CRPUD Board Adopts New Rates
August 17, 2017 – At their August 15, 2017 meeting, the Columbia River PUD Board of Directors adopted new rates. These rates will take effect for all bills rendered after October 1, 2017.
The new rates represent a system-wide rate increase of 5.1%. Residential, small general service, and irrigation classes will see a 5.5% overall increase. Large general service and industrial classes will see a 4.6% overall increase.
Under the new rates, the monthly residential customer charge will increase from $10 to $12.50. The energy charge will increase from 6.8¢ to 7.04¢. The amount a customer’s bill will increase depends on the customer’s monthly usage:
The new residential rates are about 23% lower than the statewide average. They are about 35% lower than the national average.
Programs for Low-Income Customers
The PUD will continue to offer discounts for customers who meet income qualifications. Customers on the Special Waiver program will pay a monthly customer charge of $2.50, instead of $12.50. Customers on the Senior Discount program will pay a $2.50 customer charge and receive a 10% discount on their energy charge.
“I don’t like to have rate increases. I don’t like to see them on my bill either. I think we came up with the best option, taking into account our seniors and our low-income customers,” said Board Member Debbie Reed.
Cost Drivers for the Rate Increase
The rate change is primarily a response to increased rates from Bonneville Power Administration (BPA). BPA is the PUD’s wholesale power provider.
In July, BPA announced it would increase costs for the PUD beginning October 1, 2017. The cost of power services is increasing by 4.29%. Transmission services are increasing by 0.37%.
Wholesale power costs make up 55% of the PUD’s annual operating and capital budget. BPA power costs have increased 42% over the past 10 years. PUD rates have increased 22% in that same period.
Part of the PUD rate increase will also help pay for added capital construction. The PUD’s largest capital construction expense is building a new substation in Scappoose.
“Load growth in Scappoose will require us to build a new substation,” said General Manager John Nguyen. “This will mean an increase in our near-term capital budget.”
Cost of Service Analysis
Earlier this year, the PUD hired EES Consulting to conduct a Cost of Service Analysis (COSA). The COSA was performed in conjunction with BPA’s next rate period, October 1, 2017, through September 30, 2019. The COSA found that under current rates, the PUD was not collecting enough revenues to meet its revenue requirements.
The COSA recommended an overall rate increase of 5.1%. It suggested larger increases to residential, small general service, and irrigation rate classes. The COSA recommended smaller increases for large general service and industrial rate classes.
The PUD currently collects 83% of its revenues from energy charges. The other 17% comes from customer and demand charges. However, the PUD’s expenses are split differently: 55% are energy related and 45% are fixed costs. Increasing the customer and demand charges moves the PUD closer to a rate design that matches its costs.
“This rate change gets us closer to cost-causer, cost-payer. It doesn’t get us there as aggressively, but it gets us closer,” said Board President Jake Carter.
Energy Charge: A variable charge to cover the cost of energy used in the billing period. Measured in kilowatt-hours (kWh).
Customer Charge: A flat fee to cover the fixed costs of operating the utility. Examples include the office building, billing and metering systems, taxes, and debt service.
Demand Charge: A variable charge for the highest rate of electric use during the billing period. Measured in kilowatts (kW). It covers costs for maintaining the distribution system. This includes poles, wires, substations, trucks, and operations.
Customer Rate Advisory Committee
The PUD’s Rate Advisory Committee met on June 22 and August 1, 2017, to review the COSA and proposed rate changes. The committee consists of customers from each rate class and the PUD Board of Directors. The Board appoints members to the Rate Advisory Committee. They serve three-year terms.
“Through all the discussions, our goal was fairness and making sure the customers are treated right. We must also generate the revenue that is necessary to operate the PUD in a reliable and responsible manner,” said Board Member Rob Mathers. “Those were the guiding principles to my way of thinking. What has been recommended is a reasonable approach to this.”
Cash Reserves to Limit Rate Increase
The PUD will use cash reserves to limit the rate increase to 5.1%. The PUD will use $456,719 out of its reserve funds in 2017, and $305,528 from reserves in 2018. The cash balance is projected to remain above the PUD’s target amount of $8.1 million for the 2017 Budget.