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Posted on January 27, 2009
In a recent article published by Tallahassee Reports, research indicated that Tallahassee’s reliance on natural gas has cost the people of Tallahassee approximately $40-50 million a year over the last three years when compared to the rates of other utilities in the area.
In a meeting on Tuesday, high ranking officials with the Tallahassee Electric Utility confirmed that the methodology used by Tallahassee Reports was appropriate and that the $40 -$50 million annual number was a reasonable estimate. It was also confirmed that the premium paid by consumers was in fact leaving the community for Lousiana and Texas – the home of the natural gas suppliers.
Officials said they are working hard to mitigate the impact of higher rates but that options for immediate relief are not available. Based on estimates, they said that the BioMass plant would have generated about 5%-8% of the City’s needs and would have been a good start at creating a more diverse fuel mix for Tallahasse.
When it comes to lowering rates, officialls said all options are on the table – including selling the utility, partnering with other utilities, searching for renewable options, and exploring purchase power arrangements. However, there are three factors that affect all of these options. First, the City of Tallahassee has transmission line issues that need to be resolved. Evidently, upgrades to the transmission grid around Tallahassee are long overdue. Second, the current state of the credit markets make it difficult to engage in any meaningful transactions. And third, the uncertainty surrounding President Obama’s energy policy makes it difficult to make long term decisions.
There is a scenario where the Tallahassee’s utility could become very attractive asset on the open market. If federal energy policy rewards those utilities with a smaller carbon footprint, other utilities may seek to purchase our “green” generation. The citizen’s of Tallahassee could benefit from lower rates and a one time windfall from the sale.