Covington’s electricity customers will pay a slightly higher price for power in 2014, with an average resident , one who uses 1,131 kWh per month, expected to see his/her yearly bill increase by just under $50.
The Covington City Council is planning to increase electrical rates starting in March 2014 for residents, commercial businesses and industries, to offset the city’s increasing costs to both buy power and maintain its electrical infrastructure.
Effect on residents
The bottom line is that the average resident, who uses the same amount of electricity in 2014 as in 2013, will pay around $50 more, according to an analysis of the proposed rates by The News; the analysis was verified by the city.
Of course, electricity usage varies greatly from month to month (and the math above is based on the same amount being used each month) because of weather variations.
The average use during summer’s peak heat is around 1,500 kWh, while use during the mildest spring and fall months can be closer to 900 kWh or less, according to an analysis by John Lansing, a pricing consultant with Electric Cities of Georgia, a nonprofit group that assists municipal electricity providers.
While the increase does hit residents’ pocketbooks – and council members all agreed they didn’t like the fact they had to pass the increased rate and pay it themselves – officials pointed out that usage is the biggest factor in bills.
If residents use air-conditioning and heat more in 2014 than they did in 2013, they’re likely to see a bigger increase. On the other hand,, improving insulation could reduce costs.
While the cost of power is increasing, Lansing said costs could stabilize from 2014 through 2017, but are expected to increase again after 2018, when Plant Vogtle’s new nuclear units come online. However, Lansing pointed out that any additional environmental regulations could throw off projections, as the regulations make power more expensive to produce at coal plants, which produce a significant amount of the
power Covington purchases.
Covington provides power to approximately 9,500 homes and apartment units.
Even with the increases, Covington’s power remains less expensive than Georgia Power’s, according to Lansing’s analysis.
The city’s proposed winter rates – which are lower than summer rates because overall electricity demand is lower – are just slightly higher than Georgia Power’s (55 cents on a monthly average), while its summer rates are substantially lower ($15.28 on a monthly average).
However, Snapping Shoal EMC has lower rates across the board, which Lansing said is a result of the company’s larger investment in natural gas power plants. Natural gas is cheaper than coal, because of the environmental regulations of coal, and is cheaper than nuclear power, because of the expense of building nuclear power plants.
Lansing said many cities, including Covington, appear to have higher electricity bills because they include multiple services on one bill, including electricity, natural gas, water, sewer and trash pickup.
Industry seeing hike
Businesses and industries will also see rates increase in 2014 under the proposed rate structure. Commercial businesses actually pay the highest rates of any users – and account for 85 percent of all income. Industries, however, generally get a break from power providers, because they use electricity in such large quantities and because they’re major employers in an economy, Lansing said.
(Commercial and industrial rate increases will be covered further in future stories. Also, check CovNews.com for some documents from the city of Covington and the pricing consultant.)
Reason for hike
The reason officials cite for the price increase is that the cost of power is increasing; Covington expects to spend $1.5 million more on power in 2014. Covington buys its power from the Municipal Electric Authority of Georgia (MEAG), a nonprofit consortium of local governments that run their own power systems.
In addition, Covington has seen some of its expenses increase, including employee salaries, health-care and other maintenance costs.
According to Lansing’s analysis, Covington typically transfers $5 million from its electric department revenues to other departments; however, the city’s revenues were down about $1 million, Lansing said.
Covington subsidizes its government operations – such as public safety, streets and other internal departments that don’t make money – with electrical and gas revenues.
The city has decided to operate its government this way for years, as opposed to having a higher property tax rate.
The city’s property tax rate would have to double if it ran the electricity department at break-even numbers.