Ocala City Council adopts resolution to lower electric rate

File photo: Keith Green, a lineman with Ocala Electric Utility, works on power lines from a bucket truck at the Eugene Dearmin substation off Southeast 36th Avenue in Ocala, Fla. on Wednesday, Sept. 1, 2021. [Bruce Ackerman/Ocala Gazette] 2021.

Ocala Electric Utility customers should see some relief in their electric rates in March, as the Ocala City Council has passed a resolution that could decrease the average user’s bill.

The city hired a consultant, Leidos Engineering, to study the projected financial operations of the city’s electric system. Craig Shepard presented the findings before the city council on Thursday before they put the resolution to vote.

“We’re proposing an overall rate decrease,’’ Shepard said. “That doesn’t happen very often, but it’s great news.”

The average customer who uses 1,000 kilowatt hours per month can expect to see a decrease of about $13.23 in their electric bill, to go into effect on March 1.

Electric rates have three elements that determine a customer’s monthly bill. The base rate covers meter reading and billing; the energy charge is based on how much electricity one uses according to kilowatt hours; and the power cost adjustment (PCA) is the fuel cost portion of the electric bill, according to OEU.

“As many of you know, the rates consist of two main parts, the base rates and the power costs, and the big good news is the power costs have gone down,” Shepard said. “The latest estimate of purchase power for this fiscal year is $109 million compared to the budgeted amount of $ 125 million. So, it’s even less than budgeted.”

This lower estimate allowed for the power costs for customers to be decreased.

The city council approved the resolution unanimously, which came before them as part of the plan for OEU’s future financial operations.

Customers will see an increase in their base rate, however, from $17 a month to $20. This increase is to help the city recover from the decreased fixed cost of a customer’s bill per month, while still helping customers see an overall decrease in their bill, Shepard said.

“There’s a lot of fixed costs that go into just getting the power to every customer, all the poles, wires, salaries and just running the system. We’ve calculated for Ocala for a residential customer that comes out to about $77 a month,” Shepard said. “Even if you never switch on the switch, the fact that it’s there costs cost the customer $77. That sort of helps explain why we want to try to recover some of those fixed costs and the customer charge.”

All customers can expect to see a decrease, regardless of usage class, of about 8%.

OEU provides electricity to about 55,000 residential and commercial customers in Ocala.