For the first time in two years, Lakeland Electric is raising the fuel charge it passes on to customers.
On Monday, the City Commission unanimously approved the utility’s request to raise the charge from $36 to $45 per 1,000 kilowatt hours. The fuel rate is reviewed quarterly, so the new rate will take effect July 1 and continue through August and September.
What it means for you: For a household using 1,157 kWh per month — the average among Lakeland Electric’s 114,440 residential customers — the fuel charge will increase by $10.42, from $41.65 to $52.07.
The average bill, which also includes the customer charge and base rate, will increase from $117.63 to $128.05. That makes the rate the same as it was last fall.
Wait, my bill is a lot more than that: That average might look low to customers inside Lakeland’s city limits because electricity is only one component of their monthly utility bill.
City residents’ invoices — with the city’s logo at the top instead of Lakeland Electric’s — also include water, solid waste, wastewater and stormwater charges, adding about $90 monthly.
Why the rate is going up: Lakeland Electric Fuels Manager Sandra Reude said the liquid natural gas market is volatile right now for several reasons:
- Supply is down 10% over last year because lower prices prompted gas companies to cut production.
- Demand is likely to be high because the National Weather Service is forecasting a hotter summer than usual. People will be using their air conditioners more.
- More southern states are switching from coal to liquid natural gas.
- A major pipeline in Louisiana had problems and had to be taken offline.
“For the last six months, we’ve been able to enjoy rates that are at the lowest levels we’ve seen since Quarter 2 of 2021,” Ruede said at Friday’s Utility Committee meeting. “However, the market prices, as we can see, have been escalating. Increased heat, increased demand, have all been pushing those markets upward. And so we need to adjust our rates accordingly.”
How Lakeland Electric compares: Even with the fuel rate increase, Reude said Lakeland’s average bill is about $3 less expensive than the next-lowest utility, which is Tallahassee’s, followed by Florida Power & Light, which is about $9 higher than Lakeland.
Commissioner frustration: Commissioner Guy LaLonde Jr. expressed frustration on Friday, and asked if the quarterly fluctuations could be avoided.
“It’s fantastic that we still have the lowest rates, and I commend everyone here. But I just know the phone calls that will follow,” LaLonde said. “It’s just that quick lens like, ‘Hey, we’re dropping it $2.’ ‘Hey, we’re raising it $9.’”
In March, commissioners voted to drop the rate from $38 to $36 per 1,000 kilowatt hours.
Moving with the markets: Ruede sympathized but said the utility was over-recovering its fuel costs and its fuel reserve had grown to $42 million.
“Even at the $38, we were still over-recovering and so that’s why we dropped it to the $36,” she said. “At that point, the forward markets were still very stable. We weren’t hearing any volatility as far as that basis point.”
However, the reserves are now about $33 million because of increased gas prices and some large fuel-related expenses including $3.46 million to remove a 3-mile natural gas pipeline that is no longer in service at State Road 33 and Interstate 4, where a new interchange is being built.
Looking ahead: Ruede said the fuel rate may need to go up to $49 in September, but it depends on weather and market conditions through the summer.
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