The Columbus Light and Water board on Thursday approved a 2.7-percent energy rate hike for all of its customers.
Board members implemented the increase as part of the Fiscal Year 2019 budget, which it also approved during its monthly meeting.
The budget estimates $1.4 million in new revenue for CLW’s electric services. Of that, the rate hike for all customers will generate roughly $1 million. The remaining $400,000 will come from customer surcharge increases for residential and smaller commercial users.
All customers will begin seeing the rate hike on Oct. 1, if the Tennessee Valley Authority — from which the local utility purchases power — approves it. The surcharges will take effect July 1, when CLW’s fiscal year begins.
Residential users will see another $1.77 customer surcharge increase — the third straight year CLW has increased it by that amount — bringing the total monthly surcharge to $17.29.
A $6 hike to commercial users using less than 50 kilowatts — which makes up about 3,000 of the utility’s customers — will raise their surcharge to $22.
Both surcharge amounts still trend below the averages for utilities that purchase power from the Tennessee Valley Authority, CLW executive director Todd Gale said. TVA-wide the average residential surcharge is $19.33 while small commercial users pay an average surcharge of $23.40 each month.
TVA would allow CLW to generate an additional $650,958 next year from raised energy rates. To raise the $1 million through the 2.7-percent rate hike, however, Gale said TVA would need to approve a cost-of-service study, which should be done at the July meeting. According to Gale, CLW needs to show the loss of volume that has caused a consistent loss of revenue in recent years.
Basically, CLW’s customer base has been shrinking, Gale previously told The Dispatch. Its last four budgets have run at a deficit, causing the utility to use reserve funds to cover operations.
CLW’s reserves now sit at just less than $5 million. Gale said the utility has operated at about an $800,000 deficit in each of the last three years.
“This is the first budget in four years that has been positive,” Gale said Thursday. “It’s a workable budget.”
Michael Tate, chairman of the board, believes that these increases will help get the CLW’s budget back on track.
“Those years where we didn’t take rate increases … if we took them back then, even the marginal ones, think about where we would be now,” Tate said at the meeting.
In May, the CLW board agreed to pay TVA a 0.3 percent grid access fee — approximately $86,000, which will start 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 is also considering a 1.5 percent rate increase on utilities purchasing its power. If that passes, Gale previously indicated CLW would need to pass that rate hike on to its customers, as well. According to Gale, the TVA board of directors should decide at the July meeting.
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