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Council keeps rate hike to minimum

Photo by Howard Reed

Photo by Howard Reed

COVINGTON -- The power cost adjustment for city of Covington electricity customers is slated to rise by September, but the increase may not be as steep as it could be.

City Manager Steve Horton presented to the City Council on Monday night a calculation of the 2011-12 power cost adjustment based on the Municipal Electric Authority of Georgia budgets from May 2011 to April 2012.

Horton said the power cost adjustment, or PCA, is expected to climb anywhere from 4 to 8 mills in the next couple of months.

"It may be as high as 23 mills," Horton told council members. "I'm concerned with the extremely hot temperatures that we are having that this could have a detrimental impact on everyone."

He said the current 14.7 mills is expected to remain through June and July, but that number is expected to jump in September.

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 1.47 cents per kilowatt hour.

Horton recommended the City Council cease funding the New Generation Fund, which is typically used to pay for future energy-related costs. Horton said the city has put about $1.18 million, or 3.38 mills, into this account.

"I would ask that the city stop funding the New Generation Fund to keep power bills down," Horton said.

Even using these funds, the PCA will still likely increase, he said, but only to 1.87 cents per kilowatt hour instead of as high as 2.30 cents per kilowatt hour, as MEAG projects.

Horton said while it is important to build savings for the future, his primary concern is the immediate impact on the city's electricity customers.

Mayor Kim Carter said the increases in electric costs can be traced to supply and demand.

"There have been so many plants shut down at the same time for environmental concerns, and there's simply not enough power to go around and that makes the price go up," she said.

The City Council unanimously voted to use funds previously allocated to the New Generation Fund to offset the projected increase in the PCA.

This isn't the first time the city has worked to keep PCA rates in check. In December, the council agreed not to pass along to customers an increase in cost for power purchased from MEAG in 2011. Covington pays an additional $2.6 million for electricity in 2011, for a total of about $31.1 million. The City Council agreed at that time to cover the increase by transferring $2.3 million from the New Generation Fund. Had the council not agreed to apply the MEAG credit, the PCA would have increased to 2.47 cents per kilowatt hour.

Staff Reporter Crystal Tatum contributed to this article.