EPB is preparing for the future as it begins the process of a $75 million bond issue. The bonds must be approved the Chattanooga City Council which will come before them for a vote on June 8. It was noted that the borrowing rates are near all time lows making this a particularly advantageous time. The revenue created is planned to be used for capital improvement projects. "If we do not go to the bond market, we would have to increase rates," said EPB Chief financial Officer Greg Eaves.
No rate increase is planned for electricity next year.
Mr. Eaves noted that although the final terms for the bond issue are not yet final, EPB expects its electric debt service will continue to be about $20 million per year or so. This includes the debt service for both the new bond issue and a previous bond issue that took place in 2015. Both bond issues are set to mature 20 years after their origination.
Since payments from EPB Fiber Optics to the electric system exceed $20 million a year for the use of the community-wide network and other infrastructure, all electric system customers benefit from the revenue generated by EPB Fiber Optics whether they subscribe to fiber optic services or not, officials said.
EPB Fiber Optics does not have any debt.
Electric use is flat to declining and electric rates were not increased last year due to the pandemic. Mr. Eaves said that any increases on a bill are fuel costs that EPB pays to TVA each month. This cost has been low but is now creeping up, he said.
On the electric side of the business this year, there was a lower demand for electric service and any increases came from new developments. President and CEO of the Electric Power Board David Wade said he mis-judged the effect that the pandemic would have. Instead of seeing a slow down of construction there was an increase in development. Most of the growth in electric service was due to the increase in new buildings. That also resulted in more Internet customers.
On the fiber optics side, he said all was positive. Subscribers were higher than budgeted for last year. The effect of the pandemic on the Internet was to add more customers. Another jump in the number of users of the Internet is expected next August and September when school starts again and when EdConnect, the program that provides free Internet to low-income homes, expands again. That service now connects 7,600 homes with 12,000 students. Mr. Wade said, “We won’t turn it off for the summer. It is not adding dollars to the business, but it is adding benefits to the community in a lot of ways.”
The budget for 2021-2022 is under development and will be based on no rate increase for the electric business. This has been driven by good weather, emergency credits from FEMA, the anticipation of new businesses and generation and storage of electricity by EPB, which can produce about five percent of the total, resulting in lower costs paid to TVA. Additioinally, self-generation of power adds resiliency, it was stated. Fiberoptics includes TV, Internet and phone service, and growth is continuing with more Internet subscribers. No price increase will be planned for Internet or phone subscriptions, but Mr. Wade said increasingly people are asking for the ability to choose what they watch on TV. He said this cannot be done because the suppliers package programs and, if EPB wants to use them, the programs must stay grouped. And the providers have increased prices they charge. EPB will be raising video rates to cover their costs.
It was noted that streaming provides customers with an option other than video subscriptions. Streaming can save money by allowing customers to buy only the programs they want and costing them less. Seeing this as a trend, there are fewer video customers planned for in the coming year. In 2009, almost 100 percent of customers had video and 80 percent had Internet. Today, 45 percent of customers buy video and 100 percent have Internet.
Corporate Goals, said Mr. Wade fit into five categories: Service to the Community, which is to improve the quality of life. Financial stewardship, to ensure that resources are managed well. Developing people is another goal. Plans for the future are also being undertaken by making sure that the network will be ready for tomorrow.
The budget that starts July 1, 2021, must be approved before July.