PUD customers may pay 2% more for electricity next year to cover higher costs of operations and fund maintenance and infrastructure projects. If rates go up, the increase will most likely start in April.
The Okanogan County Public Utility District (PUD) commissioners adopted a $58.3-million budget for 2020 that includes a 2% rate hike. The vote at the Dec. 16 meeting was 2-to-1, with commissioner Scott Vejraska voting against the budget.
It’s been a tough year for orchardists and ranchers, Vejraska said. “Everywhere I go, my constituents say, ‘How come you’re raising rates again?’ When times get tough, why can’t the PUD tighten is operations?” he said in an interview after the meeting.
Vejraska wanted to give ratepayers a break from nearly annual increases over the past five years. “I wanted to be really tight with everything to show people we can do it – provide essential services and keep the lights on,” he said.
Postponing some purchases and projects and converting the Omak office to a drive-through-only facility allowed the PUD to halve what had been a possible 4% rate hike, according to Sheila Corson, the PUD’s community relations coordinator. Omak’s customer-service employee will be transferred to another office.
Vejraska said he was “dead-set against closing the Omak office.” The role of a public utility is to be available to its customers, he said.
If the board decides to increase rates, the details – how much costs would go up for residential, business and irrigation customers – will be worked out separately. The increase will not necessarily be 2% for all rate classes, Corson said.
The PUD will also add its higher power costs to ratepayers’ bills, raising that charge to 0.6 cents per kilowatt-hour. That translates into an extra 72 to 90 cents per month for the average home, according to Corson. These cost-of-power adjustments fluctuate with costs from power sources like Wells Dam or the Nine Canyon Wind Project. They even went down once in the past decade, Corson said.
In the past year, the PUD’s retail electric sales increased, as did revenue from power the PUD sells on the open market. The utility’s costs for buying power – its biggest operating expenditure – dropped. Despite the added revenue and lower costs, the need to maintain and replace aging equipment and make bond payments pushed the commissioners to support the rate increase, Corson said.
While overall power costs were lower, the PUD had to absorb a whopping $2 million bill for two days at the end of February, when it bought power on the open market and the price spiked to $1,000 per megawatt, about 10 times the usual cost, Vejraska said.
Last year, the PUD increased the base rate 1.5% (54 cents for residential service) to raise additional revenue for the Tonasket substation and the Okanogan-Brewster transmission line. Rates were last increased in September 2017, when the base rate went up by $1 and the kilowatt-hour charge by 2 percent.
To increase electric rates, the commissioners have to adopt a separate resolution. The PUD has been working with a consultant to conduct a rate study to plan for the next decade, which should be completed in January, Corson said. The last full study was done in 2013.
The study will help determine whether different customer groups – such as residential, small and large general service, industrial, and irrigation – cover the actual costs of their electrical service.
The PUD’s budget includes $13.3 million in capital projects. The biggest capital expenditure is a $7.2-million safety project for Enloe Dam. Although the commissioners decided last year not to reenergize the dam, there are still expenses for dam safety and monitoring.
The $7.2 million will rebuild the penstocks and gates so engineers can divert the Similkameen River and inspect the face of the dam, a requirement from state and federal agencies, Corson said.
The PUD is trying to keep up with ongoing maintenance. The PUD has 27,000 power poles, and many are 50 years old, nearing the limit for safety and reliability, Corson said. The budget includes a $20-million bond to fund other infrastructure projects, including multi-phase projects already underway, such as the Tonasket substation and Okanogan-Brewster powerline, Corson said.
The PUD isn’t anticipating any load growth in 2020, but expects extra costs based on weather, with expectations for a water year at average or below.
Wages will increase 4% based on a new three-year union contract. Staffing will remain steady, but the utility won’t fill one open position, Corson said.