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Saturday, January 10, 2015

Some Utility Rates Going Up

Fairhope, Alabama

SUPPLIERS TO BLAME

Mayor Kant and Utilities Superintendent Gillespie told the city council electric rates will be going up on Jan 1st by about 5% -- and natural gas by about 10 cents/unit (presumably on Jan 1st as well, but that was not specified).

One of the city's wholesale electricity suppliers, Alabama Power, was granted the increase after a hearing last month by the state's Public Service Commission.

(Some citizens complained about the transparency of that hearing -- click.)

According to an Al.com report, a typical Al. Power residential customer who uses 1000 kilowatt hours a month will pay $6.78 more per month. (But, Fairhope has other electricity providers as well.)

The company said the increase was needed because of new and expected EPA air quality regulations, mostly for coal-fired generating plants, concerning greenhouse gasses and nitrous oxide emissions (ozone).

Mayor Kant called it a "big chunk" and warned more may be coming next year (new mercury-related pollution standards, MATS).

Fairhope is one of the eleven-member Alabama Municipal Electric Authority; it has two other electricity suppliers besides Albama Power Company -- and operates its own natural gas powered generation plant in Sycalauga, Al.  Mayor Kant serves on its Board of Directors.


NEW PIPELINE NOT NEEDED?


Gulf South Pipeline Corporation is asking the Federal Energy Regulatory Commission (FERC) for a 100% increase to deliver it to the city through its pipelines.

The increase is needed to offset the cost of a pipeline the company built in Florida but has never been used -- because of new gas reserves found in the northeast, using controversial hydraulic fracking techniques.

At its December meeting FERC conditionally authorized some of the increase while the issue is being debated; but that amount is refundable if no rate hike should be authorized. An Administrative Law Judge has been appointed to consider the case; the final decision isn't expected until Feb. 2016 (case # RP15-65).

Mayor Kant said  it will cost the city an additional $300K now -- and possibly another $400K eventually, if approved by the regulator.

Kant said the city has joined with a number of others (United Municipal Distributors Group) to protest the increase to FERC.

Kant: "They're asking for a 100% increase. We don't think they should get all that."

Acccording to wikipedia, Gulf South Pipeline's parent company is Boardwalk Pipeline Partners LP, a subsidiary of the Lowes Corporation.


UTILITY RATES SET BY CITY COUNCIL

The Fairhope city council acts as the Utilities Board according to state law and sets local utility rates according to the applicable city ordinances.

Any excess revenue over expenses ("earnings/profits") are transferred to the city's general fund, used for 'community development' projects, or otherwise allocated according to the city's current needs (as do many other cities in Alabama ie. Robertstdale, Foley, Loxley, Daphne, etc.)

According to the 2015 budget passed last October 1st, $7,562,052 is the projected total Natural Gas Fund income revenue, with expenses of  $5,127,237 -- leaving $2,434,815 in earnings.  $1,326,575 of that is expected to be transferred to the city's general fund.

The Electric Fund is expected to bring in $20,645,280 and have expenses of $17,710,144 this year. Total earnings will be $3,228,361  -- and $500K of that will be transferred to the General Fund.


Gillespie, second from right
Rate Increase Request

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