Council OKs rate hike

Published 8:50 am Wednesday, January 27, 2010

FRANKLIN—Despite concerns from some residents, the City Council approved the first new retail rate schedule for Franklin Power & Light customers in nine years after a public hearing Monday night.

Franklin Power & Light Director Michael Stoneham said that he is “confident” that the new rates, which will be effective March 1, compare favorably with those of Dominion Virginia Power and Community Electric Cooperative.

“When you take in all factors that make up what goes into the cost of electricity that goes into the bill we will still be very competitive against Dominion across all rate schedules,” he said.

Under the revised rate schedules, a residential customer using 1,000-kilowatt hours of electricity can expect to see their monthly bill rise about $5.56, or 6.4 percent, in the summer and $5.29, or 6.45 percent in the winter.

GDS Associates, a Georgia-based consulting firm completed a rate study last year and developed the new rates. The study found that the city’s rates, while lower than Dominion and Community Electric Cooperative, were not providing adequate revenue.

The city’s Electric Department has been operating at a deficit in recent years, losing $426,735 last fiscal year, after transfers to the general fund.

To bring the department out of the red and to help build up reserves, Stoneham recommended that the new rate schedule would increase the department’s revenue by 6 percent. City electric customers’ bills have remained flat for nine years, except for fuel adjustments. During that time the city’s costs to buy electricity have increased four times.

“We have kept our rates low even in the face of rising expenses,” said Mayor Jim Councill.

Residents speaking during the public hearing raised questions about the amount owed by delinquent customers and the timing of the increase.

“We have a large issue with collections and I acknowledge that,” said City Manager June Fleming.

The revised residential rates are still about 20 percent lower than Dominion Virginia Power’s residential rates, according to city officials. Other rate classes, including business and municipal customers, could expect to see monthly bill increases, ranging from around 4 percent to nearly 11 percent.

“We do take seriously what we’re asking the citizens to do,” Stoneham said. “We have thought about this long and hard.”