Mayor Ashton Hayward has proposed an overall 6.9% rate increase for Energy Services of Pensacola. The new rate is still much cheaper than Gulf Power (GP-$32.11 per mmbtu vs. ESP-$15.10 per mmbtu).
City residents account for less than 11 percent of the ESP customer base. The vast majority of the rate increase will be borne by businesses, government entities and residences outside the city limits. This helps to dispel the argument that the ad valorem tax cut of half a percent benefited business to the determent of Pensacola homeowners.
Even with the rate increase, the gas rate will be less than the period 2005-2009. The rate increase would have been less had the Pensacola City Council followed its policy and made a CPI adjustment of 2.4 percent last year.
The 6.9% increase provides no new revenue, it only funds continuing operations. ESP costs have increased due to pipe, fittings and materials have increased in price as have fuels, equipment, and other associated costs of operating a business.
If the City Council doesn’t approve the rate increase, the council must make a series of budget amendments:
- Reduce the transfer to the General Fund by $3 million – amend that budget also, or
- Deplete ESP reserves – which violates Council policy of maintaining 15 percent of operating costs in reserve, or
- Cut the ESP budget and operate the system in an unsafe manner (poor leak response, poor maintenance to reduce OT and materials costs).
None of this should be a surprise to the Pensacola City Council. The only freshmen council members are Sherri Myers and Brian Spencer. The other seven have handled more than one prior budget and were the ones who made the decision that has ESP in its current financial condition.