Vero Beach will discuss possibly increasing electric rates this summer

VERO BEACH — Rates for customers of the city's electric system could increase in July or August.

The mild weather has meant people haven't used as much electricity as officials anticipated. That resulted in less money coming in than projected, City Manager Jim O'Connor said.

While O'Connor is not recommending an increase now, he said a rate hike could be needed in July or August if the trend continues.

O'Connor would not guess how big of an increase might be required if one is needed. He said that would depend on how much electrical demand there is in the coming months.

The decision to raise rates and to what degree really depends on upcoming demand, said O'Connor, who noted that if the area has a hot summer the usage also will go up and there might not be a need for an increase.

While residents have used less electricity, O'Connor said this has been good for consumers who have not had lower electric bills.

The city gets most of its wholesale power through contracts it has with Orlando Utilities Commission and the Florida Municipal Power Agency.

The cost for the power sold to the city from the Orlando Utilities Commission has been within projected ranges, said O'Connor, although the city anticipated it would fall more in the lower part of this range.

The overall money coming in from the retail sale of electricity to customers is below what officials anticipated was needed to pay for the wholesale power cost and the cost to operate and maintain the system.

The city could reduce expenses in the utility by reducing the amount of money it transfers from the utility to support the other operations of the city, but the city would then have to find additional money elsewhere in the budget or find other areas to cut from the budget.

O'Connor attributed the possible need for an increase to the low usage rather than additional costs such as the new $3.4 million turbine project at the electric plant or legal fees associated with the sale of the electric system to Florida Power and Light Co. O'Connor said those two costs represent a small percentage of the overall budget.

The city last raised the electric rate in December by 5.8 percent.

At the time, Electric Utility Director Tom Richards said the city did not expect additional increases in 2013 unless something drastic happened. Both Richards and O'Connor said they hoped the city would be able to lower rates instead.

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