This week’s statewide energy rate increase will not break the city, but could have long-term effects on the budget.
State regulators approved an immediate 90-day increase in electricity rates Thursday, ranging from 9 percent for residences to 15 percent for large industrial businesses.
Energy costs in city-owned buildings are increasing 10 to 13 percent on average, said Berkeley Energy Officer Neal DeSnoo. The first 90 days will cost the city about $25,000. If the rate increase continues beyond 90 days, the city will likely have to rearrange its budget.
“If it continues (past 90 days) then it is a problem that will be dealt with in the budget,” DeSnoo said. “It likely will continue, so I think our budget officers will have to work on some adjustments.”
The city will not make any budget adjustments over the next three months but will be cautious about its electricity use. To conserve energy, city employees are being urged to rely on natural light rather than indoor lighting, and use less heat during the winter and less air conditioning during the summer. The city already pays approximately $1 million a year for electricity.
The city is saving money on electricity bills through a one-year contract with the Association of Bay Area Governments. Berkeley is part of a group of local cities that buys energy through ABAG to receive discounts. DeSnoo said the money Berkeley saves with that contract will ultimately be equal to the extra money it will pay out for the rate increase.
“It is not terrible because we have a lower wholesale cost right now. The city will be affected but we are already buying cheaper.”
The moderate rate increases came after Pacific Gas and Electric in San Francisco and Southern California Edison asked for a 26 to 30 percent increase.
After 90 days the state Public Utilities Commission will decide whether to continue the rate increase or not, or possibly make prices even higher.
“We don’t know exactly what to anticipate because it is not clear what will happen in the future,” DeSnoo said. “PG&E is asking for even more money, so things can change in the future.”
“It’s not an issue if this only lasts for three months because we are already saving that much money with ABAG. If it goes beyond that three months, we will have to go back and look at next year’s budget and make any necessary changes.”
City offices will not be the only buildings in Berkeley affected by rate increases. Residences make up 28 percent of the Berkeley community’s overall energy expenditure and will pay the smallest increases.
PG&E was previously charging 10 to 11 cents per kilowatt hour for residences. DeSnoo said the 9 percent rate increase means households will pay one penny more per kilowatt hour. To calculate how much money a household will now have to pay, add one cent to the price per kilowatt hour and multiply it by the number of kilowatt hours used, he said.
Commercial and industrial groups make up the rest of the community’s bill and will see either a 12 or 15 percent increase, depending on the size of the business.
Most companies in the city will pay 12 percent increases, but a few of Berkeley’s larger companies like Bayer Corp. and Pacific Steel Casting Company will see 15 percent increases, DeSnoo said.
Carolyn Kemp, spokesperson for Alta Bates hospital in Berkeley said she did not know how much prices are going up at the hospital, but she expects dramatic increases.
“It’s going to have a huge impact on us,” she said. “We work very hard to conserve energy, now we will have to work even harder.”
She said Alta Bates already turns all the lights out in its offices at 6:30 p.m. every day to conserve energy.