Beatrice Lang
Lakeland Electric has recently raised its base rate for electricity, with the city's approval, by 2.25% across the board for customers starting April 1, 2023. This will increase the average homeowner's bill by around $1.60 per month. However, most customers will have lower monthly bills due to a decrease in fuel rates as natural gas prices have dropped. This is a result of a warmer-than-usual January, leading to lower energy consumption.
| Characteristics | Values |
|---|---|
| Date of rate increase | April 1, 2023 |
| Base rate increase | 2.25% |
| Customer charge increase | $1 |
| Fuel rate decrease | $15 |
| Expected monthly bill decrease | 21 |
| Commercial customer bill decrease | 30 to 722 |
| Commercial customer increase range | 2 to 39 |
| Number of businesses affected | 14,000 |
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What You'll Learn
Lakeland Electric's base rate increase
Lakeland Electric has recently raised its base rate for electricity, with the price increase coming into effect on April 1, 2023. The utility company received approval from the city of Lakeland, Florida, to increase charges, despite a projected overall decrease in monthly bills for customers.
The base rate will increase by 2.25% for all customers, with an additional $1 raise to the customer service charge, from $11 to $12 per month. This means a standard residential customer with an average monthly consumption of 1,157 kilowatt-hours can expect to pay an additional $1.60 per month for their electricity. This price rise affects around 87% of all Lakeland Electric customers.
The utility's base rate covers labor, equipment, operations, and profit, and is typically adjusted every four years. However, this is the first of three proposed increases, with Lakeland Electric planning to seek an additional 2.25% in October 2023 and October 2024. If approved, this will result in an overall increase of about 7% in the city's electricity rates.
Despite this, customers are expected to benefit from lower monthly bills due to a decrease in fuel rates. The price of liquid natural gas is projected to drop by 53% in February and a further 48% in March. As Lakeland Electric's fuel rate is a ''pass-through' cost, where customers pay the direct cost of fuel, the utility company can lower its overall rates. The fuel rate will decrease from a record-high of $70 to $55 per 1,000 kilowatt-hours starting on March 1, 2023. This reduction in fuel costs is expected to offset the base rate increase for most customers, resulting in lower overall monthly bills.
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Lower monthly bills for customers
Lakeland Electric has recently raised its base rate for electricity by 2.25% across the board for customers starting April 1, 2023. This is the first time in a series of three rate increases proposed by the municipal-owned utility, with additional 2.25% increases planned for October 2023 and October 2024. Despite this, most customers will benefit from lower monthly bills.
The utility's base rate, which is typically adjusted every four years, covers labor, equipment, operations, and profit. The recent increase will result in a standard residential customer with an average monthly consumption of 1,157 kilowatt-hours paying an additional $1.60 per month for energy. This accounts for about 87% of all LE customers. Additionally, there will be a $1 increase in the customer service charge, from a previous rate of $11 to a new rate of $12 per month.
However, Lakeland Electric will lower its fuel rate from a record-high of $70 to $55 per 1,000 kilowatt-hours starting March 1, 2023. This reduction is due to the projected drop in the price of liquid natural gas, which is expected to decrease by 53% in February and another 48% in March. According to Tory Bombard, LE's Fuel Manager, the warm January weather also contributed to lower energy consumption, leading to a higher supply than demand.
As a result of the fuel rate decrease, a standard residential customer's monthly bill is expected to decrease by about $21. Most commercial customers should see their monthly electric bills reduced by approximately $30 to $722 per month. This decrease in monthly bills is considered "fortunate" timing by Gina Jacobi, LE's assistant general manager of financial operations.
To help customers manage their energy costs, Lakeland Electric offers a shift-to-saving rate plan. This plan encourages customers to use more electricity during off-peak hours, which can result in cost savings. Additionally, customers can visit the Lakeland Electric website for customized tips on ways to save energy and lower their monthly bills.
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A decrease in fuel rates
Lakeland Electric has recently raised its base rate for electricity, with the city's approval, by 2.25% across the board for customers starting April 1, 2023. This will result in an increase of $1.60 per month for a standard residential customer with an average monthly consumption of 1,157 kilowatt-hours. However, despite this base rate increase, most customers will see a decrease in their monthly bills due to a decrease in fuel rates.
The decrease in fuel rates is attributed to a drop in natural gas prices. Tory Bombard, LE's Fuel Manager, explained that the price of liquid natural gas was projected to decrease by 53% in February and then by another 48% in March. As the utility's fuel rate is a "pass-through" where customers pay the direct cost, this allowed Lakeland Electric to lower its rates. The warmer winter months also contributed to lower energy consumption, resulting in reduced fuel demand.
The fuel rate, which was previously at a record high of $70 per 1,000 kilowatt-hours, will be lowered to $55 per 1,000 kilowatt-hours starting March 1, 2023. This decrease in the fuel rate will more than offset the base rate increase, leading to an overall reduction in monthly bills for customers.
According to Jacobi, a standard residential customer's monthly bill is expected to decrease by approximately $21, while most commercial customers should see a reduction of about $30 to $722 per month. This decrease in fuel rates is part of Lakeland Electric's effort to balance the utility's needs with those of its customers. The utility recognizes the financial strain that customers are facing due to inflation and aims to minimize the impact on their bills.
In addition to the fuel rate decrease, Lakeland Electric is also rolling back its environmental surcharge from $2.40 to $1.59 per 1,000 kilowatt-hours, providing further relief to customers. The average homeowner will see a decrease of 98 cents on their monthly utility bills. This decrease in fuel and environmental rates comes after a period of high energy usage during the record-high heat of the summer months.
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Lakeland Electric's financial situation
Lakeland Electric, a municipal-owned utility company, has been facing financial challenges recently. In November 2022, the company projected a $7 million budgetary shortfall for the fiscal year. To address this deficit, Lakeland Electric sought approval from the city to increase its base rate for electricity, which was granted in February 2023. This increase will take effect on April 1, 2023, with a 2.25% rise in the base cost of electricity for all customers. Despite this, most customers are expected to experience lower monthly bills due to a decrease in fuel rates as natural gas prices have dropped.
The base rate increase is necessary for Lakeland Electric to cover its non-fuel operating expenses, capital improvements, debt service on bonds, and dividends to the city. The company expects to spend about $214.2 million to service its electrical customers this year, while revenue from customer rates is estimated at $176.1 million. To bridge this gap and ensure financial viability, a rate increase was deemed essential.
The utility's fuel rate, which is a 'pass-through' cost directly impacting customers, has been volatile. In August 2022, Lakeland Electric's fuel rate spiked to a record high of $75 per 1,000 kilowatt-hours, almost double the rate from the previous month. However, due to warmer weather and a projected drop in natural gas prices, the fuel rate is expected to decrease to $55 per 1,000 kilowatt-hours in March 2023. This reduction will provide some relief to customers, with monthly bills expected to decrease by approximately $21 for residential customers and $30 to $722 for commercial customers.
To balance its finances, Lakeland Electric presented three options to the utility committee: a 7.5% hike in the base rate for six months, a 3.75% increase for a year, or spreading the impact over three years with a 2.25% annual increase. The chosen option was the third proposal, with an additional 2.25% increase planned for October 2023 and October 2024, resulting in a total increase of about 7% in the city's electricity rates.
While the base rate increase may cause concern for customers, Lakeland Electric offers a range of pricing plans to help manage costs. The Demand price plan, for example, encourages customers to reduce their electricity usage during peak hours, resulting in a lower energy rate at all times. Additionally, the shift-to-saving rate plan incentivizes customers to use more electricity during off-peak hours to save money. These plans provide flexibility and help customers optimize their energy costs.
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Lakeland Electric's pricing plans
Lakeland Electric recently raised its base rate for electricity by 2.25% across the board for customers starting April 1, 2023. This means that a standard residential customer with an average monthly consumption of 1,157 kilowatt-hours can expect to pay an additional $1.60 per month for energy. Additionally, there is a $1 increase in the customer service charge, from $11 to $12 per month. Despite this increase in the base rate, most customers will have lower monthly bills due to a decrease in the fuel rate.
Lakeland Electric offers various pricing plans to its customers, including the Demand price plan and the shift-to-saving rate plan. The Demand price plan encourages customers to smooth out their load by practising efficiency, such as not running multiple appliances simultaneously and avoiding the use of appliances during peak periods. The shift-to-saving rate plan allows customers to save money by using more electricity during off-peak hours. Off-peak hours are typically from 10:01 p.m. to 6:00 a.m. and 10:01 a.m. to 6:00 p.m., while on-peak hours are from 6:01 a.m. to 10:00 a.m. and 6:01 p.m. to 10:00 p.m.
The base rate charged by Lakeland Electric includes environmental compliance charges related to federal and state initiatives, such as clean air and water mandates. The fuel charge, on the other hand, is a pass-through charge with no mark-up, directly covering the costs of fuel used to generate electricity.
In terms of electricity rates, the average residential rate in Lakeland, Florida, is 13 ¢/kWh, which is lower than the average rate in Florida of 15.32 ¢/kWh. Customers can also consider investing in solar panel systems to save money on their monthly electric bills.
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Frequently asked questions
Yes, Lakeland Electric has raised its base rate for electricity by 2.25% across the board for customers starting April 1, 2023.
Yes, the city approved the rate hike in February 2023.
Lakeland Electric faced a $7 million budgetary shortfall for the 2022-23 fiscal year. The company will spend about $214.2 million to service its electrical customers this year.
The utility's base rate is the portion of the bill covering labor, equipment, operations, and profit. The base cost of electricity will increase by $1.60 per month for a standard residential customer with an average monthly consumption of 1,157 kilowatt-hours. This applies to about 87% of all LE customers. There's also an additional $1 raise to the customer service charge from $11 to $12 a month.
No, Lakeland Electric will lower its fuel rate from a record-high of $70 to $55 per 1,000 kilowatt-hours starting March 1, 2023. This is because natural gas prices have dropped.
