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Riverside Utilities Board to Discuss Rate Increase Plan

November 17, 2007

By Doug Haberman, The Press-Enterprise, Riverside, Calif.

Nov. 16–RIVERSIDE — Riverside residents and business owners on Thursday largely welcomed a proposed residential electric rate increase to replace one the City Council repealed in August amid complaints about high summer bills.

The proposal also would establish a flat monthly reliability charge that all customers, both business and residential, would have to pay for the next 25 to 30 years.

The main effect of the proposal would be to raise rates while avoiding the shock of huge summer bills by spreading costs out over the entire year, said Riverside Public Utilities’ general manager, Dave Wright.

“It helps reduce summer bills,” he said.

The council in December approved a rate increase for both businesses and residences that took effect Jan. 1. It only repealed the residential rate increase.

The Board of Public Utilities held an evening public hearing on the proposed new rate structure in the City Council chambers at City Hall. More than 50 people attended and 19 of them addressed the board.

The board is set to consider the proposal this morning. If approved, it would go to the council Dec. 4 for a vote on upholding it or rejecting it.

A number of business owners spoke in favor of the proposal, saying it was needed to pay for projects that would increase the reliability of the city’s electric system and help avoid rolling blackouts in summer.

The city utility expects rolling blackouts by summer 2010 unless it builds the second half of a power plant and a second substation and transmission lines to connect to the state power grid.

The Greater Riverside Chambers of Commerce board voted in favor of the new rate proposal, Chairman Craig Blunden said.

“Rolling blackouts are not an option,” he said.

Resident Ken Rotker, whose complaints about his summer bills helped trigger the repeal of the old rate increase, said he wanted to take a closer look at the new rate structure but at first blush it looked fair to residential customers.

“It’s a vast improvement over the repealed one,” he said.

Resident Jeff Kraus said the proposed monthly reliability charge should not be subject to the city’s utility users tax.

He also recommended the proposed rate structure add a fourth tier that would penalize the heaviest energy users, with the expectation that this would encourage them to conserve.

Resident Edith Moir expressed her fear that the rate increase would likely lead to others.

“This can only get worse,” she said.

Including the reliability charge, by the third year of the increase:

–A resident in a small house using 750 kilowatt/hours would have a monthly bill in summer of $87.62 for electricity.

–A resident in a medium-sized or large house using 1,500 kilowatt/hours would receive a monthly bill of $267.50 or $277.50 in summer.

–A resident in a very large house using 3,000 kilowatt/hours in summer would have to pay $601.

The electricity rate increase is needed, Wright said, to pay for a second substation and transmission lines that would transfer electricity from the state grid to the city, for a 192-megawatt power plant to help the city avoid rolling summer blackouts (half the plant is in operation and the second half must be built), and for new power contracts that would replace much less expensive contracts signed 10, 20 or 25 years ago that are set to expire in the next few years.

The utility is proposing to waive the reliability charge for qualified low-income senior and low-income disabled residents and to boost electricity conservation rebates for them as well.

It is also considering major incentives for homeowners to buy whole house fans, which pull hot air out of houses and draw cooler outside air inside, Wright said.

PAYING FOR POWER

Riverside Public Utilities is proposing a three-year residential rate increase for electricity along with a flat monthly reliability charge that would apply to homes and businesses starting Jan. 1.

The reliability charge would be based on house size or business size and would be enacted in two equal phases, in January 2008 and January 2010. There would be four sizes of houses.

When the second phase kicked in, the monthly charge would be:

–$10 for a small house (100-amp service).

–$20 for a medium-sized house (200-amp service).

–$30 for a large house (400-amp service).

–$40 for a very large house (greater than 400-amp service).

–$60 for a small business (9,000 of the utility’s 9,800 business customers are small businesses).

–$90 for a medium-sized business.

–$1,100 for a large business.

The residential rate increase would be enacted through a three-tiered rate structure with seasonal power usage allowances.

–Tier 1 would be for usage up to 350 kilowatt/hours in winter and up to 750 kilowatt/hours in summer at a cost of 10.35 cents per kilowatt/hour.

–Tier 2 would be for usage between 351 and 750 kilowatt/hours in winter and 751 to 1,500 kilowatt/hours in summer at a cost of 14.9 cents per kilowatt/hour.

–Tier 3 would be for usage above 750 kilowatt/hours in winter and above 1,500 kilowatt/hours in summer at a cost of 16.9 cents per kilowatt/hour.

The charge per kilowatt/hour in Tier 1 would not rise but the charge in tiers 2 and 3 would go up 5 percent in both the second and third years of the increase, so by the third year it would be 16.5 cents and 18.7 cents, respectively.

SOURCE: Riverside Public Utilities

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Copyright (c) 2007, The Press-Enterprise, Riverside, Calif.

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