A massive jump in electricity rates and higher than anticipated utilities usage has Jasper making some last-minute adjustments to its 2012 budget, boosting next year’s projected tax increase to 6.7 per cent.
That’s up from the 4.1-per-cent figure the municipality had been working with previously, a number many councillors thought was already too high and needed to be reduced.
“That’s disappointing,” Coun. Mike Day said after the new figures were delivered at a public budget meeting on Wednesday last week. “We were hoping to get way under four (per cent) but now we’re hoping to get back to four.”
The sudden jump is due to two factors, according to the town’s director of finance and administration, Alice Lettner.
Firstly, Jasper’s electricity contract with TransAlta is up for renewal and the current rates for power are more than 10 per cent higher than the rate at which the town had previously been locked in.
At its existing locked-in rate, Jasper will pay about $578,200 for electricity in 2011, according to figures Lettner presented to council at last week’s meeting. But, at the latest rate quoted by TransAlta prior to the meeting, that amount would jump to $655,500 – an increase of 13.4 per cent.
“This is a humongous number. Like, if you were worried about telephones, this one is even worse,” Lettner said, referencing the mayor’s concern at a previous budget meeting that the municipality is spending about $50,000 a year on phone bills.
Electricity rates continue to fluctuate wildly, however, and Lettner said she would be hesitant to lock in at a new rate right away.
“Had we locked in at the 28th of November,” she noted, “the rate since then has come down by $4 per megawatt-hour.”
That leaves the municipality with a tough decision, Lettner said. Opting to “float” with the market rate comes with a high degree of cost uncertainty, and locking in for a shorter term of say, six months, means that Jasper would pay a higher rate than if it locked in for a two-year term.
“Trying to find a good rate has been extremely difficult,” she said. “I feel like I’m between a rock and a hard place.”
But higher rates are not the only concern. The municipality’s total usage of electricity and other utilities is also higher than expected, hitting the 2012 budget with a double-whammy of sorts.
Initially, a total utilities bill of roughly $768,500 was budgeted for 2011. The actual bill now looks like it will be closer to $942,000.
The jump in usage this year combined with the pending increase in power rates also led Lettner to revise the projections for next year. The total utilities bill for 2012 is now budgeted at $1.06 million, up from the initial projection of $879,000.
“We think that’s a more realistic amount,” Lettner said of the million-dollar-plus figure.
It’s that difference in anticipated utilities costs that bumped the projected tax increase in 2012 to 6.7 per cent, leaving councillors a little stunned at last week’s meeting.
Mayor Richard Ireland asked Lettner to forward the new figures to the heads of each municipal department, saying council will be looking to reduce costs wherever possible to help bring down the actual tax hike next year.
Councillors will discuss the budget again at their next regular meeting on Dec. 20.