Bielarski explains reasons for increasing fuel surcharges, compares them to peer utilities

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At the April 8 GRU Authority meeting, CEO Ed Bielarski explained the recent increases in the fuel adjustment surcharge and compared the surcharges to GRU’s peer utilities.

Bielarski said that one of the first things the board did was to return about $9 million in excess funds in the fuel levelization fund to customers; after the Authority withdrew from membership in TEA, the equity return of about $10 million was also returned to the customers, he said.

Bielarski explained that a customer’s GRU bill consists of the base rate and the fuel adjustment; the fuel adjustment goes up and down with the costs of fuel and is adjusted as needed by the CEO, and the base rate is a fixed cost that covers GRU’s operations and is set annually by the Authority.

Bielarski said, “[Setting the fuel adjustment has] always been the prerogative of the CEO, largely because it’s a cost recovery calculation, and it has to be done quickly… We don’t want the customers to be adversely impacted by those fuel costs, so we spread it out over a rolling 12-month average.”

Bielarski said the increases to the fuel adjustment were caused by a gap in expenses of $12 million “because we had some of the highest fuel prices that we’ve had in a long time, largely due to the weather… We also lost our cheapest plant (the Kelly Generating Station) when we had to have the generator rotor taken out to be rewound, and that will be back in the May-to-June timeframe.” Bielarski said the gap in expenses in February alone was $6 million, and that will be recovered over a 12-month period.

Bielarski reviewed the recent fuel surcharge increases, which went from 45 mills ($45 for a 1,000 kWh bill) in February to 50 mills in March and 55 mills in April, and compared them to peer municipal utilities: JEA went from 41 mills in February to 60 mills in April, Lakeland went from 47 mills in February to 62 mills in April, and OUC went from 48 mills in February to 63 mills in April (see chart above).

Director David Haslam said, “Our numbers are bumping up by five bucks — okay, yeah, it sucks. As a guy who wants to pay less, I’ll raise my hand. I’d like to pay less, too. But if you look — Jacksonville, they went up by… $10 [between March and April], they’re actually higher than us, and it was a bigger jump, too. So it’s not only higher; it’s a bigger bump… Yes, it’s going up, and it’s the world; it’s not anyone’s fault.”

Bielarski said the fuel surcharge would have been 107 mills in March if GRU had tried to replenish the fuel stabilization fund in the month after the February expense gap.

Bielarski showed a chart with GRU’s 1,000 kWh residential electric bill (in orange), the average municipal bill (in blue), and the gap between those in gray (see chart above). He said, “It was somewhere around $178, $180 back in December of 2022, and we were somewhere on the order of $30 higher than the municipal average… We went from about a $30 difference down to about a $10 difference from the municipal average. So we’ve cut that difference… That’s what we were mandated to do, what we were tasked to do, and that’s what we’re doing.”

Bielarski then showed a chart (above) with inflation-adjusted rates for GRU and the municipal average since December 2011. He said, “What you can see here is, back in 2011,… we were $9 a month higher than the municipal average; today we’re $7 a month higher…  That was pre-biomass back then, and back in 2013, we went up to almost a $30 difference. And then when we bought it out, back in December of 2018, we got down to within about a $10 difference. And then in 2022, we were at a $39 a month difference… The trend line is going down; that means that the cost of GRU power and municipal power is increasing below the cost of inflation… This was built on the backs of GRU folks that are doing the right thing out there, putting the customer first, doing all the things that we can to keep the bills as low as we can.”

Chair Eric Lawson asked Bielarski to inform the board when he adjusts the fuel surcharge: “I think it would be good to have just some awareness with the board and a discussion. Again, we don’t want to step on your toes. It’s your responsibility to make those adjustments, but I think it would be good for us to be informed so that we can have those types of conversations.”

In other business, the board unanimously approved text changes to its Master Bond Resolution and Subordinated Bond Resolution to conform to the creation of the GRU Authority, adopted a resolution approving the renewal of the 2023 Series B Bonds at an annual savings of $38k, and heard presentations on the utility’s liquidity and debt portfolio. The board also adopted new rates for GRU’s lighting program and new water/wastewater charges and fees for new connections.