[Council Communication]  [Attachment]

Council Communication

Title:	Update on Electric Rates
Dept:	Electric & Telecommunication
Date:	October 7, 2003
Submitted By:	Dick Wanderscheid
Approved By: ...........................	Gino Grimaldi, City Administrator

Synopsis:	The City increased both electricity rates and the BPA surcharge in July 2003. At that time, the Council was informed that BPA was considering imposing an additional Cost Recovery Adjustment Clause (CRAC) in October 2003, and that depending on the outcome of that process, the City may need to increase rates to cover that cost. BPA did enact a rate increase that amounts to a net 2.2% increase over current rates, for the rate period (Oct 1 to Sept. 30, 2004). Because of the size and timing of this increase, current electric rates are adequate to cover this cost increase and no adjustments are needed at this time. Our rates will be re-evaluated during budget process next year along with the utility's capital needs to see if any adjustment is needed in July, 2004.
Recommendation:	No action is required, this is for informational purpose only.
Fiscal Impact:	The increase of 2.2% on BPA bills amounts to about a $28,000 increase in our wholesale power bill from BPA.
Background:	The City increased electric rates by 7.5% and the BPA surcharge from 16% to 20.8% on July 1, 2003. This rate resolution was approved on May 6, 2003. At this time we informed the Council that BPA was considering triggering the third Cost Recovery Adjustment Clause (CRAC) in October, 2003 and that rates may need to be increased again, depending on the size and timing of that increase. BPA was able to trim the increase to 2.23% over current rates, for the entire rate period. This amounts to about $28,000 in additional wholesale power costs to the City. The results of all the Cost Recovery Adjustments are $1,302,000 above our wholesale bill prior to these adjustments. The BPA surcharge of 20% currently collects about $1,353,600 in total dollars so the surcharge is adequate to cover this increased costs for the remainder of this current budget year. Therefore, there is no need to increase the BPA surcharge at this time. BPA has projected what their Adjustments Clauses will be over the remainder for the rate period, and this projection has been attached to the communication for your information. The City will soon be receiving our Electric System Study which will identify future capital needs in the Electric Utility. Staff will present their results to the council when they become available. BPA wholesale rates and this information will then be evaluated during the budget process in order to decide electric rate levels for next year.
Attachments:	Expected Power Rate Adjustments over May 2000 Base Rates for FY 2004-2006 This documents is available in PDF format.  To view the document on your computer, please click on the link below.  the Adobe reader program will open in a new browser window.  Please use the browser's "Zoom" feature to adjust the size of text for comfortable reading.

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