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April 11, 2011

Public Utilities Board to Host Finance and Budget Workshop, Rate Proposal to Follow

The City of Alameda's Public Utilities Board will host its Annual Planning Workshop - Finance and Budget next Monday, April 18, at 6:00 p.m. in City Council Chambers, City Hall.  At its regular monthly meeting immediately following, staff will present a rate recommendation to the Board in support of the Fiscal Year 2012 budget.

At the workshop, staff of Alameda Municipal Power will present the Board with its draft budget for the 2012 Fiscal Year and seek the Board's input on the document.  With an anticipated revenue requirement in excess of $52 million, AMP will remain one of the single largest Alameda-based businesses - a community-owned business.

"That's why we invite attendance especially at our budget-development and rate-setting meetings," said Greg Hamm, Public Utilities Board President.  "AMP is a direct contributor to our community's economic well-being and unique quality of life.  It's imperative that we allocate resources appropriately and recover costs in a manner that reflects community goals, now and for the future."

As part of its considerations last June, the Board conceptually approved a 5-year rate adjustment plan for Fiscal Years 2011 through 2015.  This plan is designed to avoid large rate spikes due to increasing power costs and to comply with financial guidelines previously adopted by the Board.

Over the period, power costs are expected to rise significantly, as transmission charges increase and a major power purchase contract is set to expire.  The cost of replacement power is estimated to nearly double.  Approximately 70% of AMP's forecasted cost increases over the next 10 years are attributable to these uncontrollable power and transmission costs, and these two factors alone could have resulted in double-digit rate spikes.  Moreover, recent economic volatility has led to lower-than-expected growth, resulting in lower sales and lower revenue, and continued upward pressure on rates.  The Board has favored a plan that results in lower rate increases spread over several years, instead of one with fewer, but more volatile, rate increases.

For the 2012 Fiscal Year, the second year in the 5-year plan, an average rate increase of 3.85% is being recommended.  If approved, the new rates will take effect July 1, 2011.  AMP rates will continue to remain significantly below PG&E rates, with residential rates approximately 24% lower and commercial rates 8% to 14% lower.

Prior to Fiscal Year 2011, AMP had not raised residential electric rates in 5 years. Rates for the average residential customer actually had decreased since the year 2000.  The utility is continuing to take all feasible steps to control costs and has reduced the employee count to 1993 levels.

As a local community utility, a portion of AMP's annual revenues contribute to the community to fund City services. Over $4 million is transferred to the City's General Fund.  AMP is one of Alameda's largest businesses, serves the community with a reliability record within the top quartile of all U.S. utilities, and is the leading renewable utility in all of California. Over 60% of Alameda's power portfolio consists of renewable resources as defined by the State and is 80% carbon-free.

Additionally, AMP provides low-income assistance and services to assist customers in managing and controlling their energy costs.  AMP encourages customers to take advantage of the wide array of the utility's energy-management programs and services.

The Annual Planning Workshop - Finance and Budget follows the Board's Annual Planning Workshop held in January, during which major initiatives and priorities for the utility were discussed.  "This ongoing dialogue is a fundamental component in budget development," added AMP General Manager Girish Balachandran.  "At the Annual Planning Workshop, the Board considered the critical issues, risks, and opportunities facing our utility.  Some of these included higher costs to purchase and transmit electricity, climate change, AMP's exceptionally high draw on renewable resources, and technology development.  We now are ready to present a proposal for allocating resources to these and all other areas of our operation."

AMP's 2011 Fiscal begins on July 1 and runs through June 30, 2011.