Columbia River PUD Approves 4.6% Rate Increase
August 21, 2013 – At its August 20th public meeting, the Board of Directors for Columbia River People’s Utility District (PUD) approved a 4.6% overall increase in electricity rates. The increase will appear on customer bills beginning October 1, 2013.
“Careful planning and the use of our rate stabilization fund allowed us to limit the impact on our customers and keep the rate increase as small as possible,” said PUD Board President Richard Simpson. “We expect these new rates to be in effect until September 2015.”
After the increase, PUD residential rates will still be about 25% lower than the average rates across Oregon, and about 40% lower than average rates nationwide.
Increase Driven by Power Costs
The rate increase is slightly higher than PUD officials anticipated due to the size of a wholesale power cost increase recently announced by Bonneville Power Administration. BPA recently notified the PUD that its power costs will rise by 7.8% beginning October 1. While this increase is smaller than the 9.1% average for public utilities in the region, it is higher than the 6.5% that the PUD had anticipated and used in its forecasts. With this increase, the PUD’s power costs have risen by 24% in the past 4 years.
Rate Stabilization Funds will Keep Rates Lower
The PUD plans to draw approximately $2.5 million from its rate stabilization fund during 2013 and 2014 to minimize the rate increase for customers while continuing to fund system improvement projects through cash.
No Changes to Monthly Customer Charge
The monthly customer charge will remain unchanged. This charge covers fixed costs such as meter reading, billing and postage, collections, record-keeping, and a portion of the maintenance and operation of the distribution system necessary to serve customers. These fixed monthly customer charges are also referred to as “readiness to serve” charges because they cover the PUD’s costs to have electricity readily available for the customer, whether it is used or not. The customer charge is $8 for residential customers.
2011 Rate Study Updated
Prior to implementing the rate changes, the PUD hired EES Consulting of Kirkland, Washington, to update a cost of service analysis that was initially completed in 2011. The 2011 analysis examined whether each of the PUD’s various customer classes were paying their share of what it costs the PUD to serve them. That 2011 review projected the need to raise rates 4% in October 2011 and 4% in October 2013. During their 2013 review, EES Consulting confirmed the cost allocations between customer classes were still valid, and that a 4.6% overall rate increase in 2013 would be necessary to cover added power costs, maintain financial stability and to ensure the continued safety and reliability of the electric system.
New, Simplified Rate Structure
As part of its rate setting process, the PUD rounded off its kilowatt-hour charges to the tenth of a cent. Previously kilowatt-hour charges were rounded at the hundredth of a cent.
“Our customers have asked us to keep our rate structure simple and easy to understand,” said Simpson. “Rounding off our rates is one way we can accommodate their request.”
Increases Vary Slightly Between Customer Classes
The actual percentage of the rate increase will vary from customer to customer based on their individual electricity consumption and rate class. The PUD used the results of the updated EES rate study to apply the rate changes in a way that would ensure each class of customers, such as residential, general service, or industrial, was paying what it costs to serve them. Residential customers will see an average increase of 4.8%; small general service customers will see an average increase of 3.8%, and large industrial customers will see an average increase of 5.3%.