Example of New Rate Increase

Why is my electric bill going up?

Ashland buys it's wholesale power from the Bonneville Power Administration (BPA) and in turn sells it to customers in Ashland. BPA is a federally owned hydropower that sells power generated from 31 federally owned dams in the Pacific Northwest, to public utilities. BPA wholesale rates have increased which means that the utilities that purchase from BPA must raise rates.

There are three main reasons why BPA rates will increase.

1) In the past BPA has sold its surplus power on the open market. These revenues helped keep wholesale power rates down. Due to the drought conditions of last summer and the low water levels, there was no reserve power to sell and therefore BPA financial reserves are well below their normal levels.

2) Numerous utilities buy wholesale power from BPA who must provide that power per contractual agreements. Due to drought conditions of last summer, there was not enough power generated to meet those contractual agreements and BPA was forced to buy power on the open market at significantly higher rates. BPA paid a number of utilities and large industrial customers to curtail their loads for two years. This is the second year of these contracts.

3) While this water year is nearly average the revenue that BPA receives for its surplus power sales has been far below what was anticipated when BPA set its rates in October of 2001. Wholesale power costs dropped from unexpected high levels in 2000 back to 1998 levels and the revenue from the sale of non-firm power is well below what BPA anticipated.

What is the User tax? Proceeds from this tax go directly into the City's General Fund to off-set property tax. Some of the services included in the general fund which receive funding from this tax are: Police, Fire, Planning, Building and Senior Programs. Even with the user tax the city's electric rate is very competitive with the other provider in the area (Pacific Power). It should be noted the user tax is applied to the electric bill but is not applied to the new surcharge on energy use (BPA's wholesale rate).

Don't my property taxes cover the cost of city services? Property taxes pay for about 17% of the General Fund. The remaining general fund revenues come from the user tax, franchise fees, hotel/motel taxes and other miscellaneous sources. They all help to diversify the funding necessary for the General Fund, minimizing our reliance on property taxes alone. As an example, the user tax enables the City to reduce the overall property tax rate by approximately $.72 per $1,000 in valuation.

Example of Residential Electric Rate Increase

Based on 1,500 kWh

 

Old Rate

New Rate July 1,2004

Basic Charge

$7.02

$7.44

Energy Use Charge

$75.95

$80.51

User Tax (25%)

$20.74

$21.99

BPA Surcharge

Total Cost for 1,500 kWh's

$10.66

 

$114.37

$9.60

 

$119.54

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