Problematic City Power Companies (Kaysville)

It is constantly argued that a city power company will charge lower rates than a private company.  In theory, the should.  They have no stockholders requiring profit/dividends and enjoy lower oversight (they don’t have to report to the Public Service Commission nor have any SEC filings) and tax costs.  That equates to lower overhead right off the bat.  In practice, they still can’t match the private sector as reported in the recent Clipper article (As wind power added, Kaysville rate hike likely).

Before going into a rate comparison, the rate hike is troubling as the justification for it is due to adding wind power.  I wonder who made the decision to go for wind power.  Why was that better than the coal plants – were they speculating or engaging in environmental activism on taxpayer’s backs?  The reporter never asks.  Hopefully, it was the “cheapest” (likely tax subsidized) source available at the time.

Currently, Rocky Mountain Power (RMP) currently charges an average of $0.080919/kWh* (weighted for 900kWh usage).  Kaysville, on the other hand, charges an average of $0.1125 (based on the data in this April 16, 2007 Clipper article*).  Currently, Kaysville residents already pay about 39% more for their power.  The proposed increase (we’ll be nice and go with the low of 5%) equates to $0.118125 or about 46% more than an RMP customer.

This isn’t too much of a surprise when you look at Bountiful City.  Over the years, it has been documented that they also pay a premium for their city power.  One difference, however, is that Kaysville ceased transferring money into city coffers for eight years (Bountiful continues to do so) and, at least, two Kaysville city officials actually admit that the money is used as a defacto tax (“…a way to add to the tax base…” and “…Power Department has been used this way for the past 25-30 years is because there has not been a City Council willing to raise property taxes.”).  Effectively, it’s power company transfers are means of avoiding truth-in-taxation hearings.

There are still similarities, however.  Kaysville maintains the ability to transfer power funds into their coffers rather than going to truth-in-taxation (as demonstrated by the councilman, it’s a nice way for politicians to claim they didn’t raise taxes when in actuality, they have).

Next, the councilman (after admitting to the property tax circumvention) engages in the same sophistry used by Bountiful:  citizens are the power company’s shareholders as the money is reinvested in “economic development”.  The same thing can be argued about any tax and it’s bogus.  Real shareholders receive a dividend from their voluntary investment to do with as they please.  In this case, the money was taken from them and reinvested as the city wishes.

Fortunately, some residents are being proactive and have included a provision to prohibit power fund transfers in their initiative drive which was recently turned down based on administrative issues despite theoretically having enough signatures (raising the question if the same technicalities were overlooked for other groups and/or government-supported initiatives).  Here’s hoping they keep up the fight.


*Calculations:

RMP Rates:
May-September = (($0.075292*400kWh)+($0.092749*500kWh))/900kWh = average $0.084991/kWh
October-April = $0.078009/kWh (not tiered)
Weighted average = (($0.084991*5 months)+($0.078009*7 months))/12 = $0.080919/kWh

Kaysville: I went conservative and assumed a high average usage of 900kWh (this ultimately makes the denominator larger, thus reducing the rate).  900kWh*12 = 10800kWh/year.  Per the article, including the increase, the average resident will pay $1215/year.  $1215/10800kWh = $0.1125/kWh

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One thought on “Problematic City Power Companies (Kaysville)

  1. Pingback: Utah’s Clean Air Dupe: Endless Tax Increases, CNG Monopoly, And UTA’s Stealth Bailout | Utah Rattler

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