"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."
Those are expenses the city's power department incurs in obtaining energy from various sources, he explained.
"We have a contract that we had with Idaho Power for about eight years that we have to replace at higher cost, but it's less flexible," he said. "Idaho Power wanted a significant increase."
"We are recalling more of our IPP power. Both (sources) are coal-fired resources, so we're not exchanging a renewable for a non-renewable," Hardy said. "The best thing based on what we needed was to recall additional blocks of IPP power," he said. "We think this cost will be a little bit lower (than Idaho Power)."
Years ago, BL&P joined with Colorado River power, he recalled. "It wasn't the cheapest, but it was something we made an obvious investment in. And with the Pineview and Echo facilities, the great news about all of those is they're dependent on Mother Nature to provide water. "The bad news is that this is a dry year again. Anything (power) we don't get out of those sources, we'll have to buy at a higher rate," he said.
"I believe we're doing well, continuing to try and build our reserves, which took a large hit in the energy crisis of 2001 and 2002," Power Department manager Cliff Michaelis said.
"We went through all of our reserves, then more," Hardy said. "This year, we think we'll have about a 1 percent margin. That's certainly better than losing money.
"Next year we've got a zero balance (projected). Revenues and expenses are projected to approximate each other," he said.
"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 said. "They own us, and this is seen as a rate of return."
tbusselberg@davisclipper.com
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