Norcross City Council debates electric utility rate hike amid budget concerns

Key points:
• The Norcross City Council debated a phased, three-year electric utility rate increase at its April 20 policy work session.
• Norcross Power representatives told the council that the electric utility’s residential customer base has grown by 8% over 24 months, but its long-term financial projections show a shortfall in 2027.
• Elected officials disagreed on the merits of the rate increase.

With the fiscal year 2027 budget deadline just six weeks away, the Norcross City Council took up the question of whether to raise the city’s electric utility rate, with some pushback.

At the April 20 policy work session, representatives from the Electric Cities of Georgia and Norcross Power shared the results of a recent rate study. The city is a member of the Municipal Authority of Georgia, a statewide public power authority comprised of 49 municipalities that produce and distribute power.

ECG, a nonprofit supporting members of MEAG Power, projects the city will have a nearly $900,000 deficit next year and suggests a phased, three-year rate increase to strengthen revenue.

“It’s showing, after current rates and current revenue, ’26 will barely break even at $180,000,” ECG Senior Analyst Cathy Johnson said. “Beginning in ’27, you start to see some large deficits … we call this the do-nothing slide, the baseline slide.”

Council pushes back on projected deficit

The long-range financial projection shows Norcross Power’s direct revenue from customers remaining at $14.95 million from 2027 through 2031.

Council Member Matt Myers said ECG representatives also predicted a looming deficit for Norcross Power in 2024, but it never materialized. He said the city has kept rates flat for some time to make the city more competitive.

“I’m a little confused about how you’re projecting it, like we’ve gotta do something and there’s an emergency,” Myers said. “I’ve heard this story before, and it didn’t pan out … and we still have a revenue surplus.”

Myers and Council Member Bruce Gaynor pointed out that the city is transferring more than $1.5 million from its electric fund to its operating fund, up from around $500,000 just two years ago. That’s $1 million the city is not spending on electric costs.

“When we say things like, ‘if we do nothing, we’re going to be in a shortfall,’ it can excite the community,” Myers said. “They don’t have the full context.”

Norcross Power has two main sub-stations in the city with a total of seven circuits, according to the city’s website, with three more off-system stations in Cumming, Johns Creek, and Tucker. Its territory is mostly within the existing city limits, but the city can bid on providing large-scale electric service to large users outside its designated service area.

To increase revenue, the city can sell more electricity or charge higher rates.

Norcross Power rate comparison

Norcross Power President Jim Trupiano said the electric utility has seen 8% growth over the last 24 months, mainly driven by residential.

“We’re losing 2.7% on each residential customer … they’re being subsidized,” he said. “So as our residential customer base grows, that’s a little bit of an impact.”

Trupiano said there are some potential growth opportunities, like an AT&T 5G data center at Buford Highway and Lively Street, which will be online with a new transformer in the next 12 months.

“We’re in discussions with a property owner in Norcross that’s in talks with a Korean battery manufacturing company that could come here,” Trupiano said. “We have some growth in the future here, but it’s unknown at this point.”

The average home in Georgia consumes about 1,000 kilowatt-hours (kWh) per month, but that usage can jump to more than 1,500 kWh in the summer months.

Norcross residents pay 5 cents less per kilowatt-hour than the more than 2.7 million Georgia Power customers in the state. That means Norcross Power is saving homeowners an average of $75 a month in the summer months.

Council hints at decision

The Electric Utility of Georgia recommends that the city design a phased three-year rate increase of 4% the first year, followed by 3.25% and 3%, on all classes.

While commercial customers will see a 5.5% average increase over the three years, residential customers will see a 2% average increase. With the proposed rate increases, ECG projects the city’s electric fund will avoid a shortfall from 2028-31.

“I met with the energy manager for Publix … he said we’re the lowest utility out of their 1,475 stores from a cost perspective,” Trupiano said. “And he was asking, how do we do that?”

For Norcross Power, Trupiano said the general fund’s 10% dividend, discounts for its residential customer base, and rising costs are putting pressure on the city’s electric fund.

“I understand this is the worst-case scenario, that’s the way I look at this,” Trupiano said. “I don’t think it’s that far from realistic for next year. I think we will be in a hole … If we wait, and we do reach the worst-case scenario, next year or the year later, the impacts to the customer and their budget are going to be worse than they are today.”

Council Member Josh Bare said he thinks the city should be charging market rate.

“We’re not,” Bare said. “The proposals that you’ve shown don’t even really get us to market rate, but are headed in the right direction. I think we need to move in that direction.”

Council Member Bruce Gaynor said he wants below-competitive rates.

“I think when the public owns the power system, then the public should be benefiting from that by paying lower-than-competitive rates,” Gaynor said.

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