COVINGTON - The City Council approved Monday night the purchase of additional power from two suppliers, a move officials say they hope will help stabilize utility rates.
The city will purchase baseload power from 2010 until 2015 from the Municipal Electric Authority of Georgia and its trading affiliate The Energy Authority and from the city of Marietta for a cost of about $20 million.
"We've been looking for whatever alternative we could find for more baseload power," Utilities Director Bill Meecham said.
The city purchases power through MEAG, but with customer growth outpacing supply, it has been forced to turn to the market to buy additional power. Market rates can be volatile, resulting in substantial swings in customer bills.
Having a more stable supply source should help regulate that, Meecham said.
"It should provide a higher degree of stability to our rates than what we've seen in the past, where the market has caused the rates and the bills to customers to be more than we would like and more than they would like," he said.
Mayor Kim Carter said that while reducing utility bills is a long-term goal of the city, stabilization of rates will have to do in the short-term.
The city will purchase an 8 megawatt block of baseload power in 2010, with 5 MW from TEA and 3 MW from Marietta.
Thereafter, from 2011 to 2015, the purchase will be 10 MW per year, divided evenly between the two suppliers.
The additional power should hold the city for the most part until a new phase of Plant Vogtle goes online, but the city will still likely have to purchase some power off the market, Meecham said.
The city is investing more than $102 million in the two-phase Plant Vogtle project, which is expected to meet customer power needs for up to 40 years, Mayor Kim Carter said last year.
The city contracted with MEAG and TEA last year to purchase a 5 MW block of baseload power for 2009. That purchase was initially expected to cost $62 per megawatt hour, but due to the downturn in the economy, the power was acquired at a reduced rate of $55 per MWH.
Looking for power to cover the gap in supply until the Plant Vogtle facility comes online, the city was prepared to enter another contract with MEAG when the offer from Marietta came through.
With both proposals costing roughly the same, Meecham recommended supply to be divided between the two.
"There is neither a perfect choice nor a bad choice," Meecham said in a letter to the mayor and council. "Because there is a benefit to increasing our diversity in power supply sources, I recommend that we split the 10 MW into purchases of 5 MW from each."
Officials hope it's the customers who will benefit.
"We'd like to say it's going to make electricity a lot less expensive, but we feel like if we could stabilize the price, that should be a big win for our customers," Meecham said.
Crystal Tatum can be reached at firstname.lastname@example.org.