Local News
Electricity, water rates to increase
Dalton Utilities customers in 2008 will face “a significant water rate increase” and a 10 to 12 percent electricity rate increase, a utility official said Monday.
Utility president Don Cope made the comments during a joint meeting between the utility’s governing board and members of the Dalton City Council.
After 2008, the utility’s rate increases will follow inflation for the next four years, Cope said.
Since November 2005, the governing board has raised rates on various services three times. Rate increases that went into effect on Jan. 1 of this year are expected to bring in $17.5 million more in revenues compared to 2006. Cope said the extra revenue is needed to pay for utility upgrades and expansions and the increasing costs of providing services due to rising commodity prices.
“What I can tell you is with all of those (increases), you will still be way below the market price (nationally) for all of those services,” Cope said.
Members of the City Council requested the meeting and were updated on the utility’s business plan through 2013. Council members were told the utility’s net revenues are expected to quadruple from $5 million this year to $20 million next year from a combination of the rate increases and customers adding services, including from the utility’s recently completed water expansion project. Net revenues are expected to reach $38 million in 2013.
“The additional revenues reflect the rate increases coupled with the additional customer build out that we’re getting on the water expansion project coupled with the increased customer acceptance of Optilink (the utility’s telecommunications service),” said Tom Bundros, chief financial officer.
The increase in revenues will mean more money for the city, which owns the utility, in the form of a 5 percent transfer fee the utility pays the city annually. The City Council and utility board set the transfer fee, which is currently 5 percent of operating revenues and investment income. The fee was reduced from 6 percent to 5 percent in December 2003 and a $6 million cap was eliminated.
The utility paid an $8 million transfer fee for 2007, accounting for 26 percent of the city’s $32.13 million annual budget. The fee is expected to increase to $14 million in 2013.
The utility effectively subsidizing the city’s budget could have a negative impact on the utility’s ability to maintain competitive rates, said Bill Barron, vice president of manufacturing for Dalton-based Shaw Industries, the utility’s largest customer.
“What does that do to us as far as being a competitive utility?” Barron asked. “We all know that the (carpet) industry came to Dalton because of the lower utility rates and if moving forward we become less competitive, how do we retain existing and attract new industry to Dalton?”
Cope said Georgia Power pays a 4 percent fee to municipalities “in most places on electrical,” while water and wastewater are not subjected to extra fees. There is usually a franchise fee for gas. Franchise fees for telecommunications providers vary from 1 percent to 4 percent.
“There is some transfer payment that is necessary and right,” Cope said. “The city of Dalton owns Dalton Utilities. If Dalton Utilities was the Georgia Power Co., and if we were doing business in the city of Dalton, we would pay a franchise fee to the city of Dalton. There is a portion of that we would transfer regardless of who we are.”
Dalton Utilities currently serves 14,543 electrical customers in Dalton; 8,695 natural gas customers in Whitfield, Gordon and Floyd counties; 11,577 sewer customers in Whitfield County; and 34,153 water customers in Dalton and Whitfield and Murray counties. Optilink has 8,626 customers.
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