Electric bills may rise 25 percent

Savannah Electric will ask PSC for permission to recover fuel costs from dramatic rise in natural gas costs to produce electricity.

Coastal Empire residents are coming off one of the most costly heating-bill winters in memory. And now the summer's air-conditioning costs aren't looking so great either.

Today in Atlanta, Savannah Electric officials are expected to ask Georgia's Public Service Commission for permission to recover the company's losses on fuel costs in the past two years. If approved, Savannahians' electric bills could go up as much as 25 percent. Savannah Electric hopes to begin charging the new rates in May.

Small businesses also will feel the impact of the increase, while large businesses and industries may be affected less since they are allowed under state law to negotiate their fees. The larger users also may be protected by long-term contracts.

In short, Savannah Electric had the same bad natural gas bills its customers had this winter. In 2000, gas-fired turbines generated 5 percent of its electricity. That was down from 10 percent the previous year.

The utility says it spent about $40 million more on fuel to produce electricity than it received from customers during the past two years. It also says it needs to adjust future rates since natural gas prices are not expected to decrease anytime soon.

Savannah Electric -- part of publicly owned Southern Co. -- operates as a government-regulated utility and must get permission before adjusting it rates.

Last year, Savannah Electric was allowed to recover $100 million from customers to pay for its costs. However, the company's fuel costs came to $120 million. Company officials said they had a similar loss the previous year.

The shortfall in 2000 came despite a 5 percent increase in the fuel-recovery charge, the first such increase since 1992.

With 2001's fuel costs expected to top $144 million, Savannah Electric officials decided to ask for another fuel-cost rate increase. Under Georgia law, the utility is allowed to pass its extra costs for fuel to customers.

For small business owners, though, many will have unsavory tasks of either cutting their own salaries or passing on their costs to customers, said Marjorie Young, owner of Carriage Trade PR and president of the Small Business Chamber.

Carol Perkins, owner of specialty pet supplies store Harry Barker, isn't sure what to do. The new startup business just finished a winter with monthly gas bills around $800 to heat its 6,000-square-foot store on Liberty Street. Perkins says her electric bills already range from $400 to $800, meaning the increase will cost her an extra $100 to $200 a month.

"What do we do?" Perkins said. "If it keeps the lights on, I'll take a salary decrease."

Many residents, especially the elderly on fixed incomes and the poor, also are just finishing a winter spent struggling to keep up with the spiraling costs of heating with natural gas, said Richard Edwards, director of resource management for the United Way of the Coastal Empire.

"The electricity could be more of an impact," Edwards said.

About 59,000 local customers are hooked up to natural gas, while 132,000 get electricity. That means more people on low incomes and the elderly could be affected by the electricity increase.

Edwards and other local aide organizers say some people on fixed incomes are already teetering on financial disaster.

While consumers might make do without gas, getting by comfortably or staying healthy without electricity is difficult, said Susan Weinstock, legislative representative in the American Association of Retired Persons' department of state affairs.

William Brown, director of communications with AARP's Georgia office in Atlanta, agrees that the double whammy of high gas prices followed by increased electric bills will be especially stressful for senior citizens.

"The consumers are waiting for the other shoe to fall," Brown said. "They're asking, 'What's next?' There always seems to be something."

Many of AARP's members already face increased prescription drug costs, higher food prices, and only a meager 2 percent Social Security cost-of-living increase, Brown said.

"In most cases, that doesn't even come close to covering prescription drug increases."

Nationwide, AARP is pushing energy assistance programs and lobbying for utilities to share fuel recovery increases.

"We would prefer the fuel recovery charge not be passed through" completely to consumers, Weinstock said. 'For some elderly people, that could be the difference between being healthy and unhealthy."

Savannah Electric isn't alone among electric utilities. Electric companies across the country are raising rates. In New York, for instance, Con Edison hiked electric rates by 43 percent last year and is asking for more increases this year.

Savannah Electric officials, recognizing their bad timing for a rate increase, spent the past couple of weeks meeting with community groups and aide organizations to give them a heads up. Company officials also met with the editorial boards of local media, including the Savannah Morning News.

Savannah Electric officials say they hope to deflect some of the criticisms leveled at the natural gas marketers who have issued consistently higher bills without any notice. Since Georgia's natural gas industry was deregulated nearly two years ago, those companies don't have to seek permission to raise rates.

Patty Lyons, director of Senior Citizens Inc., said she applauds Savannah Electric's community meetings. She's impressed with how Savannah Electric representatives are going around to senior centers, talking about budget billing and making sure everyone who is eligible is signed up for the senior discount.

The base charge, $5.20, is waived for senior citizens and low-income residents. They still have to pay the same rate on the remainder of their bills.

In recent years, electric utilities have been increasingly turning to natural gas to power plants because of the environmental criticisms of coal and the low costs of gas.

Savannah Electric, while still heavily tied to coal, does depend on gas-fired turbines to provide it the extra juice it needs when usage soars on those hot afternoons and cold winter mornings.

When gas prices increase, though, the utility is allowed to recoup these higher costs by raising rates. It works just like when employees turn in expense accounts to their bosses. Savannah Electric has to provide the Public Service Commission with receipts from the year, saying this is what was spent and why.

The commissioners look at the request, asking if Savannah Electric was responsible with its fuel purchases, looking for the cheapest rates available, said Public Service Commissioner Bobby Baker.

"The reason everybody put their eggs in the gas-fired generation basket is 18 to 24 months ago it was so cheap," Baker said.

Business reporter Ben Werner can be reached at 652-0381 or by e-mail at bwerner@savannahnow.com.

http://www.savannahmorningnews.com/smn/stories/031601/LOCelectric.shtml

-- Martin Thompson (mthom1927@aol.com), March 16, 2001