, and the three factors above will affect individual rates. He said that some cities keep a 0 PCA but have to meet and change electricity rates monthly.
He said that revenues and expenses have to equal. If you don’t want to increase revenues then the only other option is to cut expenses, he said. That is the bottom line.
If the PCA is simply done away with, then the city loses roughly $700,000 a year. There has to be some revenue to make up for that.
He heard that citizens were complaining about the PCA and wanted to clarify that it’s a part of the rate—that the base rate and the PCA make up the total rate which is a part of your bill. The 20 year old rates don’t keep up with the costs in the first three categories of costs, therefore the PCA looks larger.
In a sample graph the residential customer average increase will be roughly $16.60 a month to decrease the deficit. A small commercial business will see rates increase about $25 a month, where a large commercial business will pay roughly $600 dollars more a month. These are just sample figures that will be looked into further and added to the water, sewer, gas, and garbage rates to figure an actual number to be further reviewed by the council.
Several council members had ideas on how to offset the increase in rates. Mr. Strozier suggested that the city limits be extended two miles in each direction to generate more revenue.
Mr. Schwartz stated that would help financially on the property tax side, but would not help with the usage as those lines or territories were set by the state years ago.
