Sept. 22, 2010
Media contact: Chris Gleason, Community & Media Services manager, (253) 223-2293
Tacoma Power presented a proposed 2011/2012 budget to the Tacoma Public Utility Board today. To balance the $797 million budget, the utility proposed significant cost reductions, as well as a rate increase.
The proposed rate revision would raise residential customers' bills by an estimated average of $6 per month in 2011 and $5 per month in 2012.
The utility has not raised rates since 2005, and provided a rebate to customers in 2009.
Some of the key items that will affect Tacoma Power's budget in the coming biennium, that also similarly affect other regional utilities, include:
* Loss of revenue - Revenue from selling surplus power on the wholesale market has helped Tacoma Power avoid rate increases over the past six years. A drop in the market price for power will reduce the utility's wholesale revenue by about $68 million.
* Government requirements - Relicensing Tacoma Power's cost-effective hydroelectric projects and energy conservation programs to reduce customers' bills will cost Tacoma Power approximately $82 million in 2011/2012.
* Aging equipment replacement - To ensure reliable service, the utility will spend $49 million on replacing poles and other equipment in 2011 and 2012.
* Power purchase costs - The Bonneville Power Administration's rates will increase by an estimated 9 percent in October 2011. Tacoma Power purchases about 55 percent of its power from BPA, and anticipates a $36 million increase in power costs in the next two years.
"We made some difficult choices to try to run Tacoma Power as lean as we can in the next two years and beyond, and worked hard to minimize rate increases for the people we serve," said Ted Coates, Tacoma Power superintendent. "We know our customers expect reliable electric service, but they also expect us to provide it at the lowest cost possible. We made every effort to accomplish that."
Some of the cost-cutting measures include:
* Reducing 50 positions in the 2011/12 budget, which will include 20 layoffs
* Reducing non-labor operating expenses by 20 percent - a $19 million savings
* Eliminating or postponing capital projects
* Restructuring and financing its debt at a low interest rate, which reduced debt expenses by about $24 million in the next two years Both the Public Utility Board and the Tacoma City Council must approve the budget and rates. The Public Utility Board will conduct a first reading of Tacoma Public Utilities' budget on Oct. 13 and a final reading on Oct. 27. The City Council will vote on Tacoma Public Utilities' budget before the end of the year.
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About Tacoma Power
Tacoma Power serves 168,000 customers in Tacoma, University Place, Fircrest and portions of Fife, Lakewood, Federal Way, Steilacoom, Fort Lewis, McChord Air Force Base and other portions of Pierce County. The utility includes five divisions: Transmission and Distribution, Generation, Rates, Planning and Analysis, Power Management and Click! Network.
