Gainesville businesses are paying sky-high energy rates compared to the national average, according to a recent study.
Commercial businesses — like a retail store — are paying 52 percent more than 2015’s national average, while industrial ones — like a factory — are forking 78 percent more, said Dave Denslow, an economics professor emeritus at the University of Florida and the study’s author.
“You’re not creating jobs for the people in Gainesville when you” raise rates that high, he told WUFT News Wednesday before presenting his findings to the Gainesville Regional Utility’s Utility Advisory Board.
Meanwhile, residential GRU customers are charged 16 percent more than the national average. And when business and residential are combined, the University City altogether is paying 44 percent more, said Denslow, who is a member of the board.
The main reason for the relatively high rates, he said, is GRU’s $70 million annual expense: the Gainesville Renewable Energy Center.
The city signed a 30-year agreement in 2009 with GREC to buy fuel generated from the burning of biomass, like yard waste, as an energy source. Within the last two years, GRU has gone to arbitration over certain parts of the contract.
The city needs to decide where its priorities lie when it comes to residents and businesses footing the $70 million price tag, Denslow said.
“Are you going to really raise residential rates more, or will you sock it to commercial enterprises, to stores, and to industrial enterprises such as battery makers?” he said before the meeting.
Denslow said the city places the burden on businesses rather than residents because businesses “don’t have as many votes.”
Darin Cook, chair of the board and an executive at the Gainesville company Infinite Energy, agrees.
“That’s actually one of our top priorities for the [Utility Advisory Board] is to look at some unique rate structures that might help encourage business and economic development,” he said.
Businesses in the industrial sector may be hesitant to start in Gainesville because of its high rates, Cook said.
“It’s not so much necessarily the day-to-day costs but what a business has to put up front to actually get started,” he said.
GRU’s chief financial officer, Justin Locke, confirmed the imbalance between residential and commercial.
“Absolutely, we lean some of the cost to the commercial,” he told the board. “That has been a very historic thing.”
Locke agreed that the high rates hinder economic development in Gainesville.
“People who can produce widgets or gadgets or whatever,” he said, “they will go somewhere else because it’s such a big piece of their business.”
The next big relief won’t be until the $70 million GREC agreement changes, Locke said.
Board members didn’t offer further specifics on such changes in the contract, but they said they would continue to explore how to bring them about.
“We shouldn’t be where we’re at with commercial,” Locke said. “It’s just too high.”