NEWBERRY – Utility Director Tim Baker said city staff continues to evaluate retail electric rates during the Utility Fund budget for the fiscal year 2020-2021.
The city’s primary wholesale power provider, Piedmont Municipal Power Agency (PMPA) passed a wholesale rate reduction of five percent effective May 1, 2020. Baker said this reduction was primarily in energy charges and would not have a significant impact on capacity costs.
“We are currently scheduling a rate review with our rate consultant, to develop a recommendation for a rate reduction or change,” he said.
Baker said they budgeted both wholesale electric costs and revenues based on historic data to allow decisions to be made by council — once the analysis was performed.
“We expect to have a recommendation in the first quarter and will continue to use the Wholesale Power Cost Adjustment (WPCA) to pass through any changes in purchased power costs until such time a complete analysis can be conducted,” he said.
A continuation of a two percent meter minimum on both water and sewer charges are proposed in the upcoming budget. Baker said these increases were to offset the additional debt capacity needed to fund the 2015 series bonds and were a part of the rate plan adopted at that time.
Baker said the average inside city residential customer would see a total increase of approximately $0.75 per month, based on a five-eighths inch meter. Even with this increase, Baker told council the city was still seeing lower consumption charges than nearby utilities.
The total estimated utility gross revenues for FY 20-21 are $37,860,287 compared to $39,211,959 in the prior year, representing a decrease of 1,351,672.
Under the line item of Utility Administration, Baker said staff recommended an increase of $72,798 relative to FY 19-20. This increase comes primarily for the rate study regarding the PMPA wholesale decrease.
The electric division, totaling $1,346,257 is recommended to increase $192,535 or 16.7 percent relative to prior year for ongoing litigation, addition of an operation and maintenance line item for fiber optic maintenance and increasing cost of electrical materials.
While the city’s fiber optic system is nearly completed, Baker said they budgeted for maintenance on the system, should funds be needed to maintain that.
The line items of General Insurance and Employee Benefits are projected to increase $48,616 and $133,428 respectively relative to prior year. Baker said these line items are provided to the city through the Municipal Association of South Carolina.
Non-departmental expenses totaling $25,660,759 is recommended to decrease $1,788,500 relative to last year, Baker said primarily from a reduction in the transfer to the Utility Capital Fund due to reduced capital expenses.
Several Utility Capital Funds are recommended to decrease this fiscal year to include Electric System Capital by $1,180,000. The primary reason for this decrease, Baker said comes from completing the fiber project and delaying new purchases. A new bucket truck is requested under this line item as Baker said he did not feel the purchase could be delayed.
The Water System Capital, totaling $473,000, is recommended to decrease $509,500 relative to prior year, along with the Sewer System Capital, recommended to decrease $92,000. These decreases come from delaying projects and purchases where possible during the current COVID-19 pandemic.
The Bond Fund Capital budget, totaling $1,559,882, is recommended to decrease $4,875,167 compared to prior year as the bond funds are expended, Baker said.
This includes completing the Kraft-Heinz Water Tower and associated pumps and piping. Baker said they will only have enough funds to begin a phase two project for the Scotts Creek sewer line replacement, but would try to maximize any remaining funds such as grant matches to get as much of the project completed as possible.