CLEVELAND, Tenn. -- Cleveland Utilities will consider increasing customer charges for its electric services as part of its 2015-16 budget year, which begins July 1.
In a recent meeting, the utility board discussed a proposed overall 1.537 percent electric billing increase that would ultimately add $6.74 to the current $8.09 residential customer charge.
The proposal calls for adding $2.74 in July, followed by a $2 increase in October and another $2 increase in April 2016, said Ken Webb, president and CEO of Cleveland Utilities.
Board member Eddie Cartwright questioned how the proposed increase would appear in the average customer's bill.
"Cause I know that question's going to hit as soon as it spreads through the community that there will be an increase, maybe," Cartwright said.
Ken WebbAn average residential customer using 1,118 kilowatt hours of power is billed $109.09 under current rates, Webb said. That customer would pay $115.83 if the proposed electric increase is implemented, he said.
Larger commercial customers would see increases as well, Webb said.
The utility board is scheduled to vote on the proposed budget on April 7 and present its recommendations to the Cleveland City Council on April 13.
Webb said the need for making electric service billing increases is based on recommendations by a recent cost-of-service study that will be reviewed at the April 7 meeting.
Ultimately, it comes down to trends that have developed in the last 10 years which have seen customer base and peak demand increase while actual electric sales decreased, he said. The cost of purchasing power from the Tennessee Valley Authority is a key factor in the equation.
"What's really happening is there is a little bit more of a squeeze there between what we have to send TVA and what we actually collect," Webb said. "Over 83 cents out of every dollar collected by the electric division goes to TVA."
Despite the decreased power sales, the utility still has to provide and maintain a distribution system that can deliver even during peak periods.
"Our demand is actually increasing and we have to have the capacity to meet that demand," Webb said. "Now it may only occur one day out of the year, but we have to have it available."
Webb said growing customer conservation and energy efficiency efforts were a contributing factor to decreased sales.
The resulting bottom line for the electric division has amounted to a year-to-date earnings loss of $482,092, according to the February 2015 report presented by Marshall Stinnett, CFO for Cleveland Utilities.
Paul Leach is based in Cleveland. Email him at paul.leach.press@gmail.com.