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On December 16, 2008, the Redding City Council approved two consecutive 7.84% electric utility rate increases. The first is set to take effect in January 2009 and the second in January 2010. Please take some time to read through the facts and history about REU, the reasons why REU must increase rates and review the presentation made to the City Council by REU Director, Paul Hauser (click here to view presentation). It is important that we remember our Utility’s history and understand the industry’s challenges, to gain a better understanding of our electric energy future.
REU History
Redding community leaders successfully acquired PG&E’s electric utility distribution system in Redding and as a result, in 1921, REU was formed. Its mission was, and still is to provide the citizens of Redding with reliable, safe, and low-cost power.
(For more on REU’s history visit
www.reupower.com/aboutreu/history.asp).
Fast forward to the late 1980’s early 90’s - REU was at a “cross roads” with its power supply. The nation’s economy was in recession, future power supplies and transmission were strained and Redding once again needed to take control of its own electric power destiny. The City successfully negotiated to acquire a small power plant in south west Redding, now known as the Redding Power Plant. At the time, some vocal opponents of the power plant purchase challenged City leaders for what they considered to be a “foolish decision”, citing the community did not need to generate its own power. In 1992, the Redding City Council made arguably one of the best decisions ever by approving the purchase of the small power plant.
1996 - 2001 - State Assembly Bill 1890 - deregulated California’s electric utility industry; established new open market and customer choice for electricity. REU implemented a temporary 23% rate surcharge to pay down its debt, and enable REU to compete in the new open market. Energy service providers scrambled to gain market share, major investor-owned utilities raised prices, later filed for bankruptcy, a Governor was recalled, and much of the State faced “rolling blackouts”. This was a perilous time in California. http://info.sen.ca.gov/pub/95-96/bill/asm/ab_1851-1900/ab_1890_cfa_960408_172203_sen_comm.html
2001 - 2002 - State Energy Crisis - Redding avoided “rolling blackouts” in 2002. The decision in 1992 to purchase the Redding Power Plant ensured Redding could meet its own power needs. REU added a 43 megawatt (MW) generator increasing local power production. Two years ahead of schedule, the City Council eliminated the 23% interim rate surcharge, dropping electric rates to 1996 levels. Businesses and residents alike lauded the City Council for its foresight and commitment to locally controlling Redding’s power needs. Redding was recognized as a “shining” light in an otherwise “darkened” State.
2006 - REU secured 26 MWs of wind energy at $60-$65/megawatt-hour. Today, the same wind energy costs nearly double.
California Environmental Mandates Impacting Electric Utilities
• 2002 - Senate Bill (SB) 1078 - Renewable Portfolio Standards - By 2017, 20% of all utility power to be generated from eligible renewable sources (solar, wind, biomass, small-hydro, geothermal). http://info.sen.ca.gov/pub/01-02/bill/sen/sb_1051-1100/sb_1078_cfa_20020819_151544_asm_comm.html
• 2006 - Assembly Bill (AB) 32 - Global Warming Solutions Act of 2006 - By 2020, AB 32 set to reduce State greenhouse gas emissions by 25%. As part of AB 32, the California Air Resources Board (CARB) calls for a 33% renewable energy portfolio for utilities and estimates the State wide cost to be $3.6 billion, producing a savings of just $1.8 billion. http://www.environmentcalifornia.org/html/AB32analysis.pdf
• 2006 - Assembly Bill (AB) 2021 - Energy Efficiency Law - Requires all utilities to meet “cost-effective” energy efficiency targets established by the California Energy Commission.
http://info.sen.ca.gov/pub/05-06/bill/asm/ab_2001-2050/ab_2021_cfa_20060421_125425_asm_comm.html
• 2006 - Senate Bill (SB) 107 - Acceleration of SB 1078 - 20% of all power to be generated from eligible renewable sources by 2010, instead of 2017 (AB 32 accelerates the renewable energy standard to 33%). http://info.sen.ca.gov/pub/05-06/bill/sen/sb_0101-0150/sb_107_cfa_20060905_115627_asm_floor.html
Facts About REU’s Current And Future Outlook
REU has been serving Redding’s electricity needs safely, reliably and affordably for more than 87 years. Although, REU is seeking a rate increase, Redding’s electricity rates will still be among the State’s lowest. Below are some facts about REU and charts comparing REU’s proposed rates versus PG&E’s rates. Power in Redding, even with a rate increase, is still a relative bargain.
• Fact - REU vs. PG&E = saving Redding millions of dollars over the years. In the last year, Redding saved more than $37 million!
• Fact - REU’s electric service is available 99.991% of the time, ranking REU among the State’s most reliable utilities.
• Fact - REU, since 2001, has provided customers with more than 38,000 energy-efficiency and renewable energy rebates, injecting more than $9.5 million into the local economy and reducing peak demand by nearly 12 megawatts.
• Fact - REU’s rates, on average, have increased a nominal 2.2% annually since 1996.
• Fact - REU projects, in 2010, our renewable energy portfolio will exceed 30%.
• Fact - REU’s low-cost hydro power has declined over the past 2 years, due to low rainfall, costing the Redding community more than $8 million.
• Fact - REU is constructing Unit 6, a new 43 megawatt generator, a long-term power investment in our community’s future, similar in nature to the decision made more than a decade ago to purchase the Redding Power Plant.
• Fact - REU has trimmed its 2008 operating budget by $1.2 million, including leaving six full-time positions unfilled.
• Fact - REU received City Council approval for two consecutive 7.84% rate increases in 2009 and in 2010, while many utilities in the State are seeking double digit increases in 2009.
Click here to view Proposed Rate Increase presentation.
Rate and Monthly Cost Comparisons Include REU's Recommended 7.84% Rate Increase
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