Spinning City Power Rates

What is the difference between a power rate hike and savings? Ownership, of course! If its Rocky Mountain Power, it’s a rate hike to line fat cat pockets but if its city power, its a means of holding the line on taxes. At least that is the way Bountiful City is spinning its annual rate increase:

BOUNTIFUL — A small power rate hike will be presented to the Bountiful City Council tonight, Tuesday, as art of its tentative budget.

“It includes a 2 percent increase,” City Manager Tom Hardy told the Clipper late last week. “It’s to cover the costs of increased power costs.”“We’re not replenishing our reserves that we had previously, but not depleting or going into the hole,” Hardy continued. However, the contribution to city services from the power department is a bit lower, “a little over a $200,000 decrease,” he said. “That’s something we’d obviously like to keep at the level it was.

“But in these days and times, it was at about $2.4 million, and now it’s just a little over $2 million. What that represents for us is the return of the investment that we’d like to have.

“Obviously, it’s to benefit our citizens for (the city) being in the power business. I think our citizens are getting a very favorable result, and we plan to keep it that way,” Hardy said.

“The contribution we (power department) make to the city, we look at that as in lieu of taxes,” Michaelis [Power Dept. Manager] said. “They own us, and this is seen as a rate of return.”

[emphasis added]

This stuff is really laughable (seriously, I’m laughing at this). Power consumers are being over charged $2 million for their power so that the city can stick the money in its general fund and then tell citizens that this is a great deal for them.

The line about this being in ‘lieu of taxes’ is just as hilarious. We raised your rates rather than being up front and requesting a tax hike. Well, I suppose if the state raised vehicle registration fees by $100, that would be a great deal, right? They didn’t raise taxes so obviously it would be “a rate of return”. The funny thing is these seem to result in a lighter wallet and a lower bank balance. I guess Mr. Michealis forgot to mention who actually reaps the cash in the “rate of return”.

As I understand it, Bountiful power (BP) rates are roughly equivalent to Rocky Mountain Power. What is worse, is that Rocky Mountain Power is attempting to make a profit (including payments to shareholders) and must pay taxes while BP doesn’t pay taxes and isn’t a for profit enterprise. Speaking of which, I wonder how much regulatory oversight BP must deal with vs the publicly traded RMP?

I did a quick run down on the numbers and found that Bountiful households* would have around $150 extra in their pockets, each year, if they were not overcharged the $2 Million.

Nevertheless, don’t worry about this – you’re getting a “favorable result” and the city plans on keeping it that way!

Sometimes you just can’t beat the entertainment value of over-the-top spin like this.

*Used July 1, 2005 census data for Bountiful population and found an average of 3.1 (rounded down) people/household in Davis County (couldn’t get figures on Bountiful households).

Related: City Slush Fund$

UPDATE: The Lehi Mayor and Council supported an internal audit of the city power company and the Mayor also considered selling it: Lehi power dispute may be political.   This is all I could find on it, at this time (I’m not sure what the outcome was).

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6 thoughts on “Spinning City Power Rates

  1. In light of this I am all the more happy at the desire of the mayor of Lehi to sell Lehi Power to Rocky Mountain Power on the grounds that Lehi Power is only able to give comparable rates to Lehi residents as they would get from RMP anyway.

  2. I was unaware Lehi was considering the move. Do you have any links to articles on the matter (especially the Mayor’s reasoning for the decision)?

    I assume Lehi city is/was NOT using the power dept. to funnel funds to itself. Is that correct?

  3. You’ll see some good hits if you Google: lehi power audit

    and…
    yes…

    Lehi was/IS using the power dept. to funnel funds to itself! Unbelievable isn’t it? Nice hidden tax.

  4. I’m sorry for the late response. I saw your comment earlier and forgot.

    I ran the search and found your blog posts. It’s unfortunate to hear that this tactic is being used by more than one city. This may beg action at the legislative level to prevent cities from using these power gimmicks to bamboozle citizens by claiming low taxes while raising power rates to inflate budgets (and circumvent truth in taxation).

  5. Pingback: Bountiful Keeps Covert Tax « Utah Rattler

  6. Pingback: Bountiful Power Taxes and Recycling (Warning to West Bountiful) « Utah Rattler

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