|Fuel Cost Factor Increase Authorized By City Council
GARLAND, Texas, Novemeber 21, 2005 - The Garland City Council has approved an increase in the fuel cost factor component of the rate for electric service provided by Garland Power & Light (GP&L) effective November 1, 2005. The dramatic rise in the cost of natural gas over the past several months is reason for the increase. The increases in natural gas costs, complicated by the effects of Hurricanes Katrina and Rita, have had a significant impact on the costs associated with the generation of electricity.
The Texas Public Utility Commission has recently approved increases in the Price-To-Beat fuel adjustment for several electric providers in Texas including TXU, Reliant and CPL. An overall fuel cost factor increase of 24% for TXU went into effect earlier this month. The increase in the GP&L fuel cost factor continues to be less than the increase approved for TXU. Even though GP&L is a not-for-profit electric utility, it must cover the cost of generation while adhering to the Garland City Ordinance that mandates that GP&L’s overall bill will remain below the TXU Price-To-Beat.
After reviewing several options provided by GP&L staff, the City Council approved a fuel cost factor increase that remains 5% below the Price-To-Beat fuel cost factor. This approved adjustment also calls for a structured withdrawal of funds from the utility’s Rate Mitigation Fund to offset the increase in gas costs and to maintain lower electric rates. The Rate Mitigation Fund was established by Garland City Council expressly for this purpose. The fund is made up of past transfers from the Electric Fund. Rate Mitigation Funds have not been utilized to date.
GP&L customers who use 1000 kWh of electricity can anticipate that their monthly winter electric bill will be $125.90. This is less than TXU’s Price-To-Beat at $129.81.
By adequately covering generation costs through this latest adjustment in the fuel cost factor, GP&L will be able to continue to provide reliable electric service while remaining competitive and maintaining the proper balance between controlling long term debt and depletion of the Rate Mitigation Fund.
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