LA County residents to see hike in water, electric rates

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By The Staff

Los Alamos residents can expect to see a rate increase in both electric and water services, following a motion approved by the County Council at Tuesday night’s meeting.

With three of the seven councilors absent, a quorum of four consisting of Councilors Frances Berting, Ken Milder, Robert Gibson and Michael Wheeler was left to handle the heavy agenda.

Council voted 4-0 in favor of the electric and water rate hike.

According to information included in the suggested motion presented to council by the Utilities Department, electric rates were increased by 5 percent in fiscal 2008 and another 5 percent increase was scheduled for 2010.

During FY08, events and market conditions created the need to advance the planned rate increase by one year. During FY08, work was substantially complete on the environmental improvements made to San Juan unit 4.

“The electric rate increase [of 5 percent] had been planned for fiscal year 2010, but circumstances with the San Juan generating plant caused us to move that up,” said Utilities Manager John Arrowsmith. “We installed pollution control equipment as part of a consent decree from a lawsuit brought by the Sierra Club.”

The actual cost to the county for that project was approximately 20 percent or $1 million greater than the amount budgeted and borrowed.

In addition, delays in the restart of the unit of approximately two months resulted in replacement power costs that were not anticipated. Market conditions have also changed substantially in the last year, driven primarily by price increases in natural gas that drive the spot market for electricity.

The county’s current residential electric rate is approximately 95 percent of the average in the neighboring communities, the county staff reported.

“The five percent rate increase brings the local rate into parity with the region,” said Deputy Utilities Manager for Finance Janet Bettinger.

The county is proposing to increase all of its charges, except monthly fixed charges, by 5.5 percent. The planned net result is an increase in revenues of 5 percent.

The average residential customer using 550 kWh per month will see a monthly increase of $2.59. As a result of the increase, the annual revenue will increase approximately $550,000.

In addition to the increase in electric rates, water rates will also see an increase.

The 10 percent rate hike is the first increase in water rates in 10 years, county staff reported. The hike is needed to cover the costs of inflation including the costs of replacing and improving infrastructure, staff said.

“We took over the water system in 1998 (from the Deptment of Energy),” Arrowsmith said. “Deputy Utilities Manager Tim Glasco and I did a 50-year plan and came up with how much we needed to do wells, paint tanks, etc.”

Water rates will go from $2.17 per thousand gallons to $2.39 per thousand gallons. According to county documents, the increase was discussed during the FY09 budget hearings and was included in the 2009 10-year financial forecast.

The rate hike will increase the cost of water allocated to the Water Distribution Division and a distribution rate increase is accordingly planned for fiscal year 2010.

The increased annual revenue would be $308,000, of which approximately $92,000 would be allocated to National Nuclear Security Association and the remainder to the County’s Water Distribution Fund.

According to information obtained from the Department of Public Utilities, the DPU operates the county-owned electric, gas, water and wastewater systems under the jurisdiction of the Board of Public Utilities.

The DPU receives funding from rates paid for electric, gas, water and wastewater services and auxiliary fees, and has provided the community with these services for more than 50 years.

Established under Article 5 of the 1968 Charter for the Incorporated County of Los Alamos, the DPU provided payments to Los Alamos County in lieu of the franchise fees and taxes that would normally be assessed against a privately owned utility.

“There are not very many things that have only increased 10 percent in 10 years,” Gibson said.