[Council Communication ]  [ Proposed Resolution ]

Council Communication

Title:	A resolution increasing electric rates
Dept:	Finance
Date:	May 15, 2002
Submitted By:	Lee Tuneberg, Finance Director
Reviewed By:	Greg Scoles, City Administrator

Synopsis:	The approved budget for FY 2002-03 calls for an increase of electric rates and the surcharge rate in keeping with the rate model and projected wholesale power costs. Staff and consultants have done considerable rate analysis and are recommending an initial increase of 6% for all rates and increasing the surcharge from approximately 10% to 16%. Additionally, the intent is to adjust the commercial class rates to provide for inclining block rates that are consistent with other rate classes but is revenue neutral for the commercial class. Consistent with Resolution 2001-18, all surcharge revenue is not subject to the Electric Utility Tax or included in the franchise fee calculation for General Fund Revenues. The increase will be effective for bills prepared on or after July 15, 2002 beginning with Cycle 5.
Recommendation:	Staff recommends approval of the attached resolution.
Fiscal Impact:	The resolution represents a $890,000 increase in revenues in the electric fund and balances current year revenues and operational needs within the adopted FY 2002-2003 budget. Of that amount, $490,000 relates directly to anticipated increases in wholesale power costs passed on to the city by Bonneville Power Administration. The other half pertains to increased costs in the Electric Fund including increased transmission costs, health care, system maintenance and other operational expenses. (See attached memo that details these increased costs.) The increase for rates will also generate an additional $122,500 Electric Utility User Tax revenue and $49,000 in franchise revenue which represent right-of-way use costs and assists to minimize the reliance on property tax in the General Fund.
Background:	In 2001 the city increased electric rates in July by 10% and added a surcharge of 10% in anticipation of operational and wholesale power cost increases expected in October. This increase is consistent with the prior year change and justification. The May 7, 2002 Council Communication is attached to provide additional background information.

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RESOLUTION NO. 2002-

A RESOLUTION REVISING RATES FOR ELECTRIC SERVICE
PURSUANT TO ASHLAND MUNICIPAL CODE
SECTION 14.16.030 AND REPEALING RESOLUTION 2001-18

THE CITY OF ASHLAND RESOLVES AS FOLLOWS:

SECTION 1. The electric rate schedules are increased 6.0% for rates for electric service provided by the City Ashland effective with Cycle five billings prepared on or after July 15, 2002.

SECTION 2. The City of Ashland adopts a 16.0% surcharge (increased from 10.0%) on billings for electric usage in addition to charges specified in Section 1 to help pay for wholesale rate increases on power supplied to the City of Ashland by the Bonneville Power Administration effective with Cycle five billings prepared on or after July 15, 2002.

SECTION 3. The surcharge revenue is not subject to the Electric Utility Tax or included in the franchise fee calculation for General Fund Revenues.

SECTION 4. Three copies of this resolution shall be maintained in the Office of the City Recorder.

SECTION 5. Classification of the fee. The fees specified in Section 1 and Section 2 of this resolution is classified as not subject to the limits of Section 11b of Article XI of the Oregon Constitution (Ballot Measure 5).

SECTION 6. Resolution 2001-18 is repealed.

This resolution was read by title only in accordance with Ashland Municipal Code §2.04.090 duly PASSED and ADOPTED this ____ day of May, 2002.

Barbara Christensen, City Recorder

SIGNED and APPROVED this ____day of May, 2002.
Alan W. DeBoer, Mayor

Reviewed as to form:
Paul Nolte, City Attorney

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