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Presented to the Alachua County Legislative Delegation on Sept. 23rd 2019
The information in this presentation respectfully proposes the following :
1.)That the delegates consider legislation to clarify how the municipal public services Tax ( 166.231 Fla. Stat.) is to be calculated.
2.)That the delegation consider legislation to put a referendum question on the Fall 2020 ballot to see if the voters would like an independent board to sell the GRU electric utility to the highest bidder.
For more information click here
Florida is a heavily-populated peninsula. There are no significant generators of electricity close enough to our borders to facilitate interstate competition.
Hence, any Florida deregulation of electricity would be intrastate, i.e., confined within Florida boundaries. Selling electricity wholesale within Florida is already deregulated; however, such off site sales are only permitted among Florida utilities, or specially authorized consortiums.
As GRU nonresidential electric rates rise to 300% of the corresponding Florida Power Light (F.P.L.) rates, Darin Cook has rolled out a plan to decimate Florida’s lowest cost electric generators/transmitters.
His “energy choice initiative” would only be mandatory for investor-owned electric utilities (IOU’s) – not the 32 municipals, their incarnations, or the rural coops. Some municipal electric utilities are transmission only – they do not generate. The City of Alachua is an example of a city that buys wholesale and sells retail. Everyone is currently free to self-generate – but cannot sell or transmit off site.
Mr. Cook recently served as the front man for a well-financed, but now disbanded, business group long on cash and devoid of political expertise. On that note, he opined that the purchase of the GRU biomass plant for $750 million dollars would “save” us a lot of money.
Mr. Cook is an energy trader. His firm, Infinite Energy, is similar to Enron except for more ethical business practices. Mr. Cook neither generates nor transmits electricity off site at all.
The Florida Public Service Commission (PSC) exclusively determines the need for electric generation in Florida for off site distribution – not Mr. Cook. PSC powers derive straight from our State of Florida Constitution.
Recognizing that there are no outside-of-the-state sources, a margin of excess capacity for our rapidly growing state is not merely permitted – it is required. This is to accommodate unforeseen circumstances. This cushion gives rise to a free, open, and unregulated wholesale market that functions to suppress retail prices. GRU regularly buys power for less than it costs GRU to generate it.
Mr. Cook’s assertion that partial retail deregulation aimed only at IOU’s would bring us more “green” energy is good political messaging, but simply is not true.
More importantly for our own community, should our City Commission “opt in”, who would reimburse us for most of GRU assets freshly encumbered by massive debts and secured by revenue bonds. Should these troubled assets be decommissioned and wiped off our GRU books, what about the resultant insolvency? These “stranded” investments stand in the shadow of a mountain of secured debt. What about our lords and masters – GRU bondholders – aided and abetted by Mr. Cook and his allies?
Realistically, GRU would never opt in. It has a high cost “renewable” generation. Electing deregulation would alone trigger immediate City of Gainesville bankruptcy. Thus, our beleaguered GRU ratepayer would not benefit at all – only Mr. Cook’s firm would benefit. Our only and most likely saviors, the IOU electric utilities, would be mired in chaos.
Mr. Cook mentions franchise fees. The City of Gainesville right now could pile franchise fees on beleaguered GRU customers only without deregulation. That the city refers to its ratepayers as customers does not change our plight as sharecroppers.
For non-GRU utilities, and in the unincorporated areas of Alachua County, franchise fees are foreclosed on the basis of a 1999 Supreme Court decision striking down an Alachua County “privilege fee”.
Since Alachua County to this day has never bothered to require a franchise agreement in order to place utility infrastructure in its rights-of-way, utilities including GRU are squatting out there paying nothing and are subject to little or no regulation.
GRU dumps raw sewage around the clock in Alachua County rights-of-way with complete impunity. Prochoice for electricity is not to be confused with a woman’s right to suitable healthcare.
This article is in response to an opinion piece originally written by Ed Bielarski, GRU GM found here: https://www.gainesville.com/opinion/20191009/ed-bielarski-grus-service-is-anything-but-average
Fiction: GRU “profits are sent to the city of Gainesville’s General Fund.”
Fact: The $38,000,000 GRU transfer payment is an arbitrary, previously agreed upon amount that is not necessarily a “profit”. Shrinking revenues, rising costs, massive borrowing, negative “fuel levelization”, and declining net position despite creative valuation of the biomass plant suggest that the transfer payment is actually being financed, at least to some degree.
Fiction: GRU profits “support an award-winning police department.”
Fact: GRU has no say over how its “profits” are spent. In fact, our police department has been decimated by poor pay and unfair labor practices by City Government.
Fiction: “GRU will collect another $14 million in utility taxes for the city.”
Fact: “GRU will collect another $14 million in utility taxes for the city,” and $5.8 million more for the county. These taxes involve dubious schemes to inflate the collection by pyramiding taxes and surcharges multiple times, among other predatory practices. The local legislative delegate has been notified.
Fiction: “GRU includes the city’s stormwater services and garbage collection on its monthly residential bill…which keeps the City from having to…contract with the County, saving paper and money.”
Fact: GRU bundles the city’s stormwater and garbage collection fees with the residential electric meter within the city. This is a cost shift from landlord to tenants. GRU charges the city twice as much to collect and remit these monies to the City monthly than our property appraiser would charge if he collected this money annually. These fees become monthly obligations for tenants who must pay in full or face disconnection of the totally unrelated electric service. Moreover, GRU fails to collect these monies when it writes off bad debts and disconnects the electric meter, or fails to keep track of annexations. The Property Appraiser would collect nearly all monies since he does a better job making sure every single property gets a bill that is paid one way or another, once per year, with an extensive grace period.
Fiction: “A utility rate increase is the most efficient vehicle for funding the world-class services that make Gainesville great.”
Fact: Despite regressive, ongoing GRU rate increases, it is projecting shrinking revenues at an accelerating rate suggesting that more increases are to expected indefinitely. GRU has dramatically increased prices for inefficient outdoor and street rental lighting, hoping its customers will not notice, or confront the growing injustice posed by this regime. Mr. Bielarski promised us “massive savings” from the $750,000,000 buyout from a dubious biomass contract. All “savings” are gone, rates are higher than ever, and are in fact the highest in the state across-the-board, and are going higher.
Fiction: GRU is a great steward of our wastewater.
Fact: Due to excessive transfer payments, nepotism, incompetence, and probable corruption, GRU spills untreated wastewater in both small and large volumes from dilapidated sewer lines all over the place, all the time
Fiction: GRU’s biomass incinerator only burns the “beaks, claws, and feathers of the wood industry.”
Fact: No such beaks, claws, or feathers are burned. Whole trees are burned from land clearing activities. Third parties pick up woody material from various landowners, chip it, and deliver it to GRU to get paid. The landowners are spread out far and wide, and are paid nothing. GRU has no way of knowing where all these materials are coming from. There are no enforceable standards whatsoever. We only have GRU’s word, which we would be foolish to trust.
Fact: “On some days (thanks to the biomass plant and our uneconomic Pegeen Hanrahan solar feedin tariff that cost unprivileged GRU ratepayers $6,000,000 annually) we are already at 40% renewable.”
Fact: So what? At what cost?
Attorney for GRU ratepayers only.
WHY GRU OUTDOOR LIGHTING OFTEN BECOMES A BAD IDEA
Bulletin #1 of 10/1/18
You can commit to a five (5) year contract with GRU including specified penalties for early termination.
For a bundled monthly charge, GRU will:
- Install wire, a light pole, bracket, and a light fixture (now only LED), and service burned out bulbs at your request without additional charge.
- The monthly charge paid by the GRU ratepayer allows GRU to completely recover their investment in five (5) years.
- GRU feeds their outdoor lighting infrastructure from their side of your meter, and then estimates the GRU electricity required, and bundles this with a sky-high and unparalleled charge for electricity.
- This bundling of GRU electricity with the rental of the outdoor lighting infrastructure exposes the “fuel” component to the utility tax and/or surcharges!
GRU Why Pay More encourages all GRU ratepayers, with EXPIRED and now punitive GRU outdoor lighting contracts, to contact us. We can take immediate and total control of an unfavorable yet expired deal. Often, we can\ find a much more economical solution to your outdoor lighting situation. We take great pride in doing so.
As of 10/1/18 GRU monthly fees for existing and inefficient, NON-LED outdoor light fixtures increased 22%, 21% and 6% respectively (retroactive to the pre 10/1 meter read).
By Jim Konish
Utility Attorney and City Lobbyist
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Gainesville Regional Utilities bills are complicated. Your GRU bill is the sum total of all GRU and non-GRU charges, fees, rates, taxes and more. Every item is bundled, yielding the monthly “total amount due.”
The ever-changing and increasingly regressive GRU electric rate structure, along with bundling, produces an increasingly unfair and highly regressive monthly GRU bill for those who can least afford it. The decision to jack up Tier 1 residential electric rates, and nonresidential non-demand electric rates, while lowering the Tier 2 residential electric rate is an additional regressive assault on the poor.
Charges often have no relationship to actual consumption, thus are immune to conservation. Examples are the customer and connection charges. The electric “fuel” charge does vary with consumption, is very significant and is the same across all customer classes and tiers. “Fuel” includes GRU wholesale purchase and sale of electricity. The GRU general manager alone can increase the charge for “fuel,” or just make it up, anytime.
Fees are tacked on to our GRU bill for a specific purpose. Avoidable fees include late payment (1.5 percent) and outdoor lighting rental. Unavoidable residential fees include stormwater and curbside garbage collection. Stormwater is rain running off impervious surfaces. It is often confused with wastewater, which is sewer water.
Rates refer to the unit cost of a particular metered GRU utility service. Wastewater is always estimated. There are residential rates (one rate structure for all), and nonresidential rates (different types of customers get or can elect different rates).
The term “rate structure” refers to the fact that unit prices change at certain levels of monthly electric consumption called Tiers (850 kWh — residential/1.500 kWh — non-demand nonresidential). The same goes for water. Different nonresidential gas rates are also elective. This makes the number of days in the billing cycle, and your rate classification, important.
Nonresidential demand electric customers also face “demand charges” based on the maximum monthly electrical load GRU observes. Nonresidential GRU electric customers can elect their rate and are frequently put on a wrong rate by default. To amplify confusion, GRU nonresidential electric customers are also referred to by GRU as nonres, general service, commercial or business customers.
GRU and city commissioners regularly trumpet that they “lowered electric rates” due to the November purchase of an unnecessary and worthless biomass electric plant for $750 million, and this is false. On Feb. 1, GRU doubled our electric rates, cut the “fuel” adjustment charge in half and sent most of the resulting windfall in utility taxes to local government! Not all electric rates changed by the same percentage amount and the rate structure was regressively changed.
The electric fuel adjustment charge was flatlined as of January 2009 (the date of biomass contract) until October 2013 (the date biomass plant began operations), resulting in a positive balance of $32 million representing cumulative “fuel” overcharges. The ensuing drop to negative $6.9 million as of the October represents $40 million of camouflage for the impact of biomass on our GRU electric bills.
GRU simultaneously deferred maintenance and pay raises, and used one-time money and financing gimmicks, to further mask biomass impacts. After promising immediate “savings” from the biomass purchase, GRU instead kept its electric prices level and resumed overcharging us for “fuel” from November to February to restore the electric fuel levelization balance to positive $3.6 million in February.
Our GRU electric bills are exorbitant across all GRU rate classifications and are confusingly bundled with many other items. It is indisputable that any residential GRU electric customer consuming the average amount of electricity (around 850 kWh) faces a sky-high total GRU bill largely immune to conservation. The bundled stormwater fee ($9.45) is the same regardless of the size of a dwelling. Likewise, the curbside 18-gallon garbage cart costs $1.00/gallon while the 96-gallon cart cost 37 cents/gallon. This hardly is fair or promotional of recycling.
Finally, the debate about whether to implement a 3.1 percent vs. a 2 percent electric increase does not pertain to GRU residential electric rates or bills at all. Instead, it addresses GRU projected electric revenues. The current proposal will dramatically increase the GRU electric bills for the vast majority of GRU electric customers who consume less than 850 kWh monthly, while actually lowering the GRU bills of all who consume more than 1732 kWh monthly.
Our “progressive” city commissioners are insensitive, regressive and oblivious to equity.
Jim Konish is a utility attorney helping clients lower their GRU bills.
This is from the Gainesville Sun: