The Athens City Council on Monday got a closer look at how Athens Utilities will be affected by a new rate structure being implemented by the Tennessee Valley Authority.

The new wholesale power rate structure, which goes into effect Oct. 1, could ultimately affect some customers’ bills, depending on their monthly usage.

Utilities like Athens Utilities will pay a Grid Access Charge to TVA. The charge is a fixed charge based on the previous five-year average wholesale kilowatt hours. For fiscal year 2020, Athens Utilities will pay a grid access charge of $5.7 million, or $475,000 per month.

Electric Department Manager Blair Davis told the council there would be a corresponding reduction in energy charges, which means Athens Utilities would not see an increase or decrease in revenue in its wholesale power bill.

Information Davis provided to the council indicates TVA is requiring a restructuring of retail rates. Davis said to reduce the Electric Department’s risk, similar changes should be made to retail rates. He proposed increasing fixed charges but implementing a corresponding reduction in energy charges. He told the council the changes would again be revenue neutral.

The current customer charge is $12, which Davis proposed increasing by $4. Other changes are proposed at the usage level. Those using 2,000 kilowatt hours per month or more would pay less, according to the proposed rate structure.

The average customer, described as using 1,387 kilowatt hours per month, pays a bill of $139.99. Under the new rate structure, the customer’s bill would be $143.66, an increase of 2.6 percent. A customer using 1,500 kilowatt hours per month pays $150.42 per month now but would pay $152.58 under the proposed rate structure.

A customer using 3,000 kilowatt hours per month pays $288.84 per month now, but would pay $270.93 under the proposed structure. That’s a reduction of 6.2 percent.

Davis said the residential calculations were based on the past year’s residential cost per kilowatt hour.

If Athens Utilities takes no action, TVA will implement a default rate structure. Davis said the rates would be broken down as follows:

• A rate for the first 500 kilowatt hours;

• A rate for the next 1,000 kilowatt hours; and

• A rate for all kilowatt hours above 1,500.

“If for some reason, this year, our consumption is lower than the five-year average, we would lose revenue,” Davis said. “That’s why we’re looking to move to a fixed cost like TVA.”

The council will adopt the Athens Utilities fiscal year 2019-2020 budget, which runs from July 1 to June 30, 2020, at the council’s next meeting June 24.

Alcohol changes

Also Monday, the council approved amendments to the city’s current alcohol ordinance. Questions about the ordinance came up during the May 23 meeting during an appeal of an on-premises alcohol license denied by the city’s Public Works Department.

The proprietors of Sabor Latina Taqueria Inc., which operates an existing restaurant on U.S. 72, are opening a second location in the Hometown Market shopping center on U.S. 31. The owners applied for an alcohol license but were denied because of the restaurant’s proximity to Cultivate Church, located 65 feet away in the same shopping center.

The current alcohol ordinance states a business selling alcohol must be 500 feet from a church, school or child-care facility in a general business district.

The council ultimately overturned the Public Work Department’s decision and allowed the restaurant owners to proceed through the normal chain.

City attorney Shane Black said the changes amend the distance requirements to make it clear a licensed facility is not prohibited from being in the same shopping center as a church building, school or child-development facility. The amendment creates a shopping center exception to the distance requirements.

The council also updated the city’s ordinance to reflect a legislative change made in 2018, which allowed nonprofit organizations to apply to the Alabama Alcoholic Beverage Control Board for a special events retail license.

Other business

In other business, the council:

• Transferred $600,000 from the city’s alcohol fund to be split evenly between the five districts for infrastructure projects;

• Set a public hearing for July 22 to hear comments concerning a proposal to vacate a public alleyway behind Market Street Church of Christ;

• Moved its July 8 meeting to July 15;

• Authorized Mayor Ronnie Marks to enter into an agreement with KREBS Engineering to provide an engineering evaluation, recommendation and design of improvements to extend a gravity sewer to the Pepper Road development. The cost of the work would not exceed $24,700;

• Authorized Marks to enter into a contract with Reed Construction for pavement striping on several streets, including East Hobbs, Bryan, Houston, Roy Long and Hine. The cost is estimated at $40,000;

• Authorized Marks to issue a task order for street lights at the intersections of U.S. 31 and Moyers Road and U.S. 31 and Clyde Mabry Drive; and

• De-annexed 2 acres directly south of 14979 Lucas Ferry Road in an estate residential and agricultural district.

The council will meet again at 5:30 p.m. Monday, June 24.