New Rates will Go into Effect on October 1
Deer Island, OR – August 15, 2019 – At their August 13, 2019 meeting, the Columbia River PUD Board of Directors adopted new rates and a new rate structure to be implemented in two phases. The new rates will take effect on October 1, 2019. The new rate structure will go into effect on October 1, 2020.
Residential customer rates will increase by 4.5% starting on October 1 of this year. Small General Service and Irrigation customers will see a 5.6% increase; Lighting customers will see a 4.15% increase; Industrial customers will see a 3.3% increase; and Large General Service customers will see a 0.5% decrease. The overall rate increase across all customer classes is 3.5%.
Residential Customer Impact
The monthly Base charge is increasing from $12.50 to $15 for the PUD’s Residential customers. The Energy charge will increase from 7.04¢ to 7.19¢ per kilowatt hour. For the average Residential customer, that means an increase of a little more than $4 on their monthly bills. Increases will vary based on customers’ specific energy usage.
Current Monthly Bill Amount
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With the increase, CRPUD residential bills are still well below average for Oregon and the United States. The PUD’s new rates are about 21% lower than the statewide average and 33% lower than the national average.
The PUD will continue to offer discounts to its low-income customers. Customers receiving the Special Waiver and the low-income Senior Discount will continue to pay only 20% of the Base charge, increasing from $2.50 per month to $3 per month. Customers receiving the Senior Discount will also still receive a 10% discount on their Energy charge.
“I’m always concerned with seniors and low-income customers and want to make sure it’s not a big hardship,” said Board Member Debbie Reed. “I think this option creates the least amount of hardship to that class.”
The rate increase is primarily due to increased costs from Bonneville Power Administration (BPA), the PUD’s wholesale power provider. BPA adjusts its rates every two years. BPA power service costs are increasing by 2.65% and transmission service costs are increasing by 2.4%. These new rates from BPA are effective from October 1, 2019, through September 30, 2021.
New Rate Structure
In preparation for BPA’s new rate case, the PUD contracted EES Consulting earlier this year to conduct a Cost of Service Analysis. In addition to the proposed rate increases, the analysis also recommended the PUD change its rate structure so that its revenues are more aligned with the actual costs incurred.
Currently, BPA power costs comprise about 60% of the PUD’s operating revenues. The remaining 40% goes toward providing service and maintaining the PUD’s electric distribution system. Under the current rate structure, the PUD collects about 81% of its revenues from variable energy-related charges. The goal is to reach a point where 60% of the PUD’s revenue comes through the Energy charge while the other 40% will be collected through the Base charge and a new Demand charge. The Base and Demand charges represent the PUD’s fixed costs.
As noted above, customers will see an increase in their Base charge beginning October 1, 2019. In October 2020, the PUD will reduce its Energy charge and add a separate Demand charge to Residential, Small General Service, and Irrigation customer bills.
Currently, the Demand charge is embedded into the Energy charge as a single unit. The unbundling of the Demand charge from the Energy charge will help the PUD align its revenues appropriately with its fixed costs.
“We came up with a very good consensus on a plan moving forward. It’s just so thoroughly vetted,” said Board Member Rob Mathers. “This unbundling effort is something that we need to do.”
Introducing Demand Charge
Starting October 1, 2020, Residential, Small General Service, and Irrigation customers will be billed $1.00 per kilowatt for their Demand charge.
While the new rate structure will not affect PUD revenues overall, some customers will see an increase in their total bill while others will see a decrease due to the addition of a Demand charge.
Base Charge: A flat fee to cover the fixed costs of operating the utility. Examples include the office building, billing and metering systems, office personnel, taxes, and debt service.
Energy Charge: A variable charge to cover the cost of energy used in the billing period, measured in kilowatt hours (kWh).
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, including poles, wires, substations, trucks, line crews, and operations.
Customers can control the amount of their Demand charge based on how they use electricity. Running a central air conditioner, dish washer, water heater, oven, and dryer at the same time, for example, requires a lot of electricity to be delivered to your home at once, which creates a spike in demand. By reducing those spikes, the PUD can keep costs down for all CRPUD customers.
Customers can help keep their Demand charge down by lowering their peak usage and spreading the use of major appliances throughout the day rather than running them all at once.
Beginning February 2020, PUD customers will see a line item on their bill showing them their demand for the month. There will be no charge associated with demand until October 2020. The PUD is adding this line item to help customers monitor their demand before the charge is implemented. In anticipation of this new rate structure change, CRPUD will continue its efforts to educate customers about demand and how to help keep their Demand charge down.