AUB DIRECTORS CONSIDER RATE ACTIONS IN POWER AND WATER
ATHENS, Tenn. – Directors of Athens Utilities Board (AUB) are considering two rate adjustments for the local utility going into the final quarter of the year, one in the water division and another in the power division.
The AUB board passed the first reading of a resolution on the rate moves last night at the utility’s board meeting. A second reading of the rate resolution is set for next month’s board meeting on September 28.
Neither of the rate adjustments will be large, but both are necessary. Once approved, the new rates will go into effect in October of this year.
The water rate adjustment is the first that the division has had in 12 years and is driven by state regulation, based on the fact that the division has begun to lose money. This is not surprising with the last rate increase in the water division being in 2009.
“Had the coronavirus not hit in the first quarter of 2020, we already would have implemented a rate increase to address the situation prior to this negative net-revenue year,” said AUB’s General Manager Eric Newberry.
The water adjustment will be brought into effect with a $1.00 increase in the customer charge, and just 25 cents per thousand gallons of use every six months until April 2023. At that time, in April 2023, the rate will have increased by one dollar per thousand gallons of water used.
“This incremental approach helps lessen the financial impact to our rate-payers,” Newberry said.
“In essence, the coronavirus was a ‘double-whammy’ to our water division’s financial condition this past fiscal year,” Newberry continued.
“We have begun to lose money in the division after 12 years at our current rate. If we lose money two years in a row, the state will come in and simply tell us what our rate will be. We don’t want that and neither do our customers,” Newberry said.
“We’d rather be in charge of our own future. We have held our rate steady for a dozen years. Unfortunately, the growth rate of the division and inflation overall have left us in a tough position where net revenues are projected to continue to fall below regulatory required levels in the five-year budget,” he said.
In the power division, an increase of one percent to AUB revenues is needed. The last time power rates were increased was in 2018, when AUB had a similar one percent revenue increase for the utility.
“That’s a good hold on local rates after just a one percent increase last time, and that was the first increase for AUB revenue since 2007,” Newberry said. “Meanwhile, just as they do at home, our costs go up annually at the utility.”
“Nobody wants to pay more for any commodity, ever. We absolutely understand that, even when this revenue action results in a one-and-a-half percent increase to our average residential bill, because we are paying the same bills at our homes,” Newberry said.
The power rate adjustment will add about $1.78 to the average residential bill, which has some 1,176 kilowatt hours of use. Part of this would be an additional twenty-four cents on the residential customer availability fee, going from $15.82 to $16.06 per month.
The move will increase power revenue for AUB by about $491,000 annually.
“Over time, since our last local rate increase, our operating costs have risen. That’s no surprise to anyone,” Newberry said. “Just as at home, most things cost AUB more today than they did years ago.”
Notable is that about 83 cents of every dollar that AUB’s power division collects goes to TVA for wholesale power that is then distributed by AUB to the local utility’s 13,580 power customers.
Newberry said AUB has kept the water and power rates as low as possible by keeping annual operating costs in check, training and retaining an excellent workforce, and dutifully maintaining the millions of dollars of physical assets that the utility operates for the community. Assets such as the vast power grid, treatment plants, and water systems that cover much of McMinn County.
“It includes our construction equipment, all of the materials and devices that make up the utility distribution systems, work trucks, paying our people, paying for business insurance, healthcare, continually trimming trees—which is growing in cost substantially every year—and upgrading services and other infrastructure such as water pumping stations and miles of water lines,” Newberry said.
“We are proud of our people who have operated the business in a way that has avoided local rate actions for a more than a decade in water and for three years in power,” he said.
“Also, we thank our customers immensely. They have been so good, especially during this past year that was such a challenge for everyone,” Newberry said.
“We are committed to continue this type of work. We will watch our costs closely at every turn and make every dollar go as far as possible.”
Both of the local rate actions, when approved, will be effective October 1.
About 83 cents of every dollar that AUB’s power division collects go to TVA for wholesale power.
