A move to eliminate or at least reduce an increase in electric rates failed 5-2 at Penticton city council this week, as did a motion to keep the increase as small as possible.
Council chose to apply increases in the price it pays to buy electricity from FortisBC to an average of the wholesale price and the retail rate, but not before Coun. John Vassilaki asked the rest of council to consider taking less from the city electric utility’s profits rather than increase rates.
The City of Penticton takes about $3 million each year from the utility’s profits and uses it to fund the city’s capital improvements budget. This is considered a dividend to the citizens of the city, since the alternative would be to raise taxes.
Vassilaki’s motion would have seen the city take $500,000 less and use that difference to reduce the planned increase, ranging from 3.28 to 4.78 per cent.
“How long can the citizens of Penticton endure these rates? Our taxes might not be going up … but everything else is going up,” said Vassilaki.
The idea faced strong opposition from the start, with Mayor Garry Litke nearly ruling it out of order, since discussion of the motion would involve the capital improvements budget, which is part of the ongoing 2014 budget process.
Coun. Helena Konanz was Vassilaki’s only supporter, pointing out the staff-supplied comparisons of electric rates in other jurisdictions only showed Penticton in the middle of the pack at the top end of the usage scale. At average usage rates, she said, Penticton is not in the middle of the pack.
“At the average rate, we are not very low at all. In fact, we are quite high, compared to other communities,” said Konanz. “I want everyone to see how high Penticton’s rates are, compared to FortisBC, who we buy our power from.”
But Konanz’ analysis didn’t persuade the other councillors.
“I see repeatedly the notation by staff that Penticton is in the middle to top third,” said Coun. Judy Sentes, adding that owning the electric utility was a bonus for the city. “It is the basis for which we are able to do a lot for our community. We are looked at with some envy.”
Vassilaki noted that the city makes $6 million in net profit from the electric utility, with a portion supporting other capital projects, and the utility’s own projects, like the planned upgrade to the Westminster Avenue substation.
“What better way can you think of to help citizens than to give them a dividend that might put a few dollars in their pocket rather than pick their pocket in order to pay for the outrageous rates that are coming up?” asked Vassilaki.
Coun. Katie Robinson took exception at Vassilaki’s reference to picking taxpayer pockets. The only reason Penticton taxpayers haven’t had a tax increase recently, she said, was because the electric utility was run as a tight business.
“It is a business and we do need to make a profit,” she said. “It is a bit of a cash cow, there is no question of that, but our residents benefit greatly from it.”
Vassilaki’s motion failed, as did a motion by Coun. Wes Hopkin that the city only apply the rate increase to the FortisBC wholesale rate, and not increase the profit the electric utility makes.
Council voted 4-3 for the rate averaging option, increasing rates by 4.18 per cent, with Hopkin, Vassilaki and Konanz opposed. The new electric rate bylaw receives its first three readings at the Dec. 16 regular council meeting.