City abolishing special electric rate

COVINGTON -- The City Council has agreed to eliminate the electric economic development rate that has benefitted industries since the 1990s.

The rate has been used to recruit prospective industries and other major customers, but, "The rate has outlived its usefulness," said Utilities Director Bill Meecham. "We've found better options, like giving a break on our regular rate."

Meecham said the rate serves a small number of customers. The economic development rate has followed the wholesale market up and down through the years, he said. In 2010, the city revised the rate to cover increased costs associated with meeting reserve capacity requirements to make sure the rate continued to provide a modest margin, Meecham said.

In 2012, the city's agreement with the Municipal Electric Authority of Georgia will result in an increase in power costs, some of which is power provided to the customers on the economic development rate, Meecham said.

"While it was intended that the ED customers be served entirely by daily market purchases, the economic situation in our country has resulted in less power being bought from the market. When this 2012 step increase occurs, our margin from the ED customers will decline," he said.

Given that the city's standard industrial rate is now more competitive, Meecham recommended abolishing the economic development rate, which was unanimously approved by the council. To avoid impacting industries with unexpected increases, the phase out will take place over two years, beginning July 1.

"We've more than done our part as far as the contract is concerned with these industries and customers that were on this economic rate," said Councilman Chris Smith. "We went as far as we could possibly go with it."

In other news, City Manager Steve Horton announced that he will soon recommend to the council that Covington Municipal Airport be removed from the city manager's duties and instead fall under an airport manager's direction. Horton will recommend that current Airport Engineer Vincent Passariello be appointed to that position.

Horton said the airport "is a growing entity and the energies, duties and needs there are totally different than what the rest of the city does." Horton said he will recommend a transition period from January through June, with the airport manager assuming responsibilities beginning July 1.