Lakeland Electric customers can expect a phased increase in the base rate they pay for electric service beginning in April. City commissioners today approved the increases — 2.25% in April, 2.25% in October and another 2.25% in October 2024 — in a 6-0 vote; Mayor Bill Mutz was absent from the meeting.
The base rate covers the costs of doing business — labor, equipment, operations and profit — and is typically adjusted every four years. The base rate does not include the cost of buying fuel, which is typically adjusted quarterly and is coming down significantly next month after experiencing record high levels since September.
Before approving the increase, commissioners peppered Lakeland Electric official Gina Jacobi with questions designed to provide talking points justifying the rate increase.
Among the responses from Jacobi, who is Lakeland Electric’s assistant general manager for fiscal operations:
- Expenses have increased since 2018, the last time the base rate was raised, but Lakeland Electric has held expense increases to roughly half the rate of inflation. Costs have increased 11% since 2018, while inflation has risen 21% during that period.
- The fuel charge — a major part of the electric bill — is being reduced $20 per 1,000 kWh starting in March. For residents using 1,000 kWh per month — which is slightly lower than the average use — that represents a drop from $75 to $55 on the monthly electric bill.
- The increase in base rate will allow Lakeland Electric to stay above 180 days’ cash on hand, a benchmark that the financial rating agency Moody’s would like to see to maintain Lakeland Electric’s AA bond credit rating.
- There is a possibility the Lakeland Electric staff might recommend a lower rate at the city budget retreat this summer if the weather stays favorable and if cash-on-hand performance stays solid.
When Jacobi detailed the proposed increase to commissioners and the rest of the Lakeland Utility Committee on Feb. 3, she noted that the base rate was rising in three stages to spread out the inflationary impact on customers.
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.
The proposal approved by commissioners today also increases the customer charge, a fixed monthly fee to recover customer-related costs, from $11 to $12 a month.
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 earlier this month.
Between the decrease in the fuel charge taking effect in March and the increase in the base rate taking effect in April, 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.
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 Feb. 3 Utility Committee meeting details the rate changes recommended by Lakeland Electric staff for each customer class:
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