Rate hikes faced by Tacoma Public Utilities customers are slightly lower than those proposed last month, but they remain a “significant” impact to ratepayers, public utility officials told Tacoma City Council this week.
“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 Tuesday.
Still, 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 policymakers 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 Jan. 1, with power rates to follow April 1.
TPU officials also detailed a proposed reduction of 84 full-time water, power and rail employees 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.
The proposed job cuts and rate hikes are necessary, 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 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.
The proposed power and water rate increases reflect average increases across all customer classes, residential and commercial, TPU officials said.
Exactly how much the proposed rate increases would impact individual classes – such as single-family residential customers – has yet to be calculated.
If approved, the 5 percent per-year systemwide 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 that 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. Increases would be greater for customers in outlying areas.
Meanwhile, the average monthly residential electric bill – now about $61 for in-city customers – looks 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.
Councilman David Boe said that 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 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 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.
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.
The budget proposal is to be formally presented Wednesday to TPU’s board of directors. A final budget and any rate increases must win approval of the City Council.
Lewis Kamb: 253-597-8542