Council has reluctantly approved increases to electricity rates.
Fortis BC, which the city’s electrical utility purchases energy from, will increase its cost of electricity by 2.2 per cent.
Rate increases are typically applied at the end of a fiscal year, so council was surprised at the May 19 meeting when they had to deal with a mid-year increase.
Though it’s not unheard of, Mayor Andrew Jakubeit said it’s the first time mid-season increases were applied over the 6.5 years he’s been a part of council.
“We sort of feel held captive to the whim of Fortis to some degree,” he said.
And while the increase caused a mutual feeling of frustration among councillors, they had a tough time picking their poison.
To offset the rate hike, city staff recommended council implement a 1.83 per cent increase to the wholesale purchase, while some councillors felt the rising cost could fit into the budget’s breathing room.
A utility rate review was undertaken earlier in the year by the city, which is studying the cost effectiveness of certain public assets. Upon completion of the review later in the year, prices are expected to be adjusted accordingly.
Coun. Helena Konanz suggested that council wait until the completion of the rate review, and adjust electrical rates then.
In order to do that, director of operations Mitch Moroziuk said the city will have to find $350,000 from somewhere in this year’s budget to forego the increase – and that would only offset the rate increase by six months.
Interim chief administrative officer Chuck Loewen pointed out that if the increase isn’t applied to electrical users, the financial shortfall will have to be made up through property taxes – and the two revenues aren’t always sourced from the same people.
Mayor Jakubeit pointed out how electrical users can curb their costs by finding efficiencies, while taxpayers would have to take on the $350,000 gap.
“Clearly nobody here wants to pass on electrical rate increases again,” said Coun. Campbell Watt. “I don’t want my rates to go up – but $350,000 is a large chunk of money.”
Because the electrical rates were raised by 4.4 per cent in January of this year, and since the city yields a profit from its electrical utility – Coun. Helena Konanz wanted to stop the rates from compounding further.
“This is an incredible amount for anyone to stomach,” she said. “We can look to our surpluses for this increase, then when we get our utility review in, we can assess what we want to do then.”
“I’m not anxious to go back into our budget and try to take money out of the reserve,” Coun. Watt said.
Helena made a motion to postpone action until the rate review is complete, but fell one vote short of passing, with support from Coun. Tarik Sayeed and Coun. Andre Martin.
A subsequent motion to pass the staff recommendation of a 1.83 per cent increase passed with support from Mayor Jakubeit, Coun. Watt, Coun. Max Picton, and Coun. Judy Sentes.
The city will be receiving public input on June 1, and that event will be advertised in this newspaper. The increase is expected to be adopted on June 15, and put into effect for July 1.
Looking down the road, Mayor Jakubeit spoke about lobbying Bill Bennett, Minister of Energy and Mines at this year’s UBCM meeting to implement more effective oversight of utility companies.
“If we band together (as municipalities) we might be a little more effective in establishing a more fair rate structure.”
He also spoke about finding alternative energy sources or another provider, however Penticton has four years remaining in contract with Fortis.