HomeLocal governmentCity commission votes for GRU rate increase, information about cuts to GRU and General Government
City commission votes for GRU rate increase, information about cuts to GRU and General Government
May 12, 2021
BY JENNIFER CABRERA
During today’s Gainesville Regional Utilities (GRU) Budget Meeting, the Gainesville City Commission voted to start from a baseline option that raises electric rates by 7%, does not lay off any employees, and requires about $2 million in cuts in GRU non-labor expenses. They also deferred a decision on whether to implement Advanced Metering Infrastructure (AMI).
The presentation by GRU Chief Financial Officer Claudia Rasnick painted a bleak picture, showing that GRU’s revenue is lower than its costs and that revenue is projected to fall even farther behind expenses over time. She said that the biomass Power Purchase Agreement and Solar Feed-in Tariff put GRU on this path toward increasing deficits. She added that any cuts to expenses or capital are likely to affect the utility’s reliability.
The City Commission’s ever-increasing spending keeps the General Fund Transfer from GRU to General Government (GG) high; while GRU’s non-fuel expenses have grown 0.5% over the past 2 years, GG’s expenses have grown 9.85% over the past 2 years.
Rasnick pointed out that GRU’s credit rating has been downgraded 5 times over the past 10 years, resulting in an additional $60 million in debt payments “flowing outside the City of Gainesville.” She argued that the GFT should be calculated based on GRU’s earnings, not the amount that the commissioners want in order to fund GG. She also pointed out that the Commission’s goal of 100% renewables by 2045 is not included in GRU’s expense projections.
Commissioners voted 6-1, with Adrian Hayes-Santos in dissent, to select Option 5 presented by Rasnick: a 7% increase in electric rates (on top of 5% wastewater increases and 3% gas increases “for the foreseeable future”), and no lay-offs of GRU employees. They asked staff to draft a resolution to reduce the GFT by $2 million per year and also asked both GRU and GG staff to come back to them with “up to $5 million” in non-discretionary and discretionary budget cuts.
After the vote, GRU General Manager Ed Bielarski said he needed guidance on funding for the AMI contract, which is ready to be signed. Mayor Lauren Poe said it was “not appropriate” to decide on that at today’s meeting and asked staff to schedule a separate meeting to discuss that. Given the dire budget situation and downgraded credit rating discussed at today’s meeting, it is unclear where the City would find or borrow the $81 million needed to implement AMI.
Poe also said that a discussion on commissioner increments (budget increases proposed by individual commissioners) has been added to tomorrow’s General Policy Meeting at 1:00.
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