Staff Writer
Bills to rise Oct.1
As of Oct. 1, JEA customers will see an increase in their utility bills.
A $6.48 megawatt hour increase – from $41.26 to $47.74 – proposed by JEA Chief Financial Officer Paul McElroy and staff was approved by the seven-member board Tuesday during its monthly meeting.
A customer who uses 1,189 kilowatt-hours each month, the average residential consumption, will see an increase of $7.70.
McElroy told the board the Variable Fuel Rate charge needed to be increased because of rising costs of coal and petroleum coke that impact this year’s and next year’s finances.
A projected $71 million difference in what JEA will pay for fuel expenses as opposed to collect from customers is the reason for the increase, said McElroy.
McElroy based his projections on the higher commodity prices during the cold winter that forced JEA to use higher marginal cost fuels to meet demand as well as higher by-product expenditures to maintain regulatory requirements
Elevated pricing in coal and petroleum coke at the current fuel rate will lead to a forecast $61 million fuel fund deficit for fiscal year 2011.
Broken down, the $6.48 megawatt hour increase represents a $4.33 megawatt hour for fuel cost recovery in fiscal year 2011 and a $2.15 megawatt hour to recover the fiscal year 2010 fuel fund deficit and help restore a fuel reserve.
The fuel rate increase is built into JEA’s $2.2 billion fiscal year 2010-11 budget, which was also approved by the board Tuesday. The budget will be sent to City Council for approval.
“We achieved key financial metrics to keep our bond rating,” said McElroy, who also presented the budget to the board. “It balances the fuel fund, provides funding for strategic initiatives (and) provides record level government transfer via the JEA bill.”
The budget also includes a record $134 million in the electric system and $67 million in the water/sewer system to fund capital projects with current revenues, part of the strategy to rely less on debt and improve the overall balance sheet.
In addition, he said it also addresses human resources and retirement issues with JEA’s workforce. While McElroy said he understands the economic situation, the price of fuel has to be passed on to customers.
“It’s been very challenging,” said McElroy regarding developing JEA’s budget. “It’s a difficult economy and we realize that ... but the reality is we’d be spending $71 million and it has to be made up.”
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