City#8217;s financial concerns need able councilmen

Published 12:00 am Saturday, May 3, 2008

To the Editor:

Readers should recognize that VEPCO, Virginia Power and Dominion Power are all one and the same corporation.

I recently asked Dave Howe, director of Franklin Power and Light, about our July 1, 2008-June 30, 2009, electric rates. Here was his reply:

“The 2008-09 FP&L budget calls for our rates to be at an all-time high. When compared to VEPCO (Dominion Power), I see that our residential rates are 10 percent to 12 higher than VEPCO’s residential retail rate in terms of dollars per kilowatt hour. The small-business rates are 26 percent higher. The medium-business rates are 20 percent to 52 percent higher, and our large service rate is 35 percent higher.

“The higher rates will be caused by VEPCO’s fuel surcharge to the City, which is being passed through directly to the consumer.”

How can the City Council and city management minimize the high rates caused by the pass-through fuel surcharge? Does the entire fuel surcharge have to be passed on to citizens? How are low, fair rates maintained for citizens?

Two recommendations made by a 2007 Citizens Electrical Task Force provided solutions to these questions.

The first was to maintain Franklin Power & Light’s electrical rates lower than those charged by VEPCO to its customers. (An example of a VEPCO customer would be a Southampton County resident.)

Unfortunately, members of the council and city management fell short of making this commitment. New Financial Policies and Guidelines read: “Electric Rates will be competitive with neighboring electric providers.”

Note that our other “neighboring electric provider” is the Windsor Co-op. According to Dave Howe, “Unlike FP&L and VEPCO, the Windsor Co-op is non-profit and their rates have historically been higher than FP&L due to a higher cost structure. It is not an apples-to-apples comparison. FP&L is more comparable to VEPCO.”

The task force’s second recommendation was to use FP&L’s Electrical Emergency Reserve Fund for three specific situations: A) true emergencies; B) capital improvements; and C) rate stabilization.

Note that Item C authorizes electrical reserve fund proceeds to be used to offset and stabilize the sudden surge in FP&L electric rates, which we will experience July 1.

New City Financial Policies and Guidelines state: “Wholesales costs of electricity that are increased to the City shall be passed through to the consumer.”

City management failed to specify that the electric reserve fund profits will be used to offset a sudden increase in our electric rates.

With the upcoming May 6 city elections, now is the time for citizens to address the July 1 double-digit increase in our electric rates. Citizens need to decide which candidates are truly committed to maintaining low, fair electric rates and to minimizing the impact of a sudden fuel surcharge pass-through.

The only two ward candidates who throughout their entire campaigns have been committed to these two principles are Benny Burgess and Barry Cheatham.

Chuck Lilley

Electrical Task Force member