Truckee water customers to pay rate increase
October 31, 2007
Truckee Donner utility customers may see their power bills go up along with an already approved increase in water rates.
During a board meeting earlier this month, staff with the Truckee Donner Public Utility District recommended an almost 10 percent increase in electricity rates, said Interim General Manager John Ulrich.
The district has set hearings for the proposed electricity increase on Wednesday, Nov. 7, and Monday, Nov. 19. If approved, the electricity rates would rise at the beginning of January.
Water rates, on the other hand, will definitely be hiked by 6 percent on the first of the new year, the result of the board’s July 2006 decision to increase rates by 12 percent over two years. The first increase went into effect in January.
Major pipeline replacement projects prompted the increases, along with the district’s need to repay loans and pay for technology upgrades. According to Ulrich, the utility’s board of directors may approve the electric rate increase by mid-November. If that proves to be the case, Ulrich said he would recommend the new rate take effect by the first of the year.
Together, both increases would amount to an overall utility rate increase of nearly 8 percent, or a monthly hike of $11.68.
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Ulrich said the district’s primary reason for increasing the power rates was the additional cost to purchase energy. Ulrich referred to a proposed power contract brought to the board earlier this month that would combine coal-fired power with geothermal and hydro-electric for a mixed-energy portfolio.
Ulrich emphasized that the board would take no action until the directors had a chance to review the budget.
“This is a recommendation from staff to increase electric rates,” Ulrich stated.
If approved, Ulrich said the rate hike for electricity would translate into $8.77 more per month on a typical customer’s bill.
Advocates of a greener portfolio like Tim Wagner, the Sierra Club’s director of the Utah Smart Energy Campaign, say renewable energy or not, rates for power generation are rising nationwide.
“It doesn’t matter where we get our energy, the fact is that the cost of energy is going up,” Wagner said in a phone interview.
Last fall the utility engaged in a public debate over a plan to lock up a 50-year coal-fired power contract, which ultimately ignited a public outcry strong enough to prompt the board to seek alternative energy sources. Wagner was present at the meeting when the Truckee utility board of directors voted down the contract.
“This was really a major deal, the first time a small municipality stood up and said ‘no’ to coal,” Wagner said.
Advocates claimed the coal deal would have locked the utility into an inexpensive, $35-per-megawatt-hour price, according to director William Thomason. Proponents suggested the low cost would have stalled any rate increases, although Thomason said the coal plant would not have been operational until 2012.
That may have forced utility managers to buy electricity at market prices, which could have cost as much as $78.50 per megawatt-hour.
The district’s newly adopted energy portfolio carries possible costs from $60 to $62.80 per megawatt-hour, according to reports that Assistant General Manager Steve Hollabaugh submitted to the board last month.
Hollabaugh said the district pays $49.95 per megawatt-hour under its current energy contracts, which expire at the end of the year.
According to Wagner, the proposed Utah plant the district would have contracted with, known as the Intermountain Power Plant Unit Three, may never be built because of a pending lawsuit involving the City of Los Angeles.
Rate increase or not, critics of coal-fired energy, including Truckee Climate Action Network’s Beth Ingalls, say they would rather see the district’s current portfolio include wind- or photovoltaic power, both sustainable, solar sources.
“I’d be happy to pay more for renewable energy if the portfolio was what we wanted,” Ingalls said. “Hydro-electric is not environmentally sound ” I don’t think dams are green.”
The Sierra Club’s Wagner also advocated renewable energy sources.
“In the end, renewable will be cheaper as they become a bigger part of energy portfolios,” Wagner said.
Would there be a rate hike without the green portfolio?
“I think what we’re looking at is not too different from if we had gone with the coal contract,” Thomason said. “It was not locked in and anything could have happened.”
Wagner echoed that statement, saying many long-term contracts carry contingencies that allow the provider to raise rates if costs go up, such as the cost of a truck to transport coal to the power generating plant.
Ulrich said 84 percent of the proposed rate increase is needed to pay for higher power supply costs, and just a small fraction is required by rising labor and operational costs.
District Conservation Specialist Scott Terrell said ratepayers may be able to offset any increases by taking advantage of conservation programs, including rebates for installing compact florescent light bulbs.