Where Do SVP Customers’ Electric Bill Payments Go?

The City of Santa Clara monthly utility bill shows charges for several city services, including your electricity usage. Even though electric rates in Santa Clara remain the lowest in the state, rising costs require a rate increase of 2 percent in 2016, and many want to know why.

We wanted to ask customers about their understanding of our cost centers and how they might affect rates by choosing from the categories below. It’s helpful to know that we saved Santa Clara customers more than $100 million on their bills in 2014 compared to the rates paid in neighboring communities, where electricity customers pay up to 43 percent more for power.

See how you do in this quiz on where your electric bill payments go.

Which of the following expenses receives the most money from the bill payments made to SVP by customers?

  1. Salaries, Wages and Benefits
  2. Operations and Maintenance
  3. Maintaining Reasonable Profits
  4. The City of Santa Clara General Fund
  5. Purchased Power and Transmission

Answers:

  1. Is not correct. In fact, expenses for salaries, wages and benefits for our employees actually used just 8 percent of the our overall budget in the fiscal year 2014-15 and have remained at 7-8 percent of the budget for several years.
  2. Is not correct. Operations and maintenance, which includes replacement of aging infrastructure, modernization of our electric substations, and transition upgrades to the modern smart grid, receive about 10 percent of the revenue collected by us.  Even though 10 percent doesn’t seem like a lot, it keeps our power reliability in the top 10 percent nationwide.
  3. Is not correct.  Zero profits are reasonable for your locally owned, not-for-profit public utility.  However you judge it, profits are neither a cost center nor a motivation for us.
  4. Is not correct. The city’s General Fund supports the operations and services of the city and provides some services to us, but the city charter caps this amount at 5 percent of the revenue collected by SVP. This is instead of collecting a user tax from utility customers like most other cities do.
  5. Is correct. A whopping 71 percent of our budget goes for acquisition of the power used by our 53,000 residential, commercial and industrial customers in Santa Clara. Prior to the drought, purchased power ate up 64 percent of the budget in 2012. We own or contract for power from generating resources across the western U.S. such as geothermal in Sonoma and Lake Counties, wind turbines in California and Washington, solar from local and Kern County installations, hydroelectric in Northern California, local landfill gas and various other sources to assure that the city has the reliable power it needs at all times.

Even though the drought was one of the bigger drivers of increased cost recently, transmission costs associated with bringing the power to Santa Clara have tripled in the last five years and continue to go up.  Changes in the cost of purchased power and power transmission have the most impact on rates by far. Good decisions in this area have kept our rates low.dime_chart_ISC

A kilowatt hour (kWh) costs a bit more than a dime for most Silicon Valley Power customers. Here’s how the money from your electric bill payments is budgeted. The 5 percent of SVP revenue that goes to the City of Santa Clara general fund helps support City operations including police, fire, and library services.

 

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