Councillor wants city to plug profits into electric reserve
One Penticton councillor is criticizing his colleagues regarding their 6-1 decision to limit the city’s electrical rate hike to the same wholesale rate which FortisBC is increasing its price to the city.
The rate increase, they said, should be as low as possible to reduce its impact on residents in the current economic malaise.
But Coun. Garry Litke said he thinks the April 1 rate increase should mirror the six per cent rate FortisBC will put on their retail customers.
The extra 0.7 per cent worth of profits, Litke said, should go to an infrastructure upgrade and expansion capital reserve to mitigate the potential for extraordinary rate increases in the future.
Litke noted a significant portion of the 5.3 per cent wholesale increase FortisBC and BC Hydro gained approval from the B.C. Utilities Commission to place on Penticton — a jump that incurred the outrage of both council and the public — is going towards upgrades and expansion of the utilities’ infrastructure after decades of not contributing some of their dividends to a capital reserve.
“To me it is a matter of poor planning that for all those years when they should have been accumulating some of their revenues to continually upgrade their infrastructure they were not doing that,” said Litke. “Now we are seeing (the utilities) coming forward and talking about 30 per cent increases (over three years) and we as the City of Penticton are being slapped with the huge increases.”
According to BCUC regulations mapped out by the provincial government, utilities are typically not allowed to pre-collect from customers in order to build reserve funds for future infrastructure costs. However, municipalities are.
“(The 5.3 per cent increase) is just operating from one year to the next and not accumulating any revenue and not accumulating our reserve fund to the point where we can actually continue to upgrade our infrastructure,” Litke said. “It is pay me now or pay me later and I just think it is shortsighted to not generate revenue when you can.”
Litke was not the only member of council who thought the increase should have been higher. Although he ended up voting for the 5.3 per cent increase, Coun. Andrew Jakubeit had suggested council go with a “compromise” increase of 5.5 per cent.
“Profit isn’t a dirty word. So, I think we need to start including that in our cost structures,” Jakubeit said during an initial debate.