Commissioner Gillum’s “Tit for Tat” Rationale Overlooks Millions In Electric Rate Increases

The discussion over the $8 million electric utility surplus over the last few months has seen city commissioners and staff defending the need to deposit the “found” money in the electric reserve which already had approximately $95 million. Rationale for keeping the money has ranged from “its policy” to “its only $34 per residential customer”.

During the city commission meeting on January 26, 2010, other rationales were discussed. Several commissioners argued that the surplus should be kept because the city has put money back into the economy through customer assistance programs and appliance rebates. However, one of the more intriguing rationales was put forth by Commissioner Gillum.

Commissioner Gillum argued that since the utility ran deficits of $6.8 million and $8.4 million in 2003 and 2004 respectively, and did not ask the citizens to cover those short falls, the city now is justified in keeping the $8 million surplus. Commissioner Gillum basically said “the reserve covered you then, so the reserve gets the $8 million surplus now.”

What Commissioner Gillum failed to mention is that the City electric utility would have run a deficit of over $50 million since 2006 without a rate increase. And guess who covered that? You got it – we did – the citizens of Tallahassee, not the reserve. The citizens of Tallahassee have covered these deficits through base rate increases. These are not increases for fuel, but for operation expenses.

Since 2006 base rates have increased over 38%. These increases have put over $50 million in city coffers to cover operating deficits since 2006. Without those increases the City would have run huge deficits. But the citizens stepped up and covered the deficits that were laid at their doorstep.

The residential customers of this community paid $7 million more in 2006, $11 million more in 2007, $14 million more in 2008, and $17 million more in 2009. Again, these are base rate increases, nothing to do with fuel. This does not even take into account the additional rates collected from businesses.

A complete analysis of the “tit for tat” rationale put forth by Commissioner Gillum indicates that it is the citizens of Tallahassee that have covered the deficits of the electric utility since 2006, not the electric reserve fund, despite the assistance in 2003 and 2004.

So given this new information, would Commissioner Gillum support the return of the $8.3 million?

  Andrew Gillum, electric fund, rate stabilization, utilities