Impact of lower rates expected to begin in February

City officials took a step Thursday to ensure Gainesville Regional Utilities gives its 93,000 customers a reduction on their monthly electric bills, a promise made during the city’s acquisition of the biomass plant formerly known as GREC.

At Thursday’s city meeting, commissioners gave one of the two needed approvals that ensures savings for all the utility’s residential and commercial customers. The next vote is scheduled for Jan. 18.

“The bottom line is that there are going to be pretty significant savings,” Mayor Lauren Poe said.

Starting Feb. 1, city residents are expected to see about a 7 percent reduction in what bills otherwise would be, while those outside city limits will see about a 5 percent reduction due to taxes and surcharges. GRU officials previously estimated savings at 10 percent.

On Nov. 7, the city and its utility purchased the biomass plant, now called Deerhaven Renewable Generating Station, for $754 million. Since then, GRU General Manager Ed Bielarski said the city has saved at least $7 million by eliminating a multi-billion dollar obligation to GREC.

The sale, however, increased GRU’s debt from $945 million to $1.5 billion, which will loom over the city for 30 years. Still, Bielarski said it was a good deal and expects an overall savings of $768 million spread across 30 years.

“I’m so confident with the fact that this was the best deal that we could’ve ever got,” he said.

GRU officials have also mentioned increasing rates up 10 percent steadily through 2022, but are also subject to the approval of the city commission. Bielarski has said the change is nothing unique to Gainesville, as utilities around the state will do the same.

Plant upkeep

City officials say the biomass plant is running as the city’s second cheapest plant behind the natural gas-fired Kelly facility, cheaper than the utility’s coal plant, Deerhaven 2.

There are approximately 40 contractors working at the biomass plant who previously worked for GREC. The collective cost for those workers is about $3.5 million, Bielarski said.

Bielarski said the purchase of the DHR has also prolonged the lifespan of its oldest plant, Deerhaven 1, which was scheduled to close in 2022. GRU officials previously expected a replacement plant to be built for about $200 million.

One of the city’s plans with the plant was to modify it to run around 25 megawatts, down from 102 MW. GRU originally estimated the necessary retro-fitting to cost $15 million. Now, Bielarski said it could be around $6 million to $7 million, but that the city may not modify it at all.

He said the city is saving additionally by contracting with new suppliers for fuel at a cheaper rate.

Mayor Poe said an added benefit to the purchase is that the city hasn’t been dependant on natural gas. Currently, he said, the state is seeing a natural gas shortage.

GRU officials are exploring the use of yard debris as a fuel source for the plant and are using storm debris left behind by Hurricane Irma.

Bielarski said the utility is also looking to contract with other municipalities and counties around the state to bring in debris to use as fuel at a lower cost than buy it from its typical supplier.

On Friday, GRU added a running savings counter to its website. The counter estimates the city has saved $7.1 million since the biomass plant purchase as of Friday afternoon.