Monday, November 30, 2015

Utility Rates


Happy about your power bill? I’m not either. I got a big one too.

In fact, no one here at City Hall is happy about it. Your mayor, your city council, and your city manager hate seeing increased utility bills because that means that we are taking more money out of your pocket to fund city services. We’d much rather see you use that money to buy dinner in a local restaurant or spend that money in any number of ways that would have a positive impact on the local economy. I want you to have the best service at the lowest possible price. Period. No exceptions.

So first, let’s talk about the front part of the equation: service. The City of Clinton is an American Public Power Association Diamond RP3 Award winning utility, one of only two in the state. The other is Santee Cooper. We proudly serve you with some of the highest reliability ratings and fastest system restoration times after an outage in the southeast. Time and time again you tell me the only thing worse than a high rate is sitting in the dark with no power. We’ve gotten very, very good at dealing with the dark and we are getting better at dealing with those annoying blinks.

Now let’s talk about the second part of the equation: cost. Unfortunately, we also have some higher than average rates as compared to other providers in South Carolina. There are many factors that impact the rates, including the dramatically hotter June this year, the impact of a PPCA charge, the impact of our local economy on power rates (fewer customers to spread the cost out among), and some decisions made years ago. We try to balance our power rates by having some of the lowest property tax rates in South Carolina as a city, because we know it impacts our residents when they have to pay for government services, including government utilities. 

So what happened?

You power bill is higher this month for two reasons. First, the June billing cycle was unusually hot. There were many days with the temperature above 90 degrees. The hotter it is outside, the harder your air conditioning system and other appliances that keep things cool have to work. Even if you don’t adjust the setting on your thermostat the outdoor air temperature impacts how hard your air conditioner has to work to keep your home cool and the harder the air conditioner works the more electricity you use. We’ve seen some customers who used five times more electricity in June 2015 then they did in June 2014 even though they didn’t do anything differently, and that means a much higher electric bill.

But the heat wasn’t the only reason that your bill went up. Another reason is the city’s Purchase Power Cost Adjustment Charge, or PPCA, which changes each month based on what the city has to pay to a provider to purchase electricity, which added an additional $0.029 per kwH to the bill. Due to the mix of electricity the city receives, the cost to buy it each month changes a little bit. The PPCA passes the adjustment on to each customer equally based on their use of electricity. When the cost to buy electricity goes down, the PPCA passes the savings on to you. In the December 2014 billing cycle, the PPCA resulted in a 4% discount on your power bill. In the February billing cycle there was an 11% reduction, and in the May billing cycle it saved you 5%. In August the PPCA is still going to be positive but it could result in an 8% to 9% reduction compared to your current bill. 

We also are not in a position to just throw our hands up and go buy power somewhere else. Many years ago city officials signed a long term agreement to purchase power from our current provider and to cover certain obligations associated with the joint funding of power generation facilities. Even if we were able to buy power somewhere else, we would have to charge a higher rate to meet certain contractual obligations we have with our provider.

I wish I had more space to go into greater detail about this issue. Because what happened in June was unusual, complicated, and there were many factors that came together to create the situation that we experienced. I’ve prepared a much longer and more detailed set of information about your June power bill on my blog at www.clintonsc.blogspot.com.  Please take a minute to go to the website and read about these issues, because ultimately we are going to need you to help us make the hard decisions necessary to determine our future direction.

In the meantime, our customer service representatives are ready to help you by spreading out some of the charges to make paying your bill easier. In January, we want you to sign up for equal pay, so your power bill will be the same every month, making it easier for you to budget. And remember, we are all in this together, and the only way to address it, fix it, and make it better is by working together to find solutions that we (and our wallets) can all live with.