Electric rate study shows FY24 gap; consultants recommend restoring seasonal residential rates and tweaking class allocations

Electric Cities of Georgia officials told East Point City Council on June 19 that a cost-of-service study for fiscal year 2024 shows the city's electric utility ran a roughly $4.5 million shortfall and that residential rates charged year-round at the lower "winter" level explain much of the gap.

The study, presented by Cho Nguyen, director of analytical services at Electric Cities of Georgia (ECG), and Kathy Johnson, manager of analytical services, analyzed FY24 billing, unaudited financials and power purchases. "With that, you were in a deficit of $4,500,000 for fiscal year 24," Johnson said during the presentation.

ECG said purchases of power (MEAG) and fixed costs represent most utility expenses while residential revenues are understating fixed-cost recovery. The consultants told the council residential customers were billed at the winter rate year-round for several years, including during summer months, and that restoring separate summer and winter residential rates would improve revenues by roughly $1.2 million in the near term.

"If they do not (restore seasonal rates), the net revenues we'd have to add $1,400,000 to that," Johnson said, noting the study had modeled the residential rate returning to summer/winter pricing. The study also showed some commercial rate classes currently subsidize residential customers: "Because you're not collecting enough on your residential, your small power, medium power, and large power are having to pay," Nguyen said.

ECG recommended a multi-year rate adjustment and rate-design work to reduce cross-subsidies across rate classes, plus a higher fixed (base) charge on residential accounts to recover a larger share of fixed costs. The consultants said 86 percent of the utility's power costs are fixed and that only about 12 percent of current revenues are fixed.

Council members asked for more historical context, bill-impact scenarios and clarity on the utility's fund balance. Councilmember Shropshire pressed staff for the electric enterprise fund balance and whether the FY24 shortfall had been covered by reserves: finance staff and ECG explained the study reports results for a one-year window and that fund balance has historically been used to cushion year-to-year operating shortfalls; ECG agreed to overlay projected fund balance over the study's multi-year projections in a follow-up. Councilmember McComb asked for example household impacts; ECG said detailed bill-impact modelling would follow once council directed a rate-design path.

Councilmember Butler and others flagged planned capital spending included in long-range figures and asked for scenarios showing how capital plans would change if rates were adjusted or if reserves were used. Several council members asked staff to produce a clearer historical picture going back to 2013 and to bring the additional analysis to the July/August work session so council can weigh options ahead of final FY26 rates decisions.

The study excluded revenues and power costs tied to an off-system customer (a cryptocurrency miner) and excluded projected franchise fees from an anticipated large adjacent data-center/franchise relationship; staff said franchise fees would typically flow to the general fund rather than the electric enterprise fund.

Council direction and next steps: ECG will return with bill‑impact modeling for specific rate-design scenarios, a multi-year projection including the electric fund balance overlay, and a timeline for rate-design options. The council asked staff to post the complete study and to schedule a follow-up presentation that includes historical audited results and the fund-balance overlay.

Ending: The presentation prompted a substantive policy discussion about whether to restore seasonal residential rates and how to allocate increases across customer classes; staff and ECG will return with scenario-based rate designs and bill impacts before any final rate changes are adopted.