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Tacoma: TPU presents budget plan; details rate increases, job cuts

Post by Lewis Kamb / The News Tribune on Oct. 12, 2010 at 6:22 pm | 15 Comments »
October 13, 2010 10:56 am

Rate hikes faced by Tacoma Public Utilities’ customers are slightly less than those first proposed last month, but they remain a “significant” impact to ratepayers, public utility officials told Tacoma City Council on Tuesday.

“There’s never a great time for a rate increase,” TPU Director Bill Gaines told the council, when presenting the latest 2011-12 budget plan.

Still, in order to balance the budget, utility officials are recommending “system average rate increases” for each of the next two years of 5.7 percent for Tacoma Power customers, and 5 percent for Tacoma Water customers.

Alternatively, TPU officials proposed that policy makers could choose to impose a one-time rate increase in 2011 of 9.8 percent for power, and 8.4 percent for water.

In either case, water rates likely would go up on January 1, with power rates to follow on April 1, officials said.

As part of the budget plan, TPU officials also detailed a proposed reduction of 84 full time employees across all utilities – water, power and rail – that would include 64 positions cut by attrition and 20 by layoffs.

All proposed layoffs would occur within Tacoma Power and target positions “where work has gone or will go away,” Gaines said, such as in services provided to new construction, which has largely disappeared amid the dour economy.

The proposed job cuts and rate hikes are necessary to balance the budget, amid stagnant revenues and unavoidable capital costs imposed by regulatory mandates, TPU officials said. Gaines and other utility officials also said they’ve worked hard to cut “controllable” costs as much as possible to minimize the rate hikes and avoid cutting into services.

Overall, the proposed budget plan for all three utilities comes in at $1.1 billion – about $109 million less than the current two-year budget, Gaines said.

If approved, the proposed power and water rate increases, both of which would take effect next year, reflect average increases across all customer classes, from residential to commercial, TPU officials said.

Exactly how much the proposed rate increases would impact individual classes – such as single family residential customers – is not yet clear because individual class rates have yet to be calculated, TPU officials said.

If approved, the 5 percent per-year system-wide hikes recommended for Tacoma Water over the next two years (or, the one time 8.4 percent increase in 2011) should be close to what families would expect to see on their bills, Gaines said.

Utility officials project those proposed hikes would add about $1.50 to the average monthly residential water bill (now about $28) for the next two years for customers inside the city (Amounts of increases would be more for customers in outlying areas).

Meanwhile, the average monthly residential electric bill — now about $61 for in-city customers – projects about $5 higher per month for the next two years, officials said.

Still, power rate increases for single family residential customers might actually come in above the proposed “system average” hikes of 5.7 percent annually over two years (or the one-time option to hike rates by 9.8 percent next year only).

Councilman David Boe said by his calculations, residential power customers could face rate increases of more than 8 percent under the option to spread smaller hikes over two years, or possibly double-digit increases under the one-time rate hike option.

“That’s my concern,” Boe said.

The latest proposed rate increases are slightly lower than hikes proposed as part of individual utility budgets presented to the TPU board last month, in part because they incorporate new calculations for employee wage freezes, TPU spokeswoman Chris Gleason said.

As part of his general fund budget plan for the city, Tacoma City Manager Eric Anderson proposed across-the-board wage freezes for all city employees after those initial utility budgets had been presented.

In addition to proposed water and power rate increases, Tacoma Rail proposes rate increases for its industrial and commercial rail customers – by $2 per car (to $57) for intermodal loads, and by $33.40 per car for commercial loads (to $295, or $345 for Hazmat).

Even if the proposed utility rate increases are approved, TPU officials say Tacoma’s water, power and rail utility rates will remain lower than those charged by comparable utilities.

“We’ve been very concerned about the rate increases, which of course, we knew would be required,” TPU Board chairman Bob Casey said.

But, Casey added, he has  “not seen the depth of review” of any previous utility budget than this one during his seven years on the board.

The budget proposal is next set to be formally presented on Wednesday to TPU’s board of directors, who are scheduled to approve a budget two weeks later, Casey said.

Ultimately, a final budget and any rate increases must win approval of the City Council.

Among other details they requested, council members asked for more information about recent pay increases to some utility employees to help them analyze the budget.

Councilman Jake Fey also asked utility and city officials to provide more information about established programs to help seniors and other ratepayers who might have trouble paying increased utility bills.

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