EPB Seeks 3.5% Rate Increase; First Since 2011

Friday, May 22, 2015
EPB board
EPB board

EPB on Friday morning asked its board of directors to consider a 3.5 percent rate increase to monthly electric power charges for customers, effective July 1. The board is set to vote on the measure in June.

For residential customers who use 1,000 kWh of electric power in a month, this adjustment will reflect an increase of about $3.50 on their monthly bills. The 3.5 percent change includes increases to EPB’s base energy rate and the monthly customer charge.

This is EPB’s first rate increase since 2011 because revenues from EPB’s Fiber Optics division have allowed the utility to defer rate increases that would have totaled five percent over the last four years, officials said.

The 2011 rate increase came after a deadly tornado and other storms that cost EPB $30 million for cleanup.

EPB officials said storm cleanup costs have risen from an average $2 million per year to an average $6 million.

Officials said this rate increase "is driven by a continuing trend over several years of higher-than-normal costs associated with the greater frequency of devastating storms and by large peak energy demand charges that EPB pays to TVA for power generation.  These demand charges are not covered by regular power sales during months with extreme fluctuations in temperature, particularly when there are a few days of extreme temperatures and the rest of the month is much milder."

The new rates will apply to EPB’s residential, commercial and smaller industrial customers (excluding B, C, D Industrial Customers). Officials said there are contracts in place with TVA on the large customers. 

“EPB is committed to delivering reliable energy and the best possible value to our customers,” said president and CEO Harold DePriest. “With this rate increase, we are committed to holding the line on additional rate increases for several years.”

He said EPB’s investment in innovative technology and infrastructure are largely responsible for the utility’s ability to keep rates consistent for several years despite inflation. “Our customers have realized great value from EPB’s Fiber Optic system, in both world class communications and the benefits of offsetting our rising costs of providing electric power. Our community is well positioned to minimize the rising costs of providing power going into the future.” 

Of the storm costs, Mr. DePriest said, "What we are seeing are severe storms that are coming more frequently."

He also said the additional revenue is needed to provide EPB with a better cash flow and help it keep a strong bond rating.

EPB is operating at a loss on the electric side by several million dollars with two months left in the fiscal year. Mr. DePriest said if the utility is able to finish in the black with a late surge "it will only be by a few hundred thousand dollars. That is not much for an agency our size."

While the electric side is facing a possible loss, the fiber optic side has made $13.4 million this fiscal year.

Chairman Joe Ferguson said, "I'm so thankful we did what we did when we did it."

Mr. DePriest said it was "the best investment we ever made."

Officials noted that the telecom (phone) debt will be paid off in June. It stood at over $36 million in 2007. Mr. DePriest noted that the success and experience with the phone endeavor led EPB to move on to the more lucrative TV and Internet business.

On substantial income from large power users like Volkswagen, Mr. DePriest said, "We haven't seen it yet." But he said VW's second line should benefit EPB.

However, he said there is "not a lot of margin" on huge accounts like Volkswagen. He said, "The real benefit is for the people of the valley who get better jobs and homes."

Present at the meeting were board members Ferguson, Vicky Gregg and Warren Logan. Absent were John Foy and Jon Kinsey.

 



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