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City absorbs increase in power costs

Photo by Howard Reed

Photo by Howard Reed

COVINGTON -- The city of Covington will not pass along to customers an increase in cost for power purchased from the Municipal Electric Authority of Georgia in 2011.

That won't necessarily translate into a utility bill decrease for customers, but it will mean that costs will stay lower than they could have been had the city not taken measures to absorb the increase, said City Manager Steve Horton.

Covington will pay an additional $2.6 million for electricity in 2011, an increase of about 6.9 percent, for a total of about $31.1 million. At the recommendation of Horton, the City Council agreed to cover the increase by transferring $2.3 million from the New Generation Fund, through MEAG, which is typically used to pay for future energy-related costs, such as interest payments on the new Plant Vogtle.

"Between our $2.3 million and some overestimates on our expenses, we may come out at pretty close to breaking even," he said. "The PCA is set to remain level, providing there's not something we don't know about, through June."

The PCA, or power cost adjustment, is how the city passes along the cost to purchase power to its customers rather than constantly changing rates. The PCA increases or decreases depending on the market, so customers aren't locked in, as they would be with a rate change.

The current PCA is 1.97 cents per kilowatt hour, and that should hold stable or possibly drop. "Everybody's cost will be lower than anticipated. It may not be lower than it is today, but it will be lower than anticipated," Horton said. "It's got to be lower than it would have been if we hadn't taken the $2.3 million out of the MEAG account."