Total Bills Will Lower Even With Proposed Base Rate Increase

Fuel Charge Decrease and Base Rate Increase Proposed

Today, Lakeland Electric has submitted its final proposal for a series of base rate increases and a fuel charge decrease to the City of Lakeland Utility Committee.

Customers’ bills are made up of several charges: base rate, environmental charge, fuel charge, and taxes and surcharges. If both proposed measures are approved, an average residential customer using 1,157-kilowatt hours (kWh) will see their total bill decrease by $21.54 this spring. (A base rate increase of $1.60 + a fuel charge decrease of -$23.12.)

Proposed Fuel Charge Decrease – Effective March 1, 2023: 

The City of Lakeland Utility Committee approved a decrease of the electric fuel charge for Lakeland Electric customers starting in March and through the next fiscal quarter (April/May/June 2023) pending a vote by the Lakeland City Commission on Monday, February 6, 2023. 

Lakeland Electric staff recommended lowering the fuel charge by 2¢ per kWh. If approved, a residential home using 1,000 kWh per month will see its fuel charge decrease from $75.00 to $55.00 per 1,000 kWh. 

The volatility of the fuel market and demand is calming, allowing the utility to lower the fuel charge. The cost of fuel is passed directly to customers. Lakeland Electric makes no profit from the fuel charge.

Proposed Base Rate Increase: 

• 2.25% on April 1, 2023
• 2.25% on October 1, 2023
• 2.25% on October 1, 2024

Lakeland Electric is recommending a series of 2.25% base rate increases over 17 months to maintain the financial health of the utility and minimize the inflationary impact on customers. 

“We are trying to balance the utility’s needs with the needs of our customers,” stated Gina Jacobi, Assistant General Manager of Fiscal Operations. ‘Spreading out the base rate increases will help prevent customers from sudden significant changes in their bills while maintaining the utility’s financial health.”

The base rate accounts for about 45% of customer bills and consists of the customer charge and the energy charge or the kWh used by a customer. 

If approved, an average residential customer (Residential Standard) base rate increase will be $1.60 per month. For our small commercial customers (General Service) the average base rate increase will be $2.08 per month. 

The additional money will go to preserving the utility’s days cash on hand, an essential measure to maintaining its credit rating. The increase will also fund maintenance and upgrades to Lakeland Electric’s poles, wires, substations, and power plants as well as cover operational costs that have dramatically increased. 

“The electric industry is not immune to inflationary pressures which is why this base rate increase is necessary. We know our customers continue to face increased costs everywhere due to inflation and other factors; that’s why we are pleased that our decreased fuel charge will more than offset this base rate increase,” said General Manager, Mike Beckham. 

Lakeland Electric has seen substantial price increases for standard materials. In the last year, wood poles have increased by 30%, transformers by 40% and steel poles by 45%. 

The utility projects that even with the base rate increase, it will have some of the lowest electric rates in the state in April 2023.

Today the City of Lakeland Utility Committee has approved the proposal for an across-the-board base rate increase of 2.25%. There are two exceptions, General Service Demand customers will receive a 2.24% increase and General Service Large Demand will receive a 2.26% increase.

The proposal will go before the Lakeland City Commission for its first reading on February 6, 2023, and for a second reading and vote on February 20, 2023.