COVINGTON — By a vote of 5-1, the Covington City Council approved the first reading of an ordinance that will increase electric rates by an average of 1.92% each year for the next eight years, with the first rate increase coming Oct. 1, 2020.
The increase is needed to help pay for the power Covington committed to purchase in 2008 from the Plant Vogtle nuclear power plant through an agreement with the Municipal Electric Authority of Georgia (MEAG). In 2008 the estimated cost of the project was $14 billion. Twelve years later, the project is still not completed, but the costs have skyrocketed to $28 billion, and it is coming time for Covington to start paying for its portion.
In 2019 the previous City Council formed an electric rate study committee to come up with proposals for how the city could pay its bill without dumping all costs onto utility customers. The end result was a plan to increase rates gradually over nine years, while also pulling a substantial sum each year from the city’s utility funds.
But the previous council did not take action on the recommendation, and in the midst of the COVID-19 pandemic the current council is having to make a decision on what to do.
At the city’s teleconference council meeting April 6, Mayor Steve Horton stated that they are proposing an average rate increase of 1.92% each year, starting in 2020 and continuing for the next eight years. He noted that depending on the rate class they are in — residential, commercial non-demand, commercial demand, industrial service, large industrial service — some customers could see a slightly lower rate increase, while others could see an increase of up to 2.4% annually.
Horton added that in order to keep the annual increase as low as possible, the city will pull money from its utility funds. The city usually makes up a fair sized portion of its budget revenue from the utility funds, and with money that would normally go into the budget going toward paying off the power bill, City Manager Scott Andrews is already working to tighten up the city’s budget for next year.
Horton suggested that now was not the time to deal with the issue, but wanted the council to be studying it and thinking about when they wanted to take action.
But Fleeta Baggett said it had already been put off too long.
“None of us want to do this rate increase and now is not the time to do it,” she said. “But it is going to have to happen... The recommendation was to start this last year. It was not done by the prior council and mayor last year, and now we’re putting it on down the road this year. I don’t want to get it to a point where we’re having to double up on things because we’re not doing what we’re supposed to be doing. So what do we need to do so all of a sudden we’re not hitting people with 5% at one time?”
Kenneth Morgan agreed and said he felt the council needed to take action within the next 30 days.
Susie Keck, who was on the previous council along with Morgan, Hawnethia Williams and Anthony Henderson, said no action was taken earlier because the recommended rate increase at the time was more than what they were proposing now.
“The way that rate study was presenting it was not as palatable as this is,” she said. “It started out at 2.5% and graduated up to 4.5%, without using the fund. This is more gradual and totals out at 17.5% and the other was like 22%. Had we done it back then, people would have been paying a lot more. What I would suggest is that we approve it now and say it is going into effect on a certain date, such as Aug. 1.”
Freddie Morgan, head of the city electric department, suggested they make the start date of the rate increase Oct. 1. That way, he said, they will be getting into the winter rates, which are lower.
The council agreed. The first rate increase will take effect Oct. 1, and after that each annual increase will begin on Jan. 1 of the following year.
Keck said the city also needs to start educating the public about Plant Vogtle and why the city is having to increase its rates.
Williams made a motion to approve the first reading of the ordinance increasing the rates. Baggett seconded it and the motion was approved, 5-1, with Henderson casting the lone dissenting vote. Henderson said in a previous meeting that he will never vote for increasing utility rates.
The second reading is set for Monday, April 20.