Liberty: Project won’t trigger 30 percent rate increase
January 17, 2014
Liberty Utilities is defending its proposed power line project, arguing it is needed and would increase rates less than some project opponents have been saying.
The three-phase, estimated $46 million project would upgrade and realign a loop of major transmission lines serving the company's North Tahoe customers. The lines are some of the oldest in California and don't have enough capacity to reliably serve even existing peak winter demands for electricity, according to the company.
Some people opposed to the project have warned that, with the company's small base of about 49,000 customers, the project would cause electricity rates to increase 20 to 30 percent.
Not so, said Mike Smart, the utility's president, and Ken Wittman, its manager of regulatory affairs.
"As a rule of thumb, for about every $10 million we added to the rate base, rates went up about two percent," Wittman said.
That would mean increases of about 10 percent after all three phases are built and operational over the next five to 10 years, assuming the California Public Utilities Commission lets Liberty Utilities recoup all of the cost through rate increases, Smart and Wittman said.
The first phase — a rebuild and partial realignment of its 650 transmission line — is estimated to cost $17 million.
The company aims to complete that phase this year, with substation modifications in Truckee, Northstar and Kings Beach completed in 2015 or 2016 and completion of a realigned 625 line with Squaw Valley and Tahoe City substation modifications in 2018 or 2019.
Rate increases could vary by customer class, with residential, industrial and commercial customers paying different shares — an issue that would have to be sorted out by CPUC.
That's just the potential rate increase for the proposed projects, however. Smart cautions other cost increases could factor into Liberty Utilities' next general rate case in 2015.
According to Wittman, the company asked for about $16 million in its last general rate case in 2012 and got about $12 million, triggering about a 4 percent average rate increase.
"My next case may be more. Wages have gone up, insurance benefits. There are new trucks out there. I could ask for $30 million in the next case, with $17 million for that line," Smart said. "I don't want to set anybody up by saying our next case is going to be 2 percent. No. If phase one goes it will be two, plus."
There's also the question of if or how the project is approved by several permitting agencies including the U.S. Forest Service, Tahoe Regional Planning Agency and the CPUC. Five alternatives were identified in a draft environmental impact report prepared for the project.
"Prices could go up or down depending on where you're pushing me or pulling me. But for the preferred alternative, alternative four, those are the numbers we're playing with," Smart said of the cost.
At the end of the day, the project would require a rate increase, just not 20 to 30 percent as some have claimed. "Nobody likes an increase," Smart said.
Liberty Utilities has prepared a question and answer document about the project. It is available online under news at http://www.libertyutilities.com/west/. Additional information about the project is available through TRPA.