FPUA-CFP Agree on Increased Transfer Method

I attended the joint meeting of the FPUA and the City of Fort Pierce Commission, where they worked their way to agreement on an increase in the transfer from the utility to the city. The compromise will probably add a little over a million each year to city coffers. UA Board member Mike Perri expressed his misgivings about possible rate increases in the future. While UA Director, Bill Thiess, said he thought they could increase the transfer in the next five years without increases, he also said planned decreases in the electric rate would probably not happen. The utility already has planned increases in water and waste water rates and the power cost adjustment is a fluctuating rate. The utility also won the ability to adjust rates based on the public service commission's deflator index, a kind of consumer price index for utilities. Commissioner Sessions objected strongly to the utility's proposal to advance monies in 2012, because of the expectation of payback from the city. Sessions said he felt like he was borrowing and paying back what was rightfully the city's money. Commissioner Becht has pushed for the increased transfer because he said it's fair to the utility and the city.

http://www.tcpalm.com/news/2011/oct/31/fort-pierce-utilities-officials-agree-to-pass/

Fort Pierce, utilities officials agree to new method of annual transfer

By Laurie Blandford laurie.blandford@scripps.com 772-409-1328

Originally published 06:12 p.m., October 31, 2011
Updated 07:54 p.m., October 31, 2011

FORT PIERCE — City and Fort Pierce Utilities Authority officials agreed they didn't want to increase electric rates as they proceed with a new method in calculating the amount of money the authority annually transfers to the city.

The City Commission and authority board met for a Monday afternoon workshop and agreed to move a large amount of the power cost adjustment into the rate part of electric bills. Officials said the adjustment is a pass-through cost to the authority's power provider, Florida Municipal Power Agency, to cover the fluctuating price of fuel.

The commission and board still have to give final approval to the new method at their next meetings.

Each year, the city receives 6 percent of the authority's total revenue. It received nearly $5 million last year.

But the adjustment hasn't been included in the transfer since 1994.

City officials wanted to include the adjustment in the total revenue so the city would receive an extra $1.5 million annually and help balance about $6 million in future budget deficits.

Authority officials came up with a compromise.

Residents' electric bills consist of two parts: the rate and the adjustment. The rate consists of the base rate to run the utility at $42.32 per 1,000 kilowatt hours and the base power cost at $49.52 per 1,000 kilowatt hours. The adjustment is $35 per 1,000 kilowatt hours.

Authority officials proposed moving $30 from the adjustment to the rate, which would give the city about an extra $1 million annually.

Authority Director Bill Thiess said the extra transfer would be done without a rate increase to residents, but it lessens the authority's ability to decrease rates in the future.

Instead of increasing residents' rates, the authority would make up the extra money going to the city by eliminating a rate decrease planned for next year.

But board member Michael Perri said Monday officials were making "a big mistake" and suggested instead raising the percentage annually transferred to the city.

"You can't convince me that down the road it won't affect the ratepayers," Perri said. "This is stealing from them."

Since the city won't see any of the extra money until 2013, officials agreed to set up the option for the city to borrow from the authority's $1.25 million in reserves next year if needed.

Still, officials must get approval from the authority's bondholders, which are two insurance companies, to change the way the annual distributions are calculated.

Thiess said he planned to send the proposed new method Tuesday to the authority's bond counsel.