Ocala electric customers avoid rate hikes

Transformers, relays and control boxes are shown at the Ocala Electric Utility Eugene Dearmin substation off Southeast 36th Avenue in Ocala on Sept. 1, 2021. [Bruce Ackerman/Ocala Gazette file photo]

Ocala Electric Utility (OEU) customers will not face power rate increases despite extraordinary costs during last weekend’s severe cold weather event, thanks to the utility’s Rate Stabilization Reserve Fund and widespread voluntary conservation efforts.

During the Feb. 3 city council meeting, City Manager Pete Lee called on Chief Financial Officer Janice Mitchell to address the event, related energy costs and circulating rumors. Mitchell explained that the extreme cold that impacted much of the Eastern United States created major challenges for Florida utilities.

According to Mitchell, on Feb. 1 at around 7:45 a.m., the Florida Municipal Power Pool (FMPP), a cooperative of which OEU is a member, lost three generation units due to freezing temperatures. This triggered an Energy Emergency Alert Level 3, the most severe alert level for a grid operator, signaling critically low supplies and reserves, and making controlled rotating outages a real possibility.

Emergency power purchases from other in-state utilities, which cost approximately $2.3 million for OEU’s share (with market prices spiking from $2 to $3 per megawatt-hour to more than $1,800 per megawatt-hour), helped avoid load shedding, which is customer power shutoffs. Coordinated generation recovery, customer-owned generation and voluntary energy conservation/load shifting during peak morning hours helped maintain system reliability without interruptions for Ocala customers.

“Over the past several days, Florida utilities managed an extreme cold weather event that impacted much of the eastern United States. So, it’s not an OEU issue, not a Florida issue, but an overall issue. The Florida municipal power pool, which we are part of, experienced particularly challenging conditions early Sunday morning, when the three generation units were lost due to freezing temperatures,” Mitchell said.

Mitchell emphasized that individual bills may appear higher than usual due to increased usage for heating during the cold snap, but no rate adjustments are needed because the Rate Stabilization Reserve Fund absorbs unexpected costs from extreme weather and market volatility.

“So, what does this mean for Ocala electric customers? Power rates won’t be going up, which is good news. OEU has the rate stabilization reserve that helps balance things out during these unexpected situations,” Mitchell said.

Following the meeting, City Council President Ire Bethea Sr. asked for a public letter to be dispersed to thank residents and businesses for their cooperation. The letter, which was received by the “Gazette” on Thursday afternoon, highlighted voluntary actions such as lowering thermostats, layering clothing, unplugging devices and delaying large appliance use as key to averting outages.