REPORT TO COUNCIL
SUBJECT
Title
PUBLIC HEARING: Action on a Resolution Amending Rate Schedules for Electric Services for All Classes of Customers to Increase Electric Rates and Charges in Each Rate Schedule by 5.0% and Make Other Modifications, Effective January 1, 2025
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The City of Santa Clara's Electric Utility, Silicon Valley Power (SVP), is proposing a 5% increase to its rate schedules for all classes of customers, effective January 1, 2025. This proposed increase is needed to fund the increasing cost of (1) renewable energy and (2) equipment, materials, and labor, for both new projects and required maintenance of electric utility infrastructures.
The rate increase is also needed so that SVP can maintain its financial health and bond ratings (AA- Stable assigned by Fitch and Standard and Poor's) by having a balanced budget and adequate reserves to weather future market fluctuations and volatility and other contingencies.
DISCUSSION
The proposed 5% rate increase is needed to cover the cost of generating and delivering power to all SVP customers and to help ensure the long-term stability of the system. When the updated FY 2024/25 Budget was approved, staff estimated a 5% rate increase effective January 1, 2025. In summary, there are three key reasons for the proposed rate increase:
1. Increasing cost of renewable energy.
2. Increasing equipment, material, labor, and construction costs for new projects and required maintenance of current electric utility infrastructures.
3. Increasing reserves to maintain financial stability and bond ratings and keep reserves in line with growth projections and deal with market fluctuations and volatility and other contingencies.
Cost of Renewable Energy
Renewable energy costs continue to increase due to the higher construction and material costs and increased competition for limited projects in California among utili...
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