Last increase was in April
Okanogan County Public Utility District (PUD) customers can expect a rate hike next year, since the utility will be paying more for power and transmission but the revenue it gets from its own power sales has declined.
The Bonneville Power Administration (BPA) announced numerous rate changes this summer that will result in higher costs to the PUD, according to PUD Community Relations Coordinator Sheila Corson.
Although BPA is reducing the cost of megawatt-hours (MWh) it sells to utilities, for the first time in decades — by an average of 2.5% — it is also reducing the amount of power it’s willing to sell to the PUD by about 4%, meaning the PUD will have to make up the difference on the open market. While market prices fluctuate with weather and demand, it’s “almost guaranteed” that they’ll be higher than the PUD’s contracted rate with BPA, Corson said.
The PUD estimates they will have to buy 16,409 megawatt-hours on the open market, due to BPA’s cap on sales, Corson said. The reduction in megawatt hours is because BPA is required to provide mitigation for fish passage.
In addition to buying MWh, the PUD pays BPA for the transmission of power through its powerlines. That cost is going up, but by half of what was anticipated — it will be about 6% instead of 12%. The increase will cost the PUD about $160,000 more for the year, Corson said.
The PUD also sells power on the wholesale market, but those sales came in at $600,000 below budget. At the same time, the PUD bought more power than anticipated because of the extra-hot summer weather. The excessive heat did boost the PUD’s retail sales as of June, which were about $127,000 over budget.
To address the shortfall, the PUD is considering a rate hike. The 2022 budget includes a proposed 3.75% increase across all customer classes, but it’s too soon to say how that would be distributed among different accounts, such as residential, commercial and irrigation. If approved, the increase would probably occur in April 2022, Corson said.
The PUD is gradually adjusting rates for different ratepayers so that all are within 5% of the PUD’s cost of providing power to them. A 2019 cost-of-service analysis found that existing rates for most service classes — small and large general service (stores and businesses), industrial, irrigation, and area and street lighting — come close to covering the PUD’s costs. But residential customers were paying 17.5% less than it cost the PUD to provide their power, and frost-control customers came up short by 462%.
Residential customers are also the only ones who pay more per kilowatt hour for higher use. The commissioners are working toward phasing out the two tiers, Corson said.
The PUD raised rates an average of 3.25% in April after postponing the increase because of the COVID pandemic. Residential ratepayers had a 4.5% increase.
Demand for broadband continues to grow, with more fiber connections in 2021 as of August than in any previous year.
In other news, the PUD commissioners approved a salary increase to $231,985 for General Manager Steve Taylor at their Sept. 13 meeting. The increase was based on a survey of PUD manager salaries. The salary was last adjusted in May 2019.
No changes expected for OCEC rates
The Okanogan County Electric Co-operative (OCEC) gets 90 to 95% of its power from BPA through PNGC Power, a cooperative that negotiates directly with BPA and sells to electric co-ops in the northwest, General Manager Greg Mendonca said. OCEC is working on its 2022 budget now, but the co-op doesn’t anticipate any impacts on customer rates from the BPA changes, he said.
The new BPA rates take effect Oct. 1.
PUD staff and commissioners are holding a series of public meetings about the 2022 budget. A draft budget is available online at www.okanoganpud.org/budget.
Monday, Oct. 11: board meeting, 3 p.m.; evening workshop, 6 p.m.
Monday, Oct. 25: board meeting, 3 p.m., intent to close 2022 budget hearing and adopt 2022 budget.
A link to the meetings will be on the agenda at www.okanoganpud.org under the meetings tab at the bottom of the page.
OCEC doesn’t typically release working drafts of its budget. The public can attend board meetings, which are currently held remotely. See https://ocec.coop for the link.