Utility rates for Columbus residents are going up.
Columbus Light & Water board members voted to raise the monthly residential customer charge by $1.77 during their May 21 meeting. The move will raise CLW’s annual revenue by $200,000, CLW director Todd Gale told The Dispatch.
The residential customer charge — which will increase from $10.21 to $11.98 as of Oct. 1 — is a “base rate” for all residential bills. It is not tied to usage.
“We use that money to pay for things like reading the meters and maintenance,” Gale said.
Right now, Gale said, CLW’s residential customer rate is the second lowest in Mississippi among utilities who purchase power from the Tennessee Valley Authority. Only Tupelo’s is lower. Gale said that without an increase CLW would begin dipping into reserve funds by 2018.
Gale said the utility kept about $7 million in reserve — or twice the utility’s monthly power bill to TVA. That money is meant to help float the utility through a major disaster, Gale said, since it could sometimes take up to a year for the Federal Emergency Management Agency to pay out disaster relief.
Gale credited both increased operations costs and sharply declining industrial customer revenues for the utility’s need to generate more money.
Specifically, he pointed to recent closures of OMNOVA, Sanderson Plumbing and KiOR’s plants.
“When I started here in 2006, OMNOVA and Sanderson made up 10 percent of our electrical load,” Gale said. “When you lose that, it’s going to affect your bottom line … KiOR hurt, but it affected our water revenue more than it did electric.”
Local consultant Chris Mitchell studied CLW’s financial situation and determined larger class customers, such as industry, were carrying a much greater share of the utility’s revenue load. That led to CLW targeting the residential customer charge for a rate hike.
Board chairman Andrew Colom actually voted against the board’s action on May 21 — instead supporting a $1.50 per month increase — but he called the action “necessary.”
“I think it had to be done,” Colom told The Dispatch. “But we have to focus also on a plan to cut expenses, and we have to focus on growth, especially when it comes to bringing industry to the city of Columbus.”
The residential customer charge may not be the only CLW rate hike the utility’s customers see this year. Gale said TVA would determine by July 1 whether it would raise its rates for utilities within its network to purchase power. If that happens, Gale said, CLW would have to pass that increase on to its customers’ usage rates.
Even if customers are hit twice this year with rate increases, Colom said the net impact of TVA’s decision to each customer would be “minuscule” and, as of right now, “highly speculative.”
CLW serves about 12,500 customers, Gale said, including roughly 9,400 households.
The CLW board meets at noon on the third Thursday of each month in the boardroom of its downtown headquarters.
Zack Plair is the managing editor for The Dispatch.
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