As Tacoma Public Utilities plans its budget for 2011 and 2012, we understand that decisions we make will impact you, our customers. We take that responsibility seriously.

It’s our job to provide services that are vital to our quality of life. We do that by meeting government regulations and maintaining our systems to ensure reliable power and water service, while striving to keep rates low and stabilizing utility finances.

Maintaining our systems to ensure reliable power and water
Tacoma Power and Tacoma Water must invest in their systems to continue to provide reliable, high-quality service.

Tacoma Power owns and operates an extensive system that requires constant maintenance and upgrades. Operating and maintaining seven hydroelectric projects, nearly 2,300 miles of power lines and dozens of substations will cost nearly $300 million in 2011 and 2012.

It takes a lot for Tacoma Water to maintain its 1,200 miles of pipe, 27,000 valves, 10,000 fire hydrants and the many other components of its system. Tacoma Water estimates that it will cost about $45 million for system repair and replacement in 2011 and 2012.

Tacoma Public Utilities offers some of the lowest power and water rates in the region.

Tacoma Power has not raised rates since 2005 and actually provided a rebate to customers in 2009. Although Tacoma Water has had rate increases during that time, it still operates at a much lower cost to customers than many other water utilities.

To keep costs down, both Tacoma Power and Tacoma Water have limited hiring, kept vacant positions unfilled and reduced operating costs.

Federal, state and local governments make and enforce laws that govern entities like Tacoma Public Utilities. Compliance with these regulations costs money; and in the past few years, government regulations have increased significantly.

Some of the regulations that will impact Tacoma Power’s budget include:

• Energy conservation – A Washington state law requires a four-fold increase in conservation.

• Reliability and security – The reliability and security of our electric power system has recently become subject to new federal mandates. Tacoma Power must undertake and document specific actions to keep our system secure, and report those actions to the federal government. We have had to hire additional people and purchase additional equipment to accomplish this.

• Hydroelectric project relicensing – We have been fortunate in obtaining new licenses for our dams. Those licenses, however, contain specific and costly environmental mitigation requirements that we will need to fund over the next few years.

Some of the regulations that will impact Tacoma Water’s budget include:

• Filtration – Federal law requires that Tacoma Water treat the Green River water supply for cryptosporidium, a protozoa that can cause serious digestive problems. Between now and 2014, the utility will spend as much as $240 million to build a filtration system that will treat cryptosporidium and improve water quality in many other ways.

• Groundwater treatment – Tacoma Water must treat its groundwater for two reasons:to meet state requirements for limiting corrosion of plumbing in customers’ homes and to meet a city ordinance that requires fluoridation of the water. The utility will include funding for a treatment system in its next biennial budget.

For many years, Tacoma Power has sold surplus power on the wholesale market. This power is produced when there are higher-than-anticipated stream flows at our hydroelectric dams, and the revenues from those sales are used to reduce customer rates. Unfortunately, the economic downturn has affected wholesale prices and the utility’s revenue from this source has dropped significantly.

Tacoma Water’s finances have also been affected in recent years. The utility’s customers use about 10 percent less water than they did a few years ago, due to conservation efforts and more efficient plumbing fixtures. The utility has also seen a decrease in system growth of approximately $2.7 million per year due to the ongoing decline in new construction. To maintain and upgrade its system and provide reliable service, Tacoma Water must ensure that it has a stable and sufficient income stream from customer rates.

How will this affect your rates?
Both Tacoma Power and Tacoma Water will need to raise rates in 2011 and 2012 to ensure reliable service in the future. It’s too early right now to know how much the rates will go up, but we will continue to communicate with you as we continue to control costs, develop our budgets and get a better picture.

There is never a good time for a rate increase. We are mindful of the effects that the economic downturn has had on our customers and our community. We continue to look for ways to limit our costs to minimize costs to you.

What you can do

Business customers
No matter what type of business or organization you work with, we have ways to reduce your electric use. We offer rebates and incentives on energy-saving lighting retrofits, HVAC system upgrades and compressed air efficiency projects, to name a few. We also offer free energy audits and energy bill profiles, as well as zero-interest loans. Learn more at KnowYourPower.com or by calling (253) 502-8619.

Residential customers
Our energy conservation programs offer many ways to reduce your electric use, from small things, such as instant rebates on compact fluorescent lights, to big things, such as rebates for insulating your home. You can learn about our energy conservation programs at KnowYourPower.com or by calling (253) 502-8377.

Some of the water conservation programs we offer include efficient showerheads and clothes washer rebates. Learn more at tacomawater.com/smart or call (253) 502-8723.

Small actions can lead to sizable reductions in your bill.

We will continue to provide information to you about our budget and rates as we further develop them. In the meantime, if you have questions you’d like to ask or concerns you’d like to share, please call us at 502-8600 or send an e-mail to u@cityoftacoma.org.