Lakeland Electric’s residential customers may see a slightly larger-than-expected increase in the cost of electricity consumption starting Oct. 1 if the City Commission backs a proposal to raise the base rate by 3.5% instead of the already-approved 2.25%.
The plan would add about $2.73 a month to the average bill, compared with $1.76 under the increase that was passed about six months ago.
The base rate covers the costs of doing business — labor, equipment, operations and profit — and is typically adjusted every four years. It does not include the cost of buying fuel, which is typically adjusted quarterly
The proposal will have its first reading, which is typically brief, at the commission’s meeting this morning. The second reading and vote are scheduled for Aug. 7. Mayor Bill Mutz said members of the public can speak for up to 5 minutes at the second reading.
Gina Jacobi, Lakeland Electric’s assistant general manager for fiscal operations, said the average residential customer consuming 1,200 kilowatt hours per month paid $144 in April. The new rate would bring their bill up to about $147, which would still be among the lowest in the state.
There was some good news: She said the city’s fuel rate is expected to decrease if natural gas prices remain where they are now.
“We anticipate that we’ll be able to decrease our fuel rate $3-$5 per thousand kilowatt hours in October, so that at the same time that we’re raising our base rates to what we anticipate, we’ll be able to lower our fuel rates to more than offset that.”
She said it might bring down power bills by about .50 cents.
Electricity consumption is down, costs are up
The primary reason for the proposed increase is that, although population growth has increased the utility’s customer base, those consumers are using less electricity than expected.
Jacobi explained that Lakeland Electric projected it would get $204.1 million in non-fuel operating revenue from the sale of power — but the reality is likely to be $6.1 million short of that.
There are several reasons for that.
“First of all, we’re seeing the impact of economic conditions — people are tightening their belts. Cutting back on their electricity is one of the areas that they can cut back on,” Jacobi said. “We’re also seeing the effects of people returning to work from working from home. So that’s having some effect on our residential sales.”
She said other reasons included:
- A change in building types, with new, energy-efficient construction.
- Replacing old appliances with energy-efficient ones.
- Changing out old lightbulbs with LEDs.
- More customers switching to solar power.
“Two years ago, we were adding about 17 (rooftop solar) customers a month. This year, we’re adding an average of 50 customers a month,” Jacobi said, adding that in “the past couple of months, we’ve seen 75 to 100 customers — or rooftop customers — adding solar to their homes.”
Conservation is good for the environment, but many of the utility’s costs are fixed regardless of how much energy it produces.
Jacobi told LkldNow that a $70 million bond that will be issued in August or September is partly driving the increase in utility costs. The bond is, in part, paying for repairs of the McIntosh 5 Unit, the utility’s largest generating unit. It produced 64% of Lakeland Electric’s power last year, but it lurched to a halt three months ago when a compressor and turbine were damaged. Repairs for the unit, which typically produces 350 megawatts of electricity per hour, cost $21 million.
The city is filing an insurance claim, but that could take anywhere from one to two years to receive and it is unclear how much of the repair cost would be covered.
“It will not be the entire $21 million,” Jacobi said.
Lakeland’s Utility Commission unanimously endorsed raising the already-approved rate increase of 2.25% to 3.5%. The seven city commissioners sit on that panel, so they are likely to follow suit.
Lakeland residential bills are still comparatively low
For customers living in Lakeland’s city limits, their monthly utility bill is only partly for electricity. The invoices, which have the city logo at the top instead of Lakeland Electric’s, also include water, solid waste, wastewater, stormwater and a $2 recycling charge.
In many other municipalities, electricity and water are separate bills.
To find the increase on your bill, look on the second page under Bill Detail – Electric Service. The increase will be included in the “Electric Residential Customer Charge” and Electric KWH charges, which is currently .05149 for the first 1,000 kilowatts used.
Lakeland Electric is nearly at the bottom for customer electric rates compared to nine other utilities. Only Jacksonville Electric Authority paid less, at $143 for 1,200 kilowatt hours in April. Duke Energy charged the most, at $214. Gainesville Regional Utility is next to the top, at $202.
Gov. Ron DeSantis and the Florida Legislature recently moved to take over GRU, “beginning the process of establishing a governor-appointed Gainesville Regional Utilities authority board and setting the stage to strip the Gainesville City Commission of its authority over the municipal-owned utility,” The Gainesville Sun reported. “While Gainesville Mayor Harvey Ward … said the (legislation) could be devastating to local government and services, others are hopeful that it will bring down notoriously high utility bills.”
No one is talking about doing that in Lakeland, but some customers said they are seeing their bills double as a heat wave sweeps across the country, pushing the thermometer into the high 90s and even low 100s — dangerously high temperatures in June not normally seen until July and August in Florida.
Jacobi and Lakeland Electric General Manager Mike Beckham said if the hot weather continues, it will generate more revenue, which would eventually warrant a price drop.
“I would say weather is something that’s going to help us out — we’re headed in the right direction right now, because it’s plenty hot out there,” Beckham said.
Jacobi added that “if we come in strong next year, then the commission has the ability to tweak the rate down.”
City Commissioner Bill Read wanted to know what the average kilowatt used per month is so he can know how much more his home uses compared to others.
“I haven’t looked at my bill at all, but I know my wife raises Cain at me when she gets the bill because I’m don’t turn off the lights and stuff like that,” Read said. “When I get home, I want to know how much more I use than somebody else does.”
Jacobi said it’s about 1,150, but the Florida Municipal Power Agency uses 1,000 and 1,200 kilowatt hours per month to compare utilities, so the city uses 1,200 for comparison purposes.
Last August, the City Commission voted unanimously to increase the fuel rate to $75 per 1,000 kilowatt hours, its highest level ever. Three months earlier, they had increased it from $40 to $60, citing natural gas costs that rose 300% in the spring of 2022 and forced the utility to dip into its fuel reserve.
Jacobi told LkldNow that fuel price has dropped from a high of $75 per MMBTUs from October through December to $55 now.
“We don’t really make money on fuel — we pass it through,” she said.
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I’m not opposed to this tiny increase but it sure would be nice to see some stories about the city of Lakeland:
-preventing increases of electric prices
-opposing tax increases
-preventing further developments that invite ‘invaders’ in to Lakeland
-actively supporting family values in a myriad of ways