The change came reluctantly, a 3-2 vote, at the council’s April 9 meeting, but was overall deemed necessary in order to keep the city afloat in the next year.
“We’re actually losing money each month based on what we collect in revenues from our customers,” said La-Fayette city manager Frank Etheridge. “And in the past we’ve absorbed that over the years because there’s been a profit built into that, but over the years that’s gone away. And last year actually was a very good year for the city for the simple fact that we were getting about $111,000 per month refund as part of the various (coal) plants coming off-line to get maintenance, to get upgrades, to get the mandated improvements from EPA requirements.
“Now, that $111,000 has gone away. That was basically a year to 18-month period where that was occurring. So we don’t have that money to offset our expenses. So we are losing money monthly,” he said.
Though the city of LaFayette invested in some coal plants years ago, now, as part of the Clean Coal Act, those plants are finding themselves strapped: having to increase their expenditures on environmentally compliant up-grades and improvements year by year, and passing the cost on to the participating cities in the form of compliance fees.
Last year, the cost to LaFayette of upgrades to the plants in question “was $777,000 and some change,” Etheridge said. “This year it’s $939,000. Next year it’s going to be $1.2 million. So you can see, progression-wise, it’s increased. …. Those compliance fees have always been absorbed. So we’re at the point where we can no longer absorb those.”
In anticipation of these stockpiling fees, LaFayette city council reluctantly decided to add a 10-mil electricity charge increase to its customer utility bills.
“What 10 mils means to the average residential is an 11 percent increase or approximately $10.66 per month. ... Our average residential customer uses 1,066 kilowatt hours per month,” said Etheridge.
“We’ve had a long discussion. It is a painful item, especially looking at a large increase like that. But that is the cost of compliance,” said Etheridge.
Council members, like the public in attendance, at first had trouble swallowing the numbers Etheridge pre-sented.
“This $939,000,” councilman Ben Bradford asked for confirmation, “that’s not the cost of us buying electricity? That is a fixed cost to comply with federal regulations?”
While Bradford’s summary is correctly succinct, the cost will continue to increase year by year, which may pre-sent more problems for the city in the future, if compliance fees continue to be shouldered by the city and its resi-dents.
“We have an ownership interest in these plants,” said Bradford. “We don’t control the plants. But we share in their profits. We share in their losses. The federal government’s come into these plants and said ‘You shall do this.’ They’ve done it, we can’t control it, because we don’t have a controlling interest, and the federal government said you need to do it. This is our share of the loss.”
“We have been eating a loss with the rebates we’ve been getting while the plants have been closed getting cleaned,” said councilman Andy Arnold. “That’s no longer going to be out there. And we’ve put that back toward the citizens’ power bill. And we’ve actually been eating for about 10 years.”
No percentage of the 10-mil increase in electricity rates will go toward profit for the city. “The 10 mils will only generate $932,000,” said Etheridge. The city will have to come up with the other $7,000 to make the difference in the $939,000 compliance fee.
“We have looked everywhere to save money,” said Arnold. “The city utility has not charged the customer for this stuff that the federal government has mandated for awhile. And it’s to the point now where we can’t do it anymore. And we have looked and we will continue to look.”