On Nov. 13, Santa Clara’s City Council will decide whether to approve a rate increase for Silicon Valley Power (SVP). The proposal to increase electricity rates by two percent for customers was described as “modest” by the City as it would only result in an estimated $1 per month uptick on the average Santa Clarans’ monthly utility bill. If passed, the increase would go into effect on Jan. 1, 2019.
The additional revenue garnered by the increase would be used to replace deteriorating infrastructure that delivers electricity, to homes and businesses as well as to meet the demands of rising costs of transmission access fees.
In January 2017, a three percent rate increase went into effect for SVP, and according to John Roukema, chief electric utility officer for SVP, it had been anticipated that there would be another increase for 2018, however a strong performance by hydroelectricity yield offset the need for the rate hike.
“In 2019 the cost of transmission is going up,” said Roukema. “The rate increase will help make sure that our infrastructure is upgraded and in good condition. It’s a matter of keeping on top of making infrastructure improvements such as replacing poles for power lines. We have to make sure that revenue is meeting expenses.”
Roukema views the rate increase as a nominal cost that will help keep SVP infrastructure in good working condition and financially sound. He also emphasized that SVP’s rates are well below the other utilities’ electric rates saying, “Our residential rates are 47 percent below PG&E’s rate.”
Many of the utility poles in Santa Clara are approaching the end of their functional lives as some are between 40 and 50 years old. While the electric rate increase is small, Roukema estimates that up to 10,000 poles may need replacing, which would require extensive effort and resources.
PG&E, which serves millions of customers in Northern California, has been blamed by CAL Fire for being at least partially responsible for the region’s devastating wildfire activity in 2017. The utility has been accused of lack of proper maintenance on utility poles resulting in sagging power lines, overgrown vegetation near lines and other unsafe conditions.
More recently PG&E cut power to tens of thousands of customers when weather conditions became very dry and windy, raising the threat of wildfires. The move was a precautionary one as part of a new safety program to prevent conditions where power lines may spark wildfires. Similar measures have been taken in Southern California by San Diego Gas & Electric.
Last December the California Public Utilities Commission (CPUC) adopted new fire safety regulations, which requires utilities to maintain greater clearance between transmission lines and vegetation within High Fire Threat Districts, among other changes. While the City of Santa Clara isn’t located in such a district, there are several high risk areas nearby in the Bay Area and Northern California.
“This new policy includes significant new fire prevention rules for utility poles and wires, including major new rules for vegetation management,” said CPUC President Michael Picker. “The map includes a broader definition of fire threat and also shows how dramatically climate impacts are increasing fire risks — land that is covered in the elevated, high and tree mortality fire hazard areas has grown from 31,000 square miles to 70,000 square miles. That’s 44 percent of California’s total land area.”
Because SVP’s electricity rates are relatively low, the utility hasn’t experienced community opposition to recent rate increases. If approved, the proposed two percent increase won’t significantly affect the bills of most residential customers. However, SVP offers a Rate Assistance Program, which provides a 25 percent discount off the electric portion of the utility bill for residents who qualify for financial or medical reasons.