news-PUD-rate-hikesBy Marcy Stamper

After months of studies and meetings with ratepayers who assailed rising costs, the PUD has raised electric rates by 9.5 percent for next year, effective Sept. 1.

The district postponed decisions about future rate increases until after next year’s budget is set.

Okanogan County Public Utility District commissioners approved the across-the-board rate increase for all service classes at their meeting on July 30. The resolution approving the increase also provides for an automatic adjustment – up or down – within 30 days of a change in the wholesale cost of power to the PUD, as in previous years.

The increase for residential customers will primarily be absorbed through a change in what is covered by the basic monthly fee. While the monthly minimum essentially remains the same, at $35, the PUD is no longer providing the first 500 kilowatt hours (kWh) for free with that charge. All residential customers will now have to pay for every kWh they use.

The cost per kWh for residential customers is going down to 4.35 cents from 5.75 cents for the first 2,000 kilowatt hours consumed. Usage above 2,000 kWh per month will be billed at 6.32 cents, the same as the old rates.

PUD Commissioner Steve Houston said he recognized that the PUD needs extra revenue to cover a shortfall in this year’s budget, but was only willing to approve a rate increase for one year until he has an opportunity to provide input on the district’s budget. Houston was elected last year, after the 2013 budget process was complete.

PUD consultants initially recommended two 16-percent rate hikes and then two 13-percent increases, before staff and commissioners looked at spreading out the increase over more years. The utility has had an annual shortfall of $4.5 to $5 million and has seen revenues decline considerably since 2008, according to PUD Director of Finance and Auditor Don Coppock.

 

Re-evaluate in 2014

Houston said the new rate structure makes bills easier for ratepayers to understand and recovers more of the district’s true cost of providing power. For residential customers, overhead is almost $80 per month, but the base rate is less than half of that, he said.

Houston also objected to the automatic 3-percent rate increases approved in 2010, which would have kicked in this year. The board postponed the automatic increases in June, before they went into effect, and the new rate schedule does not include any automatic rate hikes except those based on a change in the cost of wholesale power.

Small commercial customers will also lose the 500 kWh included in their base charge, which is going from $12 to $40 per month. For large commercial and industrial accounts the increases will affect different parts of their bills, such as demand, the maximum load used in a month.

The commissioners will re-evaluate rate increases for coming years after going through the 2014 budget process, which begins with a draft budget in October and should be finalized by the end of the year, said Coppock.

Houston said he is determined to look at all the PUD’s expenses when they start budget negotiations this fall. “We have to at least look at everything – not everything’s going to make sense – but we have to demonstrate that we’ve looked at it,” he said.

Ratepayers who attended three meetings around the county criticized rising prices and urged the PUD to control costs and get by with less, said Houston.

Overall electrical use by PUD customers dropped by almost 10 percent from 2007 to 2012; residential use  fluctuated in that period but is now only slightly down from 2007, according to a PUD staff presentation made in July on the rate increase. The PUD’s wholesale sales have dropped even more, from almost $12 million in 2007 to just $3.5 million last year.

The PUD has a calculator on its website at www.okanoganpud.org under “Commissioners Pass Resolution to Amend Electric Service Rate Schedules” where people can see the effect of the new rates on their bill.

Because residential customers no longer receive the first 500 kWh for free, not everyone’s bill will increase by 9.5 percent. For example, someone who used only 400 kWh a month will see a 48-percent increase, while someone using 1,500 kWh will have an 8-percent increase.