November 19, 2024 Item #6
City Council
Item 6: Adoption of a
Resolution Amending Rate
Schedules for Electric
Service for All Classes of
1852
Customers Effective
THE MISSION CIN January 1, 2025
November 19, 2024
1 City of
Santa Clara
The Conter of Virats Possible
Agenda
• Sales and Funding
Background
• Outreach and Notices
• Proposed Rate Increase
• Cost Drivers/Responses
• Impacts and Comparisons
2 POST MEETING MATERIAL
1 November 19, 2024 Item #6
City of
Santa Clara
Tha Sering of Whats Peoside
Retail Sales
• FY 2023/24 - $674 Million Retail Sales Customer Mix - Retail Sales Revenues
Residential Commercial
2% Municipal
- Residential $40 million 6%
0.4%
- Commercial $24 million
- Industrial $608 million
- Municipal $2 million
Industrial
• Sales expected to double in the next 10 91.6%
years
• Benefits to having a large customer base
City of
Santa Clara
The Center of What's Possible
Economy of Scale
Benefits of having large customers and a large customer base = Economy of scale
• Major capital costs spread across all
customers based on power usage
• Able to build cost-effective local projects to
increase reliability
• Partner with other agencies through JPA
projects to stabilize rates
• Able to purchase larger amounts of renewable
power resulting in better prices
4 November 19, 2024 Item #6
City of
Santa Clara
The Centel of What's Possible
Capital Project Funding
• Projects are funded through:
Rates
• Load Development Fee (LDF) - increased by 145-
330% over the last three years
Combination of rates and LDF
Or fully developer funded
Example For Discussion Only - Scott Receiving
: Prolo Construction estimated at $11o million
5 City of
Santa Clara
The Center Shots Fossible
Public Outreach
Date Tactic
June 2024 Presented in proposed budget
October 22, 2024 Notification to Schools and State Agencies October 30, 2024 Twitter, Facebook, Nextdoor, Website, Email News blasts to City/SVP subscribers
October 2024 Communications to Key Accounts, Commercial customer list serve
October/November Public Notices
• San Jose Mercury News
• Santa Clara Weekly
Ongoing : Social media monitoring
Directing questions to [email protected]
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3 November 19, 2024 Item #6
City of
Santa Clara
Thy Conte of Wopts Possible
Need for Increase
• Increasing cost of renewable energy
• Increasing cost to purchase and produce the
power to meet the City's needs
• Increasing equipment, material, labor, and
construction costs for new projects and required
maintenance of current electric utility
infrastructure.
• Increasing reserves in line with growth
projections and deal with market fluctuations and
contingencies.
7 City of
Santa Clara
The Cerite: of Whats Possible
Monthly Bill Comparisons with Proposed
5% Increase
2025 Residential Customer Change
Low User (300 kWh) Average (410 kWh) High User (1,000 kWh) Current Rate $49.02 $67.64 $167.54
Proposed Rate $51.46 $71.01 $175.91
Increase $2.44 $3.37 $8.37
2025 Commercial/Industrial Customer Change
Small Business Large Commercial / Large Industrial Very Large Industrial 5 Largest Industrial Small Industrial CB-6
C1 CB-3 CB-6
CB-1 (41,000,000 kWh)
(1,000 kWh) (2,000,000 kWh) (19,500,000 kWh)
(500,000 kWh)
Current Rate $251.60 $88.742 $332.611 $2.811,974 $5,578,861 Proposed Rate $264.16 $93,177 $349,213 $2,952,284 $5,857,146 Increase $12.56 $4,435 $16,602 $140,310 $278,285
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November 19, 2024 Item #6
Average System Rate Comparison with Utilities in CA
California Utilities (>10,000 Customers)
2023 Average System Rates ($/kWh)
San Diego Gas & Electric Co - 0.40242
- 0.32073
→ 030069
- 0,28277
• 0.23108
City or Collon
City of Glendale
Chey of Paradena
Los Anties Orgarinenk or
Lansen Municipal Uilty District - 0101
Alameda Municipal Power
Clivor lompoc 0.20027
Truckoe Donner PUD
City of Azusa
Moon isolay 0.16988
City of Palo Alto
0.18397
• 0.18310
Citv of Redding • 0.17887
Liberty Udulles
Imperia terizaton District - 0.17578
City of Burbank Water and. • 0.16660
City of Anahelm
City of Riverside • 0.18450
0.15869
PacifCorp
City of Roseville 0.15819
dato rainion stick 0.15520
Turlock Irrigation Diatrict - 0-129-
you ant cara • 0.13857 City of Santa Clara
0,00000 D.15000 0 35000
Based on Form ElA-061 - Annual Electnc Power Industry Report, collects data from distributon utilites and power marketers of electricity.
City of
9 Santa Clara
The Cr
9 City of
Santa Clara
That Conted of What Pussib
Rate Comparisons
SVP vS. PG&E Average Bundled Rates Comparison
PG&E Average
Bundled Total Rates
SVP Average Rates effective 10/01/24 SVP Lower than SVP Lower than Class of Service effective 01/01/25 (S/wh)" (Sich) " PG&E (S/kwh) PG&E (%).
Residential D-1 E-1
$0.175 $0.427 $0.252 59%
Small Commercial 50259 B-1
$0.426 $0.167 39%
Large Commercial CB-1 B-10S
S0.190 $0.383 $0.192 50%
Small Industrial CB-1 10150
$0.190 $0.147 44%
Large Industrial CB-3 B-20P
$0.172 $0.272 $0.100 37%
Very Large Industrial CB-6 B-20P
$0.153 $0.272 $0.119 44%
* and age rates based on estimated forecasts, including surchargos. Average rates are provided for general reference, and individual customers average rate will depend on its applicabie * This comparison does not factor in the additional user tax charge levied in most P&E service jurisdictions (ypically 5%6). Santa Clara customers are not charged these additional fees. 10 5
November 19, 2024 Item #6
City of
Santa Clara
The Center of Whats Possible
Support for Customers
• Staff has taken every opportunity to partially offset these costs - Selling credits and allowances that are not needed in the near-term - Negotiated reduction in natural gas transportation costs - Reduced cost through debt management and refinancing
• Customer programs and support
- Existing Rate Assistance Program
- Continues to offer various energy efficiency rebates
11 KHO
City of
Santa Clara
The Center of What's Possible
Rate Assistance Programs
• 25-40% discount on electric portion of bill for residents who qualify for:
- Financial Rate Assistance Program (FRAP)
• Under 80% of County Median Income
- Medical Rate Assistance Program (MRAP)
• High energy use medical device(s)
• Requires Doctor Certification
• Other Assistance Programs are also available
- Low-Income Energy Assistance Program (LIHEAP)
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6 Slide 12
KHO FRAP total (includes LiHEap eligible) 1335
MRAP - Medical rate assistance - 281
Kathleen Hughes, 2024 11 •12T21:12:39.931
November 19, 2024 Item #6
City of
Santa Clara
tha Conter ch What's Possible
Recommendation
• Staff recommends that Council adopt the Resolution
> Amending Rate Schedules for All Classes of Customers with a 5% increase effective January 1, 2025
13 13
City Council
MATH CLARA CATA
Item 6: Adoption of a
CITY OF Resolution Amending Rate
Schedules for Electric
Service for All Classes of
1852 Customers Effective
THE MISSION CIT January 1, 2025
November 19, 2024
14 November 19, 2024 Item #6
City of
Santa Clara
The Center of What Possible
More slides
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City of
Santa Clara
The Centerol Whats Possibie
Increase to All Customers
• Cost increases triggering this rate increase proposal have been incurred on behalf of all classes of existing customers
• This approach is proposed for both policy and legal reasons • Under Proposition 26, a service rate is not a tax if it is imposed for a specific government service provided directly to a ratepayer • Therefore, it is legally required that the increased cost of service be spread equally among the various classes of ratepayers. 16 16
8 November 19, 2024 Item #6
City of
Santa Clara
The Center Of Whits Possible
Residential/Industrial
Rate Comparison
Average Rate in 2023
Data Year Utility Name Residential Industrial
2023 LADWP $0.2299 $0.2016
2023 City of Palo Alto $0.2021 $0.1543
2023 City of Roseville $0.1781 $O.1190
2023 SMUD $0.1689 $0.1260
2023 Santa Clara - SVP $O.1475 $0.1343
17 City of
Santa Clara
Cash Reserves/SVP's AA- Bond Ratings
• Most important rating agency metrics to maintain AA- rating - Balanced budget and adequate reserves to weather future market fluctuation and contingencies
- Maintains existing reserves at or above the minimum target of approved ranges, and with the proposed rate increase:
• the Rate Stabilization Reserve is anticipated to be at the minimum target of 10% of sales revenue by June 30, 2025.
• the Operation and Maintenance Reserve is anticipated to be within the middle target range of 90 - 180 days of operating expenses by June 30, 2025.
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