STATUS OF THE REPORT ON THE IMPACT OF ELECTRICITY RATES
 ON THE UTILITY USERS TAX (UUT)

 

RECOMMENDATION:

It is recommended that the City Council direct staff to evaluate the impact of electricity rates on UUT revenue and report back in September 2001. The report will include options for dealing with any additional revenue, including revision of the UUT on electricity usage.

BACKGROUND :

On May 22, 2001, Councilmember Edgerton requested that staff report back on the impact of electricity rates on UUT revenue and revise UUT taxes for the portion which is based on electricity usage.

ANALYSIS :

There is no "windfall" revenue at this time as a result of the electricity crisis; however, effects of the recent rate increase are not yet reflected in the UUT revenue received. SCE previously indicated that they expected approximately 50% of Hermosa Beach residents to receive only an 8 to 10% increase in their electric bills, based on past usage. This estimate, of course, did not factor in any conservation efforts by residents. Staff recommends that we wait to perform the evaluation until data is available which includes the recent rate increase so that a fair estimate of the revenue can be made.

The City receives the UUT revenue on electricity from SCE monthly. No detailed information is received on a per-customer basis; only total amounts are provided to the City. Our SCE representative, Scott Gobble, has agreed to assist us in evaluating the impact of rates by providing comparative usage information between 2000 and 2001 for the months of June and July. If this data is used, the full impact of the recent rate increase, which first appears in June, will be included, as well as the effects of conservation efforts. A Los Angeles Times article (attached) recently reported that preliminary numbers from SCE show that 31% of residential customers are qualifying for the 20% rebate. SCE has indicated that this is likely the case in Hermosa Beach as well.

The data from SCE will be available in August, therefore we should be able to have the report to the City Council in September. Staff wanted to advise the City Council of the timing that makes the most sense for the evaluation rather than just waiting until September to present the report to the City Council.