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  Rates 2000-2002
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BPA Pass-Through
Effective October 1, 2001

Frequently Asked Questions
Q 1 What will happen to City Light's rates on October 1?
A 1 On October 1, 2001 energy charges for non-low-income customer classes will increase by 0.60 cents ($0.0060) per kilowatt-hour (kWh). (Rate changes for low-income customer classes will be discussed below.)

Q 2 Why are rates increasing again for non-low-income classes?
A 2 The October rate increase is required in order to pass through to customers the effect of increases in transmission rates and power rates charged by the Bonneville Power Administration (BPA).

BPA Transmission (Wheeling) Rates
When the City Council adopted rates in November 1999, the Council authorized City Light to pass through the effect of anticipated increases in BPA transmission (wheeling) charges. The size of the transmission rate increase was not known at that time. Subsequently BPA announced that transmission rates would increase by 25% on October 1, 2001. Passing through the effect of this increase to City Light customers required an increase of 0.05 cents ($0.0005) in energy charges for all non-low-income classes. This rate increment, with an effective date of October 1, was included in each of the three ordinances implementing power cost adjustments in 2001 (effective January 1, March 1 and July 1).

BPA Power Rates
In June 2000 BPA initially adopted rates for the five-year period beginning October 1, 2001. However, BPA reserved the right to adjust its rates if changes in its financial condition required rate adjustments. BPA's finances have been seriously affected by the turbulence in Western power markets over the past fifteen months. Just as City Light and other utilities have had to increase their rates because of high prices in the wholesale power market, so has BPA. BPA recently announced that the rates it had initially adopted for October 1, 2001 would increase by 46 percent. When the City Council adopted the March 1 power cost adjustment for City Light, the rate ordinance included a provision that required City Light to pass through to its customers the effect of any increase in BPA power rates. The 46 percent increase in BPA power rates will require an increase of 0.55 cents ($0.0055) per kWh in City Light's non-low-income rates, effective October 1, 2001.

Energy charges for non-low-income rate classes will therefore increase by 0.60 cents ($0.0060) per kWh on October 1, the combined effect of passing through the increases in BPA transmission rates and power rates.


Q 3 What will happen to rates for low-income customers on October 1, 2001?
A 3 Two changes in low-income rates will take effect on October 1.

BPA Pass-Through
Low-income rates will increase by 0.30 cents per kWh ($0.0030 per kWh) to pass through the effect of the increases in BPA's power and transmission rates. Pass-through of the tranmission rate increase had already been included in the rate schedules in the ordinances implementing the January, March and July power cost adjustment. The size of the transmission rate pass-through was 0.02 cents ($0.0002) per kWh. Pass-through of the BPA power rate increase, at 0.28 cents ($0.0028) per kWh, was authorized in the ordinance adopted by the Council on May 29, 2001. The increase for low-income customers is half the increase for non-low-income customers, in keeping with City policy that low-income rates should generally be half the rates for the standard rate classes.

Seasonal Rates
Prior to March 1, 2001, City Light's rate structure included seasonal rates for all rate classes, with low rates in the summer months (March through August) and higher rates in the winter months (September through February). For the residential rate classes, rates also varied by level of consumption. Low rates applied to the first block of consumption, which was defined as the first 10 kWh per day of consumption in the summer rate season (300 kWh per 30-day month) and 16 kWh per day in the winter rate season (480 kWh per 30-day month). Higher rates applied to consumption in excess of the first block levels. When the second power cost adjustment took effect on March 1, summer rates were eliminated for all rate classes except the low-income classes, and the higher winter rates were left in effect year-round for the non-low-income classes. The distinction between the summer and winter rate seasons was maintained for the residential rate classes because the amount of consumption billed at the first-block rate continued to be different in the two rate seasons. Furthermore, when the Council implemented a third rate block effective July 1, 2001, the level of consumption at which the third-block rate began to apply differed by rate season. The third-block rate applies to consumption in excess of 60 kWh per day (1,800 kWh per 30-day month) in the summer rate season and 125 kWh per day (3,750 kWh per 30-day month) in the winter rate season.

Low-income customers were the only customers paying lower summer rates in 2001. In adopting the July power cost adjustment on May 29, 2001, the Council eliminated the distinction between summer and winter rates for low-income customers. Year-round rates for low-income customers were set at levels between the winter and summer rates, so that low-income customers would pay the same amount on an annual basis as they would have paid with seasonal rates.

Therefore, low-income customers will see the following changes in their rates:

  • Rates will not rise to winter levels on September 1, because September has been redefined as a summer month.
  • On October 1, year-round rates will take effect for low-income customers. Low-income rates will rise to a level which includes the pass-through of BPA rate increases. However, because of the substitution of year-round rates for seasonal rates, low-income rates in the first two rate blocks will be lower than they would have been if winter rates had taken effect. By the same token, low-income rates in the next summer rate season (April 1 through September 30, 2002) will be higher than if the seasonal rate structure had been maintained.

Q 4 Are there any other rate changes that will take effect in the future?
A 4 The rate ordinance passed by the Council on May 29, 2001 includes one additional rate increase of 4-5% for general service customers in the downtown network, effective March 1, 2002. An increase in network rates on that date had been included in the original rate ordinance passed by the Council in November 1999 to recognize a portion of the higher cost of providing service to network customers and the higher level of reliability that network service provides. The increase in network rates was to be implemented in two stages, the first of which took place on December 24, 1999 and the second of which was scheduled for March 1, 2002. The May 29, 2001 rate ordinance maintains the second phase of the network rate increase.

Rates for duct, vault and pole rental and streetlights will increase by 3-4% effective March 1, 2002. These increases were included in the original rate ordinance passed by the Council in November 1999. None of these rates have been subject to the power cost adjustments enacted in 2001 or the pass-through of BPA rate increases.

Beyond the March 2002 rate adjustments mentioned above, it is difficult to say whether any other rate changes will be required in 2002. City Light's financial condition in 2002 will be heavily influenced by water conditions in the water year beginning October 1, 2001 and by prices in the wholesale power market. Since City Light will be a net seller of energy in the wholesale market in 2002, high prices in the wholesale market will benefit City Light financially, while low prices will result in lower revenues. City Light will provide a status report on its power and financial outlook early in 2002 and will recommend rate adjustments if necessary.

The Bonneville Power Administration will also be reviewing its financial status every six months and will propose rate adjustments as conditions warrant. The first review will conclude in December 2001 and may result in rate changes effective April 1, 2002. Again water conditions will be a major determinant of BPA's financial performance. Favorable water conditions in the new water year would allow BPA to lower its rates. The rate ordinance passed by the City Council on May 29, 2001 requires City Light to pass through the financial effects of any increase or decrease in BPA rates.

 

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