Electric Rates to be Increased 5%

The fiscal year 2007-2008 budget includes a 5% electric rate increase for the upcoming year. At their June 11^th meeting, the City Council unanimously approved the increase, which will take effect with electric bills issued after June 30, 2007. The increase will therefore be included on the bills which the City mails out at the end of July, and are received with the customers at the beginning of August.

Combined with the 3% increase last year, these increases represent the only electric rate increases since 1993, except for the pass-through of the 2001 Bonneville Power Administration (BPA) wholesale price increases and the State mandated low-income energy assistance charge. The proposed increase is necessary to offset increased costs, particularly for electric materials and supplies such as transformers, which have increased as much as 100%. In addition, all of the new residential developments being constructed have increased the demand for on-hand repair and replacement supplies. A 5% increase this year would be consistent with the City’s practice over the last several years of gradually instituting multiple smaller annual rate increases, to keep the impacts on the customers as low a possible, to avoid having to borrow funds for capital improvements, and to avoid the necessity of extremely large single rate increases.

The City Charter, Section 48, which was adopted on September 19, 1995, restricts the ability of the City Council to increase electric utility rates. However, a pre-existing November 1, 1994 bond financing agreement requires the City to maintain electric rates at a level necessary to properly operate and maintain the system, and to meet the debt service obligations. Therefore, similar to the sewer system, the City Council has the authority and obligation to increase electric rates to meet those requirements.

The rate increase is projected to generate an additional $217,150 in electric revenues during the upcoming fiscal year. For an inside-City residence using an average of 1,200 kWh per month, the 5% increase would raise the monthly utility bill by $4.01 (from $80.29 to $84.30), plus the 10% utility sales tax. The following table illustrates the increased Bandon electric rates for an average inside-City residence using 1,200 kWh per month, and a large commercial customer, such as a motel, using an average of 16,480 kWh, compared to corresponding rates for the other electric companies in the County, Coos-Curry Electric and Pacific Power.

Monthly electric bill for a single-family residence using an average of 1,200 kWh:

• Pacific Power $108.70
• Coos Curry Electric $ 97.52
• City of Bandon $ 84.30

Monthly electric bill for a large commercial customer, such as a motel, using an average of 16,480 kWh:

• Pacific Power $1,362.23
• City of Bandon $1,266.44
• Coos Curry Electric $1,178.49