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  Rates 2000-2002
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Power Cost Adjustment #2
Effective March 1, 2001

Description of Increase
On January 29, 2001, the City Council passed an ordinance that adjusted City Light rates in three ways:
  • Winter rates were increased by the equivalent of 4 mills per kilowatt-hour, effective March 1, 2001.
  • The difference between winter and summer rates was eliminated, effective March 1, 2001. Winter rates will now apply in all months of the year.
  • The effect of an anticipated increase in the rates charged by the Bonneville Power Administration (BPA) will be passed through to customers, effective October 1, 2001. The size of the BPA increase is not yet known. Possible increases of as much as 95 percent have been cited in the media. For every 4 percent by which BPA rates rise, City Light will have to increase its rates by 1 percent.
Rates will increase for all classes except for the low-income elderly and handicapped rate classes (Rate 26 and 27) and streetlights.

The combined effect of the four-mill increase and the elimination of the seasonal differential will be an average 18 percent increase in rates. The percentage increase will be even greater than this in the months when summer rates would have been in effect (March-August), but the effect of the higher rates on bills in these months will be offset to some degree by the fact that consumption is usually lower in the summer. This increase is in addition to the power cost adjustment of four mills per kilowatt-hour that took effect on January 1, 2001.

In addition, rate increases in the rate ordinance adopted by the Council in November 1999 will take effect as planned. These are:

  • 0.5-mill increase (about 1.5 percent) on October 1, 2001, to pass through the effect of increases in BPA transmission rates.
  • 3.1 percent increase effective March 1, 2002, for the system as a whole.
Frequently Asked Questions
Q1 Why are rates increasing again so soon after the January 1 increase?
A1 
There are two reasons why another power cost adjustment is necessary. First, this has been an exceptionally dry and warm winter. As a result water levels in our reservoirs and snow levels in the mountains are below normal. Output from City Light's hydroelectric plants will therefore be lower than expected, and City Light will have to make up the shortfall by buying more power in the wholesale power market. Second, the price of power in the wholesale market has been at extremely high levels for several months. High prices are expected to continue into the future. At the time the January power cost adjustment was enacted, water conditions were expected to be better than now appears likely, and prices were expected to be lower. Low water plus high prices equals a huge financial problem for City Light. Another rate increase is needed to solve the problem.


Q2 Is this the end of the rate increases, or are there more to come?
A2
 
What happens in the future depends on a number of factors, including rainfall, prices in the wholesale power market, and the degree to which customers reduce their consumption. While customers do seem to be lowering their consumption, the trends on rainfall and market prices are not encouraging. It is likely that City Light will be requesting further increases later in the year.


Q3 How long will these higher rates stay in effect?
A3
 
In order to recover the amounts we expect to spend to buy power in the wholesale market in 2000 and 2001, it is expected that the power cost adjustments will have to stay in effect through 2003. However, later this year City Light will be taking a comprehensive look at its long-term financial forecast. The results of this review could result in some form of rate relief before the end of 2003. At this point, the outlook for the future is still too uncertain to allow us to say anything definite about rates.

Q4 What can I do to soften the impact of this increase?
A4
 
Conserve, conserve, conserve! Every kilowatt-hour you don't consume is one less kilowatt-hour City Light does not have to buy in the wholesale market. There are already signs that our customers are reducing their consumption of electricity. In January consumption appears to be down by about 4 percent. The city has set a target of 10% for conservation savings. Anything you can do to reduce your use of electricity will help.

Q5  I am just above the eligibility level for low-income (or senior citizen/disabled citizen) rates, but this increase will hit me hard. What can I do about it?
A5 
The City Council will be studying ways of mitigating the impact of the rate increases on the low-income population, including those who do not qualify for low-income or senior citizen and disabled citizen rates under current eligibility standards. It is possible that eligibility standards will be changed. Other ways of helping those on low incomes are being explored.

Q6 Is there a light at the end of the tunnel?
A6 
Yes. City Light's long-term prospects continue to be bright. City Light has taken steps to reduce its dependence on the wholesale market for power. On July 1 of this year, City Light will be receiving power from a combustion turbine in Klamath Falls, Oregon. City Light has a new contract with BPA which will increase the amount of power City Light can buy from BPA. When this contract takes effect on October 1, 2001, City Light's need to buy power on the wholesale market will be greatly diminished. Essentially City Light is faced with a short-term problem -- a severe problem, but one with an end in sight. Once we get to October, our prospects for the future are excellent.
 

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