Electric rate increases discussed at city hall

Published 9:10 am Saturday, May 10, 2014

FRANKLIN—Franklin Electric Company Director Mark Bly said the upcoming wholesale rate increase might not be as bad as feared.

Originally, Bly was expecting an 8.9 percent wholesale increase from Dominion, but now that figure could be more in the neighborhood of 6 percent. The final figures are supposed to be determined by May 31.

The next question was, since council had been recommended a 5 percent increase for a potential 8.9 percent increase, would that rate increase drop accordingly?

“That’s certainly a decision council could make,” said Bly. “We’re looking at a 6 percent wholesale increase, and I proposed a 5 percent residential increase.”

City Manager Randy Martin also suggested keeping it at a 5 percent increase for now, as once you have advertised it for a public hearing, you can’t increase the rate. But you can decrease the rate, should council chose that option, Martin said.

“One other point on that,” he said. “We did not raise the rate to fully pay for all of the increase at 8.9 percent. It gives us an opportunity to consider less, but we were losing money on the recommendation we had given you.”

Mayor Raystine Johnson-Ashburn asked to have a comparison that is more equal to what people actually use when considering making a decision. She said that since the people of Franklin use an average of 1,300 kilowatt hours, then that ought to be the standard instead of the traditional 1,000 KWH.

“We should compare apples to apples,” she said.

Bly said that at the current rate, at 1,300 KWH a customer would pay $148.74. With a 2 percent increase, that same customer would pay $156.74 under the new rate, and $160.43 at 5 percent. At 7 percent, which is not being proposed, that goes up to $163.89.

Ward 3 councilor Greg McLemore also wanted to see the comparison to Dominion, as he wondered why Dominion customers in Virginia Beach paid less than Franklin customers.

Moving back to the 1,000 KWH standard that Dominion uses, a Franklin resident would pay $114.41 currently, and a Dominion customer using the same amount of power $108.32.

The national average is $131.98.

Johnson-Ashburn also asked what would happen if they did not raise the rate this year.

“We’d be short $915,000,” said Bly.

Martin clarified that what would happen is Dominion would charge Franklin a little under $1 million additional this year, at the 8.9 percent increase, and that the city would have to subsidize the electric company, and the current positive cash balance in the electric fund would go away. Martin said that would be dangerous if a major storm were to come through, as they’d have to go into debt to make repairs.

McLemore said it seemed that Dominion was able to charge less, and if this was wholesale power, Franklin ought to be getting cheaper than the service Dominion provides to its customers. So, shouldn’t Franklin be able to charge a lesser rate?

“We do have that option,” said Ward 2 councilor Benny Burgess, suggesting that the city could take a loss in the electric department. “They have more reserves to deal with.”

Ward 1 councilor Barry Cheatham said there were other factors as well, including size of the community and also paying Bly and his staff. Another factor is service.

“We’re paying for good service,” Cheatham said. “If you are with Dominion, and you are at the bottom of the list when power goes out, you could be without power for a long time.

“A prime example, years ago a storm came and knocked Hunterdale out. Dominion said it would be a week or so to get to us way out here. Franklin said that isn’t acceptable, so they rerouted, and Hunterdale was back online in two hours. That’s what you are getting for your extra money.”