An unusually warm winter brings good news for Lakeland Electric customers: The utility’s fuel rate — which has been at its highest point ever since September — is poised to come down substantially in March. But April will likely see a slight increase in the base rate that utility customers pay.
When Lakeland’s Utility Committee met this morning, their sole focus was on rates. They recommended that the City Commission approve one significant decrease and one slight increase:
- Reduce the fuel charge on monthly residential utility bills from $75 to $55 per 1,000 kWh starting in March. This pass-through rate can be lowered because the warm winter suppressed demand for liquified natural gas, causing prices to fall, Lakeland Electric Fuel Manager Tori Bombard said.
- Increase Lakeland Electric’s residential base rate by 2.25% in April, followed by further 2.25% increases in October of this year and October of next year. Also, increase the monthly “customer charge,” a fixed monthly fee to recover customer-related costs, from $11 to $12.
UPDATE: City commissioners voted unanimously to reduce the fuel charge on Monday, Feb. 6.
The base rate is being increased in three stages to spread out the inflationary impact on customers, according to Gina Jacobi, Lakeland Electric’s assistant general manager for fiscal operations.
For a customer using 1,157 kWh per month — the average among Lakeland Electric’s 114,440 residential customers — the new base rate would hike their monthly bill by $1.60 a month between April and September. Once all the base rate increases have taken effect by October 2024, the impact for residential users will be roughly $5 per month over the current base rate, according to Cathryn Lacy, Lakeland Electric marketing manager.
For the 11,795 small businesses in the “general service” customer class, the April base rate increase would increase bills by $2.08 per month, Lacy said.
Assuming the City Commission approves both recommendations, the average residential customer’s monthly electric bill (base rate + customer charge + fuel fee) would total $121 in April, Lacy said. That calculation is based on using 1,000 kWh per month.
By comparison, the same customer would have paid $139.87 since September, $124.87 last July and August and $104.87 from March 2021 to June 2022 — the changes reflecting increases in natural gas prices last year, spurred by the hot summer, the war in Ukraine and delivery blockages.
These numbers reflect just the electricity portion of city utility bills, but not any water, wastewater or solid waste charges.
Lacy provided the following chart comparing Lakeland Electric’s residential electric rates with those projected for other Florida utilities — both municipal owned, like Lakeland’s, and investor owned:
City commissioners make up seven of the Utility Committee’s 13 members, so the commission routinely affirms the recommendations of the committee. Commissioners are expected to approve the fuel rate when they meet Monday at 9 a.m. at City Hall. The base rate proposal comes up for a vote at their Feb. 20 meeting.
The base rate changes include raises at or close to 2.25% for each of Lakeland Electric’s 14 residential and commercial customer classes. The customer classes range from standard residential, which accounts for 87% of customers, to “interruptible time of use,” which includes just one user: Matheson Tri Gas on North Combee Road.
A presentation that Jacobi reviewed at the Utility Committee meeting details the rate changes recommended by Lakeland Electric staff for each customer class:
The Utility Committee unanimously recommended that the City Commission adopt all of the changes recommended by staff.
The base rate increase will help preserve the utility’s cash on hand, an important metric for credit ratings, and also pay for maintenance and upgrades to utility poles, wires, substations, and power plants as well as cover operational costs. “In the last year, wood poles have increased by 30%, transformers by 40% and steel poles by 45%,” Lakeland Electric said in a news release.
“The electric industry is not immune to inflationary pressures which is why this base rate increase is necessary. We know our customers continue to face increased costs everywhere due to inflation and other factors; that’s why we are pleased that our decreased fuel charge will more than offset this base rate increase,” Lakeland Electric General Manager Mike Beckham said in a prepared statement.
The fuel charge changes, also unanimously approved by the Utility Committee, would remain in place from March through June.
The committee will re-evaluate the rate in the spring to determine if adjustments are needed due to fuel price changes. Based on current trends, Bombard said she anticipates recommending a reduction from $55 to $50 per 1,000 kWh for the summer months.
A look at the fuel rate’s quarterly changes since January 2013:
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