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April 19, 2011

PUB Approves Rate Adjustment

Last night at the regular meeting of the City of Alameda's Public Utilities Board, the Board approved an overall rate adjustment where the average residential customer can expect to see a $1.92 increase in their monthly bill and  commercial customer impacts will vary depending on use.  The 3.85% rate adjustment for Alameda Municipal Power customers is effective July 1, 2011 and represents the second year in a five-year rate plan approved by the Board last year that addressed the need to increase rates in order to ensure reliability and protect AMP and its customers from sudden changes in the supply and cost of electricity.  

The Board's actions are a result of the utility's financial planning efforts that included an Annual Strategic Planning and Budget and Financial Workshops. The rate increase is within the Board's preferred limit of increases below 5% and supports the utility's 10-year financial plan.

AMP's financial assessment showed that revenue increases were needed over the next five years due to higher power and transmission costs not controlled by AMP and lower sales. In the near term, AMP must replace an existing inexpensive power contract entered into in 2000, with a new contract that is expected to double or triple in cost.  

Transmission costs throughout the State also are expected to double mostly due to the cost of replacing and constructing facilities to connect to new renewable power sources to meet the recent renewable portfolio standards requirement adopted by the state.  Approximately 58% of AMP's forecasted cost increases over the next 10 years are attributable to uncontrollable power and transmission costs.  

These two factors could have resulted in double-digit spikes; however, staff's recommendations for small but steady rate increases spread over several years, was favored by the Board. 

AMP rates will continue to remain significantly below PG&E rates, withresidential rates approximately 24% lower and commercial rates 8% to 14% lower.  AMP is continuing to take all feasible steps to control costs and has reduced the employee count to 1993 levels.

As a local community utility, a portion of AMP's annual revenues contribute to the community to fund City services. Over $4 million is transferred to the City's general Fund. 

AMP is one of Alameda's largest businesses, serves the community with a reliability record within the top quartile of all U.S. utilities, and is the leading renewable utility in all of California. Over 60% of Alameda's power portfolio consists of renewable resources as defined by the State and is 80% carbon-free.  Additionally, AMP provides low-income assistance and services to assist customers in managing and controlling their energy costs. AMP encourages customers to take advantage of the wide array of the utility's energy-management programs and services.

All Board materials are available on the AMP web site.