Higher JEA bills coming in April for most residential customers, especially lowest users

The JEA board agreed Tuesday to raise the basic monthly charge on all residential customer bills, but in the complicated world of utility rate-making, another change in the rate structure will end up saving money for high users of electricity compared to their costs now.

The base rate is the portion of the bill that covers JEA's cost for providing everything but the fuel used to generate electricity. The fuel charge swings up and down on a monthly basis depending on what it costs JEA to purchase natural gas and coal at its plants.

Northside Coalition President Ben Frazier told the JEA board during its rate hearing that the new base rate structure, which will kick in starting in April, is a "classic example of economic injustice" because it raises rates the most for people who are least able to afford it.

Energy future:JEA eyes solar farms and new natural gas plant in coming years

Watching the thermostat:Chills and bills: What to expect for heating costs from JEA this winter

In the courtroom:Nate Monroe: Former JEA law firm distances itself from controversial bonus plan

"JEA is out of touch with reality, way up high in the sky and looking down on the people it claims to represent," Frazier said.

JEA leaders said the new rate structure strikes a balance in how the cost of providing electric service is shouldered by customers.

What part of the bill is going up?

JEA is raising the basic monthly charge from $5.50 now to $15 per month for residential customers. The basic monthly charge is the same for all of them, regardless of how much electricity they consume. It essentially is the minimum bill for any residential customer.

Even if a JEA customer consumes no electricity during a bill period, the customer still pays the basic monthly charge that covers JEA's costs such as maintaining the meters and wires that serve the customer's residence.

JEA CEO Jay Stowe said that based on a study examining the utility's cost of delivering electricity, JEA could have raised the basic monthly charge to $23 but it opted for a lower increase.

"This is a thoughtful increase that we put in place in order to provide stability for the long haul," Stowe said.

Why will some customers pay more and some less for base rates?

This is where it gets complicated. For the base rate portion, the basic monthly charge will go up to $15, but at the same time, the price for electricity actually used by customers will decrease for each kilowatt hour of electricity. The cost now is 7.171 cents per kilowatt hour and that will drop to 6.546 cents per kilowatt hour.

When those two changes are factored in − a higher basic monthly charge and a lower charge for each kilowatt hour of electricity consumed − the overall base rate for a residential customer using 600 kilowatt hours would go from $48.90 now to $54.28. For someone using 800 kilowatt hours a month, the base rate would go from $63.36 to $67.37, and for someone using 1,000 kilowatt hours a month, the base rate would go from $77.83 to $80.46.

But for customers who use more electricity, the decrease in the per kilowatt hour charge will eventually offset the higher basic minimum charge.

A customer consuming 1,500 kilowatt hours pays a base rate of $114 now and that would dip slightly to $113.19. Someone using 2,000 kilowatt hours pays a base rate of $150.16 now and that would go down to $145.92, and a customer using 2,500 kilowatt hours would see a dip from $186.83 down to $178.65.

Why does JEA need more revenue?

JEA says it needs to collect more money to cover various costs it faces from inflation and also the upcoming purchase of power from the Plant Vogtle nuclear plant expansion in Georgia.

The cost of the two new reactors at Plant Vogtle has soared since JEA entered into a binding agreement in 2008 to purchase electricity generated by nuclear power.

JEA expects it will need to put in place more annual rate increases in the future.

How does JEA's charge compare to other utilities?

The basic monthly charge varies greatly by utility. JEA's current $5.50 per month charge is on the low end of the scale, according to a recent Florida Municipal Electric Association survey. That survey showed a range from $4.50 per month to $24 per month for municipal owned electric utilities like JEA. Among investor-owned utilities, the charge ranged from $8.99 by Florida Power & Light to $21.30 for Tampa Electric.

OUC, which is a large municipal-owned utility like JEA, already charges a $15 basic monthly charge for its customers in the Orlando area.

But unlike JEA, the OUC has a two-level rate structure for what it charges on a kilowatt hour basis for electricity. OUC charges 6.148 cents per kilowatt hour for the first 1,000 kilowatt hours a residential customer uses, and after hitting 1,000 kilowatt hours, the charge rises to 8.648 cents per kilowatt hour.

JEA has had a variation of that for customers who use more than 2,750 kilowatt hours a month. They pay an additional 1 cent more for each kilowatt hour above that threshold to encourage conservation. The new rate structure eliminates that conservation charge, however.

Stowe said that for a conservation charge to really make a difference, it would have to be a significant increase in the cost for customers.

"We felt this was a better, more equitable way to charge the rates," Stowe said. "We're still focused on all of the customers we serve and trying to provide the best service we can."

What is the outlook for the fuel charge portion?

The fuel charge portion of a JEA bill remains the single biggest factor in how much a customer's cost changes from month to month.

For a residential customer using 1,000 kilowatt hours, the fuel charge portion of the bill, which is added to the base rate, has ranged from $40.25 per month to as high as $83.46 over the past year. It will be $71 in March and then JEA forecasts it will drop to $37.64 in April.

Stowe said the utility's forecast shows the "most significant decrease" in the fuel charge will happen in the April time frame and it then it will still stay "lower than it's been for the last year for several more months."

This article originally appeared on Florida Times-Union: JEA approves higher base rates for Jacksonville electric customers