Boulder City looks to distribute electricity rate hike equally

By Jean Reid Norman

Wednesday, Oct. 14, 2009 | 1:55 a.m.

Members of the Boulder City Council hope to spread the pain of a power rate increase equally and to provide more help for those who will have trouble paying their electric bill after the increase goes into effect next year.

The council directed Finance Director Tim Inch to calculate by what percentage the rates would have to go up for everybody to come up with the same revenue as a proposed 2 cent per kilowatt hour hike.

The rate increase is needed because NV Energy, which sells Boulder City wholesale power during peak periods, like during the summer, is raising its rates by 260 percent effective Oct. 1. It is expected to cost Boulder City’s Utility Fund an extra $3.9 million over the next 12 months.

To raise that amount of money, the city needs to raise power rates the equivalent of 2 cents per kilowatt hour, City Manager Vicki Mayes told the council. Rates currently range from 5.5 cents per kilowatt hour for the lowest residential users to 8.25 cents per kilowatt hour for the largest commercial users. Those rates do not include a monthly service charge of $5 for homes and $10 for businesses.

Residential rates in the Las Vegas Valley are 11.7 cents per kilowatt hour. NV Energy had been undercharging Boulder City for years for its wholesale power and moved to correct that oversight this year. The city also buys power directly from Hoover Dam and Glen Canyon Dam.

A 2 cent per kilowatt hour increase would be 36 percent for the lowest residential users and 24 percent for the largest commercial users, a disparity the council members did not like.

“I am in favor of a percentage increase, not a set increase, so it is fair across all categories, all economic levels,” Councilwoman Linda Strickland said, a sentiment other council members agreed with.

Mayes said an across-the-board percentage increase could be 35 percent, though that number was disputed by resident John Rossman, who said that it would be closer to 30 percent if usage stayed the same.

The problem, Councilman Travis Chandler said, is the city needs to calculate how much revenue is generated from each usage level to determine what overall percentage would be appropriate and bring in enough money to cover the city’s bills.

Inch said he is working on those calculations and needed direction from the council as to whether it preferred the percentage increase over a flat 2-cent hike before he puts together a business impact statement. There is a time pressure, he said, if the city wants to meet legal requirements and put the rate increase into effect by Jan. 1. One difficulty is that the City Council meets only once in December, and the legal notifications may not be done by then, Inch said.

Walker noted that commercial rates are much higher than residential and said the community needs to be aware of that inequity. “We weren’t fair to businesses when we raised them disproportionately to residents,” he said.

No one suggested bringing down the commercial rates, but the council did ask Mayes and Inch to bring back a plan to increase the city’s utility assistance plan for low-income residents.

Inch said he would have the percentage rate increase and an assistance plan for the council at its next meeting, Oct. 27.

The council also will consider whether to continue with a special rate put into effect for the nonprofit Boulder City Hospital in 1973. That saves the hospital $80,000 in a year over other commercial customers, Mayes said. The hospital pays the lowest residential rate, 55 cents per kilowatt hour, for all of its power.

The council members also said that if a special meeting is needed in December to finish work on the new power rates, that could be considered as well.

Jean Reid Norman can be reached at 948-2073 or jean.norman@lasvegassun.com.