Huntsville Utilities

Huntsville Utilities building at 101 Church Street. (Bob Gathany | bgathany@al.com)

Emotions were running high Thursday as Huntsville city leaders debated the merits of a possible electric utility availability charge increase for residential and small commercial customers throughout Madison County.

Huntsville Utilities asked for a residential electric availability charge increase of $2.50 per month beginning May 1. For small commercial customers, the monthly charge would have jumped from $11.39 to $12.98, a change of $1.59.

The utility also wanted to simplify the residential electric rate structure by moving away from its current two-tier approach to one consistent rate for consumption.

A second hike would have taken effect Oct. 1, increasing the residential electric availability charge again from $11.38 to $13.78 per month, while small commercial would rise from $12.98 to $15.38.

'A little bit ugly'

After some contentious discussion, the City Council voted 3-2 not to authorize the increases in May. Council members Jennie Robinson and Mark Russell were for the proposal, while Bill Kling, Richard Showers and Will Culver opposed the plan.

The council then withdrew the October proposal as it was no longer relevant.

"The process of good governance is sometimes a little bit ugly," Huntsville Utilities President/CEO Jay Stowe said after the defeat. "Tonight was a little bit ugly."

The plan, which would have generated roughly $9.9 million per year for Huntsville Utilities' Electric Department, would have had no effect on larger commercial or industrial electric customers.

Huntsville Utilities, a not-for-profit that purchases its electricity from the Tennessee Valley Authority, is now under pressure to develop a new proposal to bring in more revenue on a fixed basis. Stowe said the council's decision to vote down the electric increases for May could affect the utility's customer service.

Capital projects

"We're proud of the progress we've made over the past five or six years to improve that customer service and we're going to keep on trying to do that," he said. "But it may slow down some of the projects that would have helped our customers."

Stowe was referring to several significant projects, including automated distribution, outage management, transportation, general construction and advanced meter infrastructure. The utility has a capital plan in place for more than $36 million in projected expenses over the next five years.

Showers sided with several audience members who were concerned about how the proposal would affect Huntsville's low- and fixed-income families who cannot afford any additional monthly costs.

"They're low income," he said. "They have situations where they just can't pay any more, yet they need our service. They've asked me as their representative, their voice for District 1 to vote no on this opportunity tonight."

Amendments

Culver also had reservations about the Huntsville Utilities' plan and brought forth a motion to amend it by cutting the residential May increases to $1.25 instead of $2.50. Kling proposed a 1.9 percent usage increase for all customers to produce more revenue for the utility.

Kling said his plan would have been a more equitable solution based on concerns from members of the public about the increases.

"It would give the person who wants to a chance to kind of cut back on their bill," he said. "The person who has the low income issues that we've been hearing about, it would give them less of an impact. They would be paying less, whereas the person with the bigger house using more would pay more."

Culver said his plan to cut the increase in half would have been a "good compromise" between the people who struggle to pay their utility bills and Huntsville Utilities.

Stowe was quick to respond, saying Culver's idea was not a compromise.

"In order for us to remain a progressive city, in order for us to remain with the strong bond rating that we have and in order for us to accomplish the tasks that are listed, we need to have the revenue that offsets that," he said. "Half of the rate doesn't accomplish the goals that we've set out; it doesn't accomplish the direction that we're headed."

Legal concerns

Culver withdrew his motion after Stowe asked if the council would consider passing the May electric increases and tabling the October increases so the utility could go back to the drawing board.

City Attorney Trey Riley questioned whether Culver and Kling's amendments were legal since the original plan had already been approved by TVA and Huntsville Utilities' Electric Board.

"I have serious concerns about the legality of that possibility," he said. "As I understand the process, the council has a contract, which they have approved, with TVA and that contract states that there is a certain procedure for rate increases and before a rate increase can occur, it has to be approved by TVA.

"The particular resolution that is before the council tonight has been presented through those various procedural steps and it arrives here having received the approval of the TVA and the different bodies that were involved in that process."

Kling withdrew his motion to amend the proposal. Showers' motion to postpone the decision entirely until the next council meeting April 28 was voted down 3-2.

Future increases

Stowe said the utility will revisit the issue and come back to the council with another plan. The delay could slow down some of Huntsville Utilities' capital projects and cause higher increases for customers in the future, he added.

"There will need to be more revenue," he said. "There will need to be more and that will require a rate increase at some point in the future. We can't avoid a rate increase forever."

There are a number of options available for customers who can't pay their utility bill. The Huntsville Extreme Energy Makeovers project, funded by an $11.7 million TVA grant, is a newer initiative low-income residents can use to reduce their home energy costs.

Robinson said the electric increases would have allowed Huntsville Utilities to pay for additional infrastructure to help customers lower their consumption.

"I think it's our responsibility to do what we need to do for our constituents to make it possible for them to lower their utility usage," she said. "And that's what this is about. It would be very short-sighted of us to look at this in just the immediate."