published Saturday, June 22nd, 2013

EPB customers power down energy use

Chattanooga will use less electricity this year and the next than originally thought, according to EPB projections, creating a deficit that will cut into revenue at the city-owned utility.

"We had a mild winter, a cool wet spring and a delayed summer, so it's basically weather-related," said Joe Ferguson, chairman of the board at EPB.

At the same time, growth in EPB's fiber-optic video, Internet and telecom business will offset those losses if current trends continue, the utility's budget shows.

"This budget year, we're budgeting $21.5 million flowing into the electric system from fiber," said Harold DePriest, president and CEO of EPB. "We're pretty proud of that, as one of our goals in doing the fiber-optic network was being able to basically finance improvements to the electric system."

Electric sales slowed the most among residential and industrial customers, and the utility now believes that total electric sales in the fiscal year that ends June 30 will end up falling $12 million below budget for the fiscal year that ends June 30, acording to projections released Friday.

Residential electricity use has dropped by the largest margin -- about $9 million -- though that drop is projected to be offset slightly by gains in commercial sales and outdoor lighting.

Industrial electric bills will decline by about $5 million through the end of 2013, and are projected to fall further through 2014.

Total electric sales, which were originally budgeted at $556.3 million, will fall instead this year to $544.4 million, and continue to decrease in 2014 to $544.1 million, according to a budget approved on Friday by the EPB board.

That will drive earnings down to $16 million. But that doesn't mean a rate hike is around the corner, DePriest said.

"We don't see rate increases coming quickly," he said. "What we will see over the next several years is that other folks will be having rate increases while we will not."

The utility's total budget calls for 150,236 residential electric customers to consume about 2.3 billion kilowatt-hours of electricity, while its 3,434 industrial customers are expected to consume 3.2 billion kilowatt hours. The 20,255 commercial customers in EPB's service area are projected to buy just 370 million kilowatt-hours, for a total of almost 6 billion kilowatt-hours distributed to the utility's 174,069 total customers.

While there's no accurate way to predict the weather in 2014, officials expect long-term demand for raw electricity to continue to fall, thanks to the prevalence of more efficient appliances, and programs that push down usage across the system during days of peak demand. Those programs have saved EPB about $3.5 million in the last year.

"At certain times of the day, when TVA charges us more for power, what we're able to do is smooth that out with the Smart Grid," Ferguson said.

In fact, TVA has increased effective rates for big businesses roughly 70 percent over the last decade, EPB officials said, because of the way the federal agency's fuel costs are structured.

In spite of the ups and downs in the electricity distribution business, the utility's fiber-optic system --which for legal reasons is kept separate from the electrical system -- continues to prosper following a rate hike in May.

The hike, which saw monthly bills rise between $1 and $6 for EPB's TV customers, was the first price increase since the utility launched it in 2009, and matches similar price increases announced earlier by Comcast and AT&T in response to higher costs paid to content producers.

EPB adjusted its budget upward for the rest of 2013, projecting revenue of $80 million for the fiber-optic division instead of the $77 million originally budgeted, and $10.2 million in earnings.

Officials believe 2014 will see revenues grow even more to $93 million, though the utility's estimates for its fiber-optic system have proven to be conservative, more often than not.

Contact staff writer Ellis Smith at esmith@timesfreepress.com or 423-757-6315.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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