ALBANY, Ga. -- The Municipal Electric Authority of Georgia told Albany Water, Gas & Light Board members Thursday they have planned to raise the utility's fee by as much as $9 million next year in an announcement that Albany Mayor Willie Adams called "shocking."
MEAG is the entity that sells electricity to its members who then turn around and sell electricity to their customers. WG&L is one of MEAG's
Thursday's presentation to the WG&L board seemed to catch some off-guard.
"I'm sure this is going to be looked at by ... some other people," Albany Mayor Willie Adams -- who also serves as chair of the WG&L board said. "This is a shocker here."
Based on several indicators and factors, MEAG's preliminary 2011 calendar-year budget shows they intend to raise their total purchased power cost to WG&L by up to $9.3 million from $63.4 million to $72.7 million. That amount is almost two-thirds of WG&L's $100 million operating budget.
MEAG Representative Steve Jackson, who gave the report to the board Thursday, said the increasing cost is based largely on a depressed electrical market whose low price coupled with low demand is making it harder for utilities to generate any revenues off the sale of electricity.
Also causing the spike in the price will be the previously scheduled outages at six power facilities beginning in 2011 for refueling, maintenance and environmental control upgrades mandated by the state and federal government.
According to Jackson, the two nuclear reactors at Plant Vogtle will go down at different points next year -- one in the spring and one in the fall -- to allow for refueling. That process in and of itself will be expensive since the price of uranium has increased given increased world demand.
Some of MEAG's least expensive plants to operate will also go offline meaning that MEAG will have to buy electricity from other places at higher rates than if it were producing the electricity itself, Jackson said.
"It's just really unfortunate timing right now," Jackson said. "We will do everything we can do to try and lower the cost, but this is the perfect storm for us."
Jackson said MEAG officials were working to trim the budget by an estimated $20 million, which could translate into a $2 million savings by WG&L who has a 10 percent stake in MEAG.
The $9 million annual increase in the cost for doing business with MEAG is convenient given the fact that the city and WG&L receive roughly $9 million annually in credits from MEAG's Trust, Adams said.
"I just think this could be a backdoor way of trying to get those credits back," Adams told Jackson and the board.
The notion was quickly dispelled by MEAG officials who reassured Adams the trust credits would not only continue to flow into Albany but that, since the credits were tied to the operations and maintenance of MEAG, that the amount would increase next year by a total of $1.7 million.
Currently the city government receives $6 million annually in credits from the trust which are divided in half with $3 million going to the city's general fund and $3 million going into a long-term local trust. WG&L itself also receives $3 million in trust credits from MEAG yearly.
WG&L Finance Director Jon Vansant III said utility officials will work in the coming months to try to find ways to absorb the cost increase.
"We'll have to try and find some way to pay it," Vansant said. "Unfortunately it has to come one way or the other."
WG&L board members or staff made no mention of a possible rate increase during Thursday's meeting.
Utility's across the state are, however, raising their rates.
Georgia Power has sought for and obtained various rate increases this year from the Public Service Commission to help fund an expansion at Plant Vogtle and Tuesday the Atlanta Gas Light Company was granted permission to raise their rates by $1.14 per customer to generate $26 million in increased revenues -- which was less than half of what they had asked for.
The PSC doesn't regulate WG&L's electric rates.