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Council Delays Vote on Raising Electrical Rates : Utilities: Department of Water and Power wants a 6% fee increase to keep pace with costs. But business owners say they cannot afford to pay more.

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TIMES STAFF WRITER

After listening to complaints from merchants about the cost of doing business in hard economic times, the City Council on Tuesday delayed action on a proposed 6% hike in electricity bills.

“It’s going to be a killer, an absolute killer,” real estate developer Gene Buchanan said of the proposal, which would increase the electric bills of large commercial customers by an average of almost $59 a month by next May.

“We’re not in a recession,” said Michael Hawkins, owner of the Green Street Restaurant and president-elect of the Pasadena Chamber of Commerce. “This is an out-and-out depression.”

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Officials say the city-owned Department of Water and Power needs the increases to keep up with rising energy costs. At current levels, the department faces annual budget shortfalls of $6.7 million in two years, said David Plumb, general manager of the utility.

The council scheduled a workshop on the proposal, inviting public comments and suggestions.

Plumb said increases in the cost of fuel as well as the city’s budgetary plight, which has forced the council to take a larger share of Water and Power reserves to bolster the city’s general fund, have caused the utility’s dilemma.

In February, in the midst of a city budget crisis that forced $9.3 million in cuts, the council voted to take an additional $3 million from the so-called Light and Power Fund. In recent years, that reserve had been supplying about $8 million a year to the city’s general fund.

At the same time, the utility has increased its rates only once since 1982: In 1990, fees were increased by 6.4%

The situation threatens the efficiency of the utility, City Manager Philip Hawkey said.

“We can’t continues to trim back and trim back until we’re undermining our effectiveness,” he said.

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Plumb said the utility has implemented measures to reduce “controllable” costs--that is, personnel, supplies and maintenance; those expenses are lower this year than they were in 1990.

Utility officials propose to increase rates by 3% on Nov. 1 and 3% on May 1. With both increases in effect, the average residential customer, using 500 kilowatt hours of power a month, would pay an additional $2.83 a month. Small commercial customers, using 1,000 kilowatt hours or less, would pay an additional $5.93.

Commercial customers using 10,000 kilowatt hours or more would be hardest hit, with average monthly increases of $58.83.

Utility officials say a new Water and Power building, planned near City Hall, is not a factor in the projected shortfalls. The building will be financed with a bond issue, which will be amortized at a rate less than the current $407,800 the utility now pays for leasing office space.

Business leaders said the rate hike could force some of their colleagues into bankruptcy.

Hawkins sought to give council members “a little bit of reality” from the perspective of a restaurateur.

“For every chicken sandwich we sell, we make a net profit of 41 cents,” Hawkins said. “The (rate) increase comes directly out of profits. . . . To keep pace, we’ll have to sell 5,366 more chicken sandwiches on an annual basis.”

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But Councilman Bill Crowfoot, noting the utility’s single rate increase in the past decade, wanted to know how many times Hawkins had raised the price of his chicken sandwiches since 1982.

“We’ve had to do it a number of times,” Hawkins conceded.

Councilman William Thomson criticized utility officials for not consulting the city’s large employers before proposing the increases.

“On the one hand, we really want to be supportive of businesses,” he said. “Then we do something like this.”

The council did not assign a date for the workshop on the proposed rate increases. Council members will not meet next week because they will be attending a conference of the California League of Cities in San Francisco.

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