The necessity for system improvements, steadily rising costs to bring power to Santa Clara, and the need to replenish emergency reserves depleted by the drought are among the main reasons why we are proposing rate increases of 3 percent in 2017 and 2018. Our rates will still remain among the lowest in the state. Neighboring utilities are raising prices 11 percent or more next year.
Maintenance and upgrade projects include replacing 30-40 year old power poles, cross arms and neighborhood transformers as well as improving power lines to meet growing demand.
Our Director of the Electric Utility, John Roukema explains it this way. “Just like maintaining your car to make sure it doesn’t break down on the freeway, we have to replace aging and outdated equipment to prevent unexpected outages. Equipment failure during a heat wave, while working on a project you haven’t saved on your computer, or while getting the kids ready for school can be a real hardship for our customers.”
The cost of bringing power into Santa Clara is also a factor in the proposed rate increase, as transmission costs have risen nearly 200 percent in the past few years. While a portion of the electricity used in Santa Clara comes from local SVP generating sources, most power comes from other regions providing energy from wind, solar, hydroelectric, geothermal or other resources. Also, the cost to deliver natural gas to our power plants doubled this past summer as a part of PG&E’s pipeline safety program.
Electricity usage in the City increased nearly 8 percent last year, requiring an increased use of state-wide transmission services. On the bright side, this increase in sales allowed us to cover some of these rising costs and limit the rate increase to only 3 percent.
Drought Cost Offset by Reserves
Inexpensive hydroelectric power became scarce during the four-year drought, we were able to maintain low rates by dipping into our emergency reserves to offset the higher costs of more expensive energy. We must replenish our reserves so that we can be prepared for the next time there is a drop in low-cost power resources or in case wholesale prices suddenly rise. The reserves give us the stability to weather the storm and keep rates reasonable for our customers when power supplies go awry. The reserves also bolster our credit rating and reduce our cost to finance large projects.
We will do everything we can to limit inconvenience for our neighborhoods while our maintenance and upgrade program continues the next few years. In some cases there will be scheduled power interruptions and we will notify customers in advance when these are to occur. A planned outage certainly beats the pain of a sudden wide-spread outage caused by ignoring preventative maintenance.
We ask customers to be patient and understand that the system work and the rate increase, first and foremost, support reliable and reasonably priced power for our community.