November 16, 2012

Rate increase may be justified

Earlier this week, the board of Dalton Utilities took a step that no one on the board wanted to take. They voted 4-1 to raise residential electricity rates for the first time in three years.

According to the Georgia Public Service Commission’s 2012 rate survey, Dalton Utilities has the lowest residential rates in the nation, and Georgia has some of the lowest electricity rates in the nation.

Those rates may be too low. Dalton Utilities President and CEO Don Cope says they don’t cover the cost of delivering electricity to residential customers. Even after the rate increase, the utility will still lose money on those sales.

That will come as little comfort to those who will see their rates increase even as local taxes rise and the unemployment rate remains high.

But the utility held off raising rates as long as it could, perhaps longer than it should have.

According to the Minneapolis Federal Reserve Bank, inflation has soared since 2009, the last time Dalton Utilities raised rates. The Minneapolis Fed’s inflation calculator says it takes $1.08 today to buy goods and services that would have cost just $1 back in 2009.

Dalton Utilities has raised some of its fees during that time.

So the question is why should residential customers be the only ones to see their rates go up? At least one of the utility’s board members indicated he didn’t think it was fair that commercial and industrial customers didn’t share some of the burden.

We agree that residential customers shouldn’t subsidize industrial customers. But neither should industrial and commercial customers subsidize residential rates.

If the utility is making money off of its industrial customers, then it should keep those rates low. The utility needs to thrive for this area to grow, but not at the expense of the companies that keep it and the rest of the economy afloat.

We hope Dalton Utilities can find a way to expand and grow business without raising rates. But we also recognize that no entity can sell its products at a loss for very long.

If Dalton Utilities board members are confident that they have cut costs as much as they can, if they are confident they cannot find ways to deliver electricity more cheaply to residential customers, then raising rates is the right thing to do, even if it may not be the most popular.

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