While approving a pass-through rate increase announced earlier in the year by the Tennessee Valley Authority, the Johnson City Power Board’s board of directors also made changes to the utility’s rate structure that the company claims will help stabilize rates with no effect for current customers.
Under the new structure, the JCPB’s customer charge, a fixed fee on customers’ bills, will be increased by $2 to $14.51, but the rate per kilowatt-hour will drop by .02 cents.
“The changing of our rate structure, which was based on a cost of service study, is revenue neutral,” Power Board CEO Jeff Dykes told the board members Tuesday evening. “We’re not having a rate increase, we’re just shifting the charges for the fixed costs to the customer charge.”
With the changes, Dykes said the JCPB’s steady costs, for things like maintaining power poles and lines and reading meters, will be paid proportionally by the customer cost, making the charges more equitable, regardless of a customer’s use.
“If one person doesn’t use as much electricity as another, one of our employees still has to come out and read both meters, so the cost to read them is the same,” he said. “It’s better to include things like that in a customer cost that is the same across the board, so one person isn’t subsidizing the other.”
Dykes said a study conducted a couple of years ago recommended the structure change, but the board has only just gotten around to enacting it.
“It’s really been a long time coming,” he said. “By making sure that those fixed costs are paid for, it reduces our risk as a company and it reduces down the road the requirement to have a rate increase from our customers.”
Dykes said the changes will be revenue neutral, which means the company will not collect any new money — a requirement mandated by the TVA.
JCPB customers will see changes to their bills in October, but not in the direction they expected.
A 1.5 percent rate increase passed as part of the TVA’s 2014 fiscal year budget will be offset by less expensive fuel costs in October, Dykes said.
The board unanimously approved the increase, which would amount to slightly more than $1.50 per month for the average user, but Dykes said heavy rains this summer increased production at the agency’s hydroelectric dams and reduced the need to buy power and fuel from other suppliers.
“Even with TVA’s increase, the cost per kilowatt-hour will decrease,” he said. “That’s good news for everybody.”