City electric rates will most likely increase as of Oct. 1. A water rate increase could follow in January.
Earlier this year, Columbus Light and Water requested a 2% rate increase and a $2.50 increase to the electric service charge from the Tennessee Valley Authority, which supplies and regulates power for the local utility. Angela Verdell, CLW general manager, said she should hear back from TVA in the coming weeks.
Verdell said the average monthly power bill for a CLW residential customer is about $146, which includes a $19.91 service charge.
The 2% increase plus a new service charge of $22.41 would see that bill jump to $151.02 in October – an increase of $5.02.
CLW expects the increases to generate $821,000 in additional revenue this fiscal year, which began July 1 for the utility’s electric division, Verdell said.
“That’s a comfortable number for us where we felt we could get things done in the next fiscal year that we need to do,” she said. “It’s not enough, and that’s just honest.”
Not only will this increase help CLW keep up with inflation, Verdell said, it will also help fund planned upgrades to power lines.
The utility also needs to purchase a bucket truck in each of the next five years, and Verdell said those cost about $250,000 apiece.
Further, some of CLW’s transformers are more than 30 years old and past their life expectancy. Verdell said the utility needs to keep a healthy supply of new ones on hand to replace the old ones when they go down.
Transformers take about a year to arrive after ordering, Verdell said. The last two transformers CLW purchased cost a combined $1.8 million.
Overall, she said there are about $10 million in capital needs on the electric side.
A 2% increase was preferable to a larger hike that would shock customers, Verdell said. Instead, CLW is planning smaller, incremental increases to their power bill in future years.
“We understand that rate increases are never ideal,” Verdell said. “That’s why we take great care in determining an increase that balances the utility’s need to maintain reliable service with our commitment to minimizing the impact on our customers. Small annual rate increases will be reviewed and considered to prevent any large increases.”
CLW board member Robert Smith said the increase came at the recommendation of the consultant Chris Mitchell. Smith said he supported that recommendation. Like Verdell, he also hopes 2% now staves off the need for a larger hike in the future.
The utility’s electric division has $10.85 million in total debt on the books, with a $2.9 million bond scheduled to retire in 2029, Verdell said. It has $8.42 million in reserve, which she said equals 1.48 months of electric expenses.
What about water?
Verdell said the CLW board will begin discussions at its Aug. 21 meeting, which begins at noon at the utility’s headquarters on Fourth Avenue South.
If approved, those would take effect Jan. 1, she said.
Smith told The Dispatch he might support a water rate increase, but he favors a smaller hike than 2%.
CLW can raise water rates without TVA’s approval.
Board chairman Brandy Gardner did not return calls or messages for comment by press time.
Zack Plair is the managing editor for The Dispatch.
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