Utility Bills Figure into Debate on Coal Plant

Utility Bills Figure into Debate on Coal Plant

Aug 08 - Tallahassee Democrat (Tallahassee, Fla.)

June and Charlie Gray have barely paid attention to the debate about whether Tallahassee should be involved in a proposed coal-fired power plant in North Florida.

The elderly couple have been too busy trying to figure out a way to pay their enormous electricity bills.

In June, the Grays' bill was $510, and that was one of the lowest on their block. They turned to the city for answers about why the bill jumped so high.

The answer was one utility officials have been giving for the past four years.

"They said we just had a hard month, then they started talking about gas prices," said June, who is retired and brings in about $40,000 annually in retirement benefits. "I feel really sorry for the people who don't have the money to pay it. We haven't gone without anything, but this month we are scared to death (the bill) will be over $600. I just don't understand why it's so gosh-darn high."

In the next few months, leading up to a November vote on the coal plant, customers such as the Grays can expect to get a crash course in what has made the city's electricity rates so high.

They also will learn probably more than they would like about the city utility's finances and future.

On July 13, the City Commission voted to spend $6.4 million initially to join a partnership of three other public utility companies planning to build a $1.6 billion coal-fired power plant in North Florida. Taylor County has been mentioned as the front-runner for the plant.

Supporters of the city's involvement in the plant have argued the city has done all it can to minimize the impact of high natural gas prices on customers. The city is heavily dependent on natural gas to generate electricity, and most of that cost is passed on to customers.

Since 2001, the city has contributed $13 million toward customers' utility bills and provided several million more in grant and loan programs designed to make homes more energy efficient.

Cheaper prices after construction

Utility officials contend the coal plant would give the city a cheaper option to produce electricity, which should translate into cheaper rates for customers when the plant opens in 2012.

"We believe we've done a lot, and we won't stop doing what we're doing, but we just really need to posture ourselves for the long term, and that's what this is about," said Reese Goad, the city's utility accounting administrator. "At the end of the day, we want customers to know that prices are going up, and we're all in the same boat as we transition into a different era in energy cost."

But the city's potential plans to spend $300 million to help build the plant could have adverse effects on utility customers in the seven years leading up to its opening.

If voters approve the City Commission's decision to become a partner in the plant, the city is expected to borrow the money through sale of bonds, probably the largest bond issue it has ever done. The city also would have to spend more than $60 million to build transmission lines to get the power from the plant.

Mark McCain, spokesman for FMPA, the majority partner of the utility groups, said the city would have until 2007 to deliver its contribution to the group.

This fall the city is expected to issue close to $120 million in bonds for capital improvements to utility facilities. The largest bond issue to date for the city was $198 million for the utility department back in 1977. The debt service for utility bonds is factored into electricity rates.

City Treasurer-Clerk Gary Herndon said it's too early to tell whether the $300 million in bonds would go out at one time or be spread out over time, or how much of an impact it would have on rates. He said it's possible the partners could need all of the city's contribution at one time, but the issue wouldn't come until five years from now.

Still, top officials such as Assistant City Manager Rick Fernandez have said financing the construction of the coal plant could bring higher rates.

"How are we going to say we want to help our utility customers with this coal plant and make a move that is going to cause a rate increase over the next eight years?" asked City Commissioner Allan Katz, who was the lone vote on the commission against the city's participation in a coal plant.

But the people who will have to make the final decision on whether it's a good idea to pay a little more now, to save a little later, will be people like the Grays.

Like many utility customers, the Grays have taken advantage of the city's energy audit programs and changed their electricity-usage habits. They don't run the air conditioning as much anymore and don't cook nearly as much as they used to, June said. They invested in a more energy-efficient water heater and improved the insulation in their home.

Bills still are routinely $390.

The high bills have been even more of a burden because Charlie Gray, 74, has Lou Gehrig's disease, also known as ALS, and needs relatively expensive medical care.

"Every year it feels like the bill goes up," June said. "I don't understand it."

In the next few months, she will.

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