REPORT TO COUNCIL
SUBJECT
Title
Action on Resolution Amending Rate Schedules for Electric Service for All Classes of Customers, Effective January 1, 2019
Report
BACKGROUND
The City of Santa Clara's Electric Utility, Silicon Valley Power (SVP), is proposing a rate increase of 2% for all classes of customers, effective January 1, 2019 (Bill Cycle 680). SVP's approved budget, approved by Council on June 12, 2018, for the 2018/19 fiscal year assumed a 2% rate increase effective January 2019.
Electric Utility staff first discussed the proposed increase with the City Council during the fiscal year 2019 budget process in June. In addition, Electric Utility staff have reached out to the Energy Task Force (large customers), Chamber of Commerce representatives, school districts, numerous individual customers, and media representatives. Staff also has provided information via social media: Nextdoor, Twitter and Facebook.
DISCUSSION
The proposed rate increase is needed to cover the increased cost of generating and delivering power to SVP customers, including transmission access charges that apply to all electric energy that SVP receives via the PG&E transmission system and gas transmission charges for delivering fuel to SVP's gas-fired power plants. PG&E's electric transmission rates have increased over 350% in the past 10 years and natural gas delivery charges more than doubled over the past 5 years. Continuing upgrades to SVP substations and distribution feeders are required to maintain SVP's high service reliability. Other factors include the cost to acquire additional renewable resources, low interest rates that have eroded interest income from SVP's cash reserves, the return to drought conditions, and the need to maintain SVP's cash reserve funds in order to maintain SVP's current A+/AA- bond ratings. Partially offsetting these cost uplifts have been revenues from selling renewable energy credits and greenhouse gas allowances that are not needed in the near term...
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