The Scandalous Baseline of Your Utility Bill

Gainesville Regional Utilities is the common enemy of college students and Alachua County residents alike.

Boasting some of the highest rates in Florida, you may be better off giving away your firstborn than attempting to reason with their customer service department.

And although the quality of direct interaction with their clients is less than impressive, the issues go much deeper — beginning with the fact that GRU functions as a natural monopoly.

It is often believed that monopolies and certain forms of monopolistic competition are illegal.

However, unless they violate the Sherman Anti-Trust Act to gain price or collusion advantages, they technically aren’t illegal. Therefore, natural monopolies are perfectly legal and have come into being in sectors where it is far too expensive to simply enter that particular market and gain a share. However, these natural monopolies are still subject to government regulation to ensure that customers are being treated fairly.

The most common example of natural monopoly is utility companies.

In the case of the U.S., this sector is divided into power generation and power distribution – power distribution is more monopolistic while power generation is perfect competition.

However, GRU does quite the job of locking viable options for power generation out of the local Alachua market.

Recently, GRU spokesperson Patrick Donges noted that, “GRU ranked second in the state for highest residential bill and third in the state for highest residential electric rates in October,” despite the fact that Gainesville residents actually use less energy due to increased awareness and sustainable practices.

Donges suggested that GRU acted in response to market factors – such as government spending, inflation, supply and demand and consumer expectations.

Normally, this could be deemed an acceptable and logical answer, except Gainesville Regional Utilities made a massive shift in 2011 to utilizing biomass as their primary form of power generation.

GRU entered into a 30-year contract with the Gainesville Renewable Energy Center in 2009 for the ripe price of $3.1 billion dollars and zero tangible benefits for Gainesville residents.

Why would an energy provider make such a heinous and expensive decision with no pay-off in sight?

Outside of simply stating that Gainesville Regional Utilities makes decisions against the grain, the choice of biomass is questionable as compared to other renewable energy resources.

On their website, GRU cites the benefits of biomass such as fuel diversity, improved reliability, air quality and carbon regulation, responsible forestry management practices and long-term cost savings.

However, biomass production is actually expensive relative to other forms of power generation. It’s inefficient (almost generating “negative energy”), it greatly increases methane gas presence in the atmosphere (more dangerous than carbon dioxide emissions as a greenhouse gas) and it can actually be considered non-renewable in that materials are consumed more quickly than they can be replenished.

So at this point, I’m left wondering if there is anything that makes sense – but wait, it gets worse!

Gainesville could actually be benefiting from solar energy tenfold. In 2009, Gainesville became the first city to introduce a solar feed-in tariff which was the jumping off point for a solar boom in Gainesville. The city as a whole was actually recognized as a world leader in per capita solar power output.

Then suddenly, the Solar FIT program was no more.

Within the program, an individual or business could install solar panels and sell the energy to GRU for a set price per kilowatt hour. The initial cost of installation could eventually be combatted with hopes of reducing the overall price of energy bills for the city. Previously, GRU was adding four additional megawatts per calendar year and thereby subsidizing more people for having solar panels.

For whatever reason, subsidizing consumers set off a bad taste in political mouths as legislators began rolling back state support of solar energy, but the death of solar in Gainesville isn’t related. It really was the biomass plant that started the downfall of a program that had such high hopes.

So suddenly, when the biomass plant started operation in 2013, other utilities were producing cheap electricity through burning natural gas and Gainesville couldn’t find buyers for this new, excess electricity.

This sent utility rates through the roof.

GRU’s annual profits go back to the city to support police and fire rescue, the upkeep of public parks and the alleviation of city debt. This fund transfer is actually Gainesville’s largest annual revenue source  — almost 35 percent of the city’s total revenue.

The utility as a whole generates $350 million a year and transferred $37.3 million in 2014 but only $34.9 million projected in 2015. This decrease is apparently due to the fact that Gainesville residents don’t use enough energy for GRU to maintain their profit margins.

But it just doesn’t add up when GRU left 59 positions unfilled, and Gainesville has had to implement hiring freezes, eliminate employee raises and take money from other specialized funds.

GRU could have and should have chosen to maintain a strong solar program; having diversity of energy forms is an excellent idea to maintain or reduce market prices. Relying only on biomass has proven expensive and foolish at this point, especially when one considers the strides made in solar.

In fact, solar is becoming the cheapest form of energy in national markets.

Clearly, if GRU analysts and higher powers took these sort of predictions into account, they could maintain profit margins and offer their customers cheaper, improved energy options.

But for now, congratulations on being environmentally conscious individuals, but with all the confounding variables Gainesville Regional Utilities is putting into play, you may want to hope for that increase in governance so that it isn’t just high bills and pure loss.

Featured photo courtesy of: WordPress

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