Cleveland Utilities passes $2 grid access charge

By TIM SINIARD
Posted 6/24/18

Starting in October, Cleveland Utilities customers will see a $2 fee on their electric bills.The utility made the announcement during its regularly scheduled meeting Friday at the Tom Wheeler …

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Cleveland Utilities passes $2 grid access charge

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Starting in October, Cleveland Utilities customers will see a $2 fee on their electric bills.

The utility made the announcement during its regularly scheduled meeting Friday at the Tom Wheeler Training Center in Cleveland.

The Tennessee Valley Authority Board of Directors approved the fee, designated a grid access charge (GAC), on May 10.  In addition, the Cleveland Board of Utilities on Friday approved the implementation of the fee to its customers. 

CU president and CEO Tim Henderson, said the decision to implement the new charge came after several discussions with TVA officials – the latest of which took place last week.

“We met with TVA last Friday,” Henderson said. “We worked with them to find out what would be the proper way to transfer the fee to our customers. It’s now a fixed component of (utility) bills.”

Beginning in October, there will be a $2 per month fee for residential customers. In addition, GSA 1 customers - small commercial businesses or customers who have power service to a barn or a detached garage, for example – will also be charged the access fee. However, CU officials said the charges will be offset by a reduction in the kilowatt rate by $0.00181 for residential customers and by $0.00126 for GSA 1 customers. In short, the new charge will be revenue neutral for most customers.

The fee is charged to utilities that purchase power from the agency.  The new rate structure, which was announced earlier this year, will address decreasing power customer demands on TVA’s infrastructure. As more energy-efficient customers purchase less power from utilities due to the use of rooftop solar panels, energy efficient windows and better insulated buildings, for example, TVA insists it must absorb costs to maintain its massive power grid as customers use less energy in the incoming years.

According to a CU, TVA will apply the GAC on Oct. 1. The GAC will be based on a rolling, five-year average of kilowatt-hours for each local power company.

TVA will calculate the fee by multiplying CU’s average purchases, or kilowatt-hours, over five years multiplied by $0.005. The charge will be updated annually at the end of TVA’s fiscal year in September, the press release said.

CU officials announced the utility’s GAC will be $4,248,433, which will be offset by TVA decreasing its wholesale base kilowatt-hour rate by $0.005.

As a result, CU will pass on this charge to its customers. However, the new calculation will take place over a two-year period, with the first phase implemented in October and the second phase during the same month next year. The change in retail rates will mirror the change in the wholesale level, the  release said.

In addition, the new fee will be listed on customers’ bills as “TVA Grid Access Charge.”

CU vice president and Chief Financial Officer Marshall Stinnett said CU will phase-in the GAC to lessen its impact on its customers.

“We are trying to do this over a period of time. Not every customer is the average and we don’t want rate shock  —significant bill impacts — so that’s the justification why we are at $2 right now,” Stinnett said. “We want to start the process and obtain more information. Right now we are going to make a smaller portion of it fixed, but the majority of it will be in their kilo-hour rate.”

In other business the utility board:

• Voided a purchase order to Dell Computer in the amount of $77,961.35 for the Microsoft Select renewal for a three-year term, which was approved by the utility board at the March 2, 2018, board meeting. The quote from Dell was incorrect. The renewal will be on a yearly term, and the new purchase order will not require board approval since the amount is below the threshold requiring board approval. 

• Approved a consideration of a purchase order to Wilding Contracting, LLC for the 2018 Building Renovation Project for the Power Service Center (Main Building) and the Tom Wheeler Training Center in the amount of $709,084.

Wilder Contracting submitted the low bid, which exceeded the budgeted project amount. Value engineering was used to reduce costs and the final figures within the budget.

• Approved the 2018-2021 Strategic Plan

• Approved property, liability and workers’ compensation insurance for fiscal year 2019 with Distributor’s Insurance Company in the amount of $917,652.

• Approved the consideration of a purchase order with Jackie Evans Trucking Company in the amount not to exceed $100,750 for the removal of alum sludge, approximately 650 loads, from the Cleveland Filter Plant.

The service period is from July 1, 2018 to June 30, 2019. The service is budgeted for fiscal year 2019 and is the source procurement.

• Approved a consideration of a purchase order with Vulcan Materials Company in the amount not to exceed $90,000 for the purchase of stone backfill.

The purchase period is from July 1, 2018 to June 30, 2019. The stone backfill is budgeted for fiscal year 2019 and is the sole procurement.

• The CU’s next meeting will be at 12:30 p.m. Friday, July 27.





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