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Rate study: East Point electric fund faces roughly $1.9M shortfall; council weighs PCA, reserves, reinstating summer rate
Summary
An independent electric-rate analysis presented to council found the enterprise faces a near-term shortfall of about $1.9 million for FY26. Options included temporary use of reserves and MCT funds, a Power Cost Adjustment (PCA) increase, delaying capital projects, and reinstating ordinance summer rates (potentially adding ~$1.4M annually). Council asked staff for detailed cost impacts and consumer education plans.
An Electric City of Georgia consultant, John Wen, presented a rate study and fiscal update on the electric enterprise March 9.
Wen said the city's budgeted enterprise expenses exceed anticipated revenue under current assumptions, estimating anticipated revenue at about $52.6 million against obligations near $54.5 million — a gap of roughly $1.9 million for the current year. He showed that previous budget lines and estimated sales had been overstated and that the enterprise had been drawing on reserves and other funds.
His short-term options included continuing to borrow from the reserve fund (with a note that current reserves equal roughly 90–100 days of cash on hand versus a policy target of four months), borrowing from MCT funds, using a Power Cost Adjustment (PCA) to recover a portion of the gap (he gave examples of PCA increments and how much revenue each would raise), or delaying capital projects. As an example, he said a PCA addition of 1.671¢ would bring in roughly the revenue needed to close the gap for FY26.
A longer-term step Wen recommended was reactivating the ordinance-defined summer resident rate, which staff had been charging winter rates year-round following an administrative directive during the pandemic. Wen said recharging the summer rate beginning in May could add about $1.4 million over 12 months.
Council members pressed for clarity on customer impacts. Wen translated PCA numbers into household impacts, noting that the current PCA is small (about $3.99/month on a typical residential bill under present levels) but that larger PCA steps could add materially to monthly bills; councilors asked for specific modeling (e.g., how much a proposed PCA would add to typical bills for different usage levels). Council also asked for a clearer accounting of reserve balances and whether funds such as MCT should be treated as reserves or long-term capital funds.
Council extended the time for the presentation twice to allow fuller discussion and directed staff to return with options that lay out both financial mechanics and consumer education measures; several council members emphasized minimizing burden on residential customers while pursuing the enterprise’s financial stability.
