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City of Ashland, Oregon / City Recorder / City Council Information / Packet Archives / Year 2004 / 05/18 / Electric Rates

Electric Rates

[Council Communication]  [Attachments]

Council Communication
Title: A Resolution Increasing Electric Rates.
Dept: Finance Department
Date: May 18, 2004
Submitted By: Lee Tuneberg, Finance Director
Approved By: Gino Grimaldi, City Administrator

Synopsis: The FY04-05 budget is proposing a 6% increase in electric rates and a change in commercial and governmental seasonal rates, while holding the BPA surcharge fixed at its current rate of 20.8%. This rate increase is necessary to cover increased personnel expenses, higher BPA Power costs, greater operating expenses and to meet the target electric fund balance.

Miscellaneous Charges and Connection Fees established by the previous resolution remain in effect, unchanged until revised by separate Council Action.

The increase would be effective for bills prepared on or after July 1, 2004 beginning with Cycle Seven.
Recommendation: Staff recommends the Council approve the Electric Rate Resolution that increases electric rates by 6.0%, removes seasonal rates from Commercial and Governmental rates and keeps the BPA surcharge at 20.8%.
Fiscal Impact: The proposed increase of 6% would generate an additional $706,800 annually for the City's Electric Utility. The Franchise fee would increase by $70,938 and general fund revenue from the user's tax would increase by $147,039. This would result in an overall increase of about 2.3% in electric bills for an "average" residential customer.
Background: Currently BPA is proposing a settlement with the IOU's which would remove $200 million from the next two years of the rate case. If this occurs the total CRAC's would remain at about current level for the first six months of the rate period. This action would equate to about a $300,000 reduction in wholesale power costs for Ashland in each of the next 2 federal fiscal years (Oct. 1, 2004 to Sept. 30, 2006). Therefore, staff is proposing to leave the BPA surcharge at its current level. If this settlement were to fail or other variables change this situation; there may be a need to adjust our BPA surcharge in October to reflect changing future circumstances. Even with this reduction, our power costs will still increase by about $410,547 over our FY 2003-04 costs. Transmission costs are projected to decline by $33,497. This means our net cost increase to BPA will be $377,050 or 6.8% higher than FY 03-04 costs.

This increase, coupled with rising health care costs, higher PERS costs, cost of living increases in salaries, the increasing costs of electric supplies, and a need to meet the electric fund target balance means the City needs to increase our electric rates to cover these higher expenses.

Staff is proposing a general 6% rate increase in the proposed FY04-05 budget and would implement this increase via a resolution that would make the rates effective in July 2004. The proposed new rates would compare to the old rates as illustrated in the following table:

Current Rates Proposed Rates
Residential
00Basic Charge

$ 7.02/Month

$ 7.44/Month
00User Charge-
0000First 500kwh

$ .04390/ kWh

$ .04653/kWh
0000Balance

$ .05400/ kWh

$ .05724/kWh
00
Bed & Breakfast
00Basic Charge

$ 7.02/Month

$ 7.44/Month
00User Charge
0000First 600kwh

$ .04876/kWh

$ .05170/kWh
0000Balance

$ .05390/kWh

$ .05714/kWh

All of these costs would also be subject to a 25% Electric User Tax which goes directly into the City General Fund.

Staff is also proposing a 6% rate increase for all other customer classes. However, there is also a need to do some rate redesign on our commercial and governmental rates to reflect seasonal wholesale billing changes from BPA. Currently we have seasonal rates for commercial and governmental customers that are actually higher in the winter period (Nov 1-April 30) and lower in the summer period (May 1 to October 30). These rates reflected our BPA wholesale power rates prior to 2001, and BPA has revamped those rates significantly since 2000.

The City now incurs high load and low load hour energy charges, that vary every month and also a different demand charge for every month of the year.

Finance has calculated the actual wholesale cost of melded kWh rate including demand and energy on aggregate for our entire wholesale power purchases and now the most expensive month of the year is August with melded costs of $.05kWh.

September is second, followed by November and December and then followed closely by July. A graph of these costs have been included for your information. Therefore, the old seasonal rates of lower rates in the summer no longer reflect the actual cost of service we incur in providing electricity to these customers. Because of this as a part of the rate adjustment in July, we would propose to change commercial and governmental rates by eliminating seasonality and making them uniform year around as follows:   Commercial & Governmental Rates
Attachments: •   Electric Rates Attachment
•   Resolution

End of Document - Back to Top
 

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