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Clallam County Public Utility District Customers Could See Rates Rise by Rob Ollikainen Peninsula Daily News, December 6, 2011

Clallam County Public Utility District customers could see rates rise

PORT ANGELES -- Clallam County Public Utility District customers will see an extra $3.30 on their monthly electric bill next year if PUD commissioners approve a rate hike pitched by staff Monday.

PUD Treasurer Josh Bunch said the 3 percent increase is needed to offset Bonneville Power Administration's recent 8 percent increase on wholesale power and the renewable-energy requirements in the voter-approved Energy Independence Act.

If commissioners approve the rate hike Dec. 12 or 19, it would generate nearly $1.8 million for the public utility to help offset $2.7 million in new costs.

"The main driver behind all this is our power supply costs," Bunch said in the first of four community meetings on the rate increase proposal. "We purchase the power and then resell it to our customers through the distribution system. And what we're purchasing in that, those costs are increasing."

Two more meetings

Two other meetings on the rate hike proposal are planned for today at 10 a.m. at JT's Sweet Stuffs, 80 N. Forks Ave, Forks, and at 1 p.m. at the Sekiu Community Center, 42 Rice St., Sekiu.

A fourth meeting will be held Thursday at 3 p.m. at the Sequim Library, 630 N. Sequim Ave., Sequim.

The other key factor in the proposed rate increase is the Energy Independence Act, which requires medium-sized utilities such as the Clallam County PUD to obtain 3 percent of their power from more expensive renewable sources next year.

The state law, which voters approved by 52 percent as Initiative 937 in 2006, requires utilities with more than 25,000 customers to get 9 percent of their power from renewable sources by 2016 and 15 percent by 2020.

Much of Bonneville's power is generated at the hydroelectric dams on the Columbia and Snake rivers.

Hydropower is not considered renewable under state law.

"The Energy Independence Act is contributing to our costs," Bunch said. "We're doing what we can to mitigate those costs to our customers, and we're proposing a small increase to cover those costs."

The $3.30-per-month increase would be for an average residential customer who uses about 1,400 kilowatt-hours per month.

It would go into effect Jan. 1 and show up on February bills.

Bunch said small electric rate increases are forecast in each of the next four years.

Bunch described a "balancing act" for the PUD to provide reliable electricity and quality services while keeping rates low and stable for customers.

Bonneville rates

Bonneville increased its wholesale electric rates by 8 percent Oct. 1, which translates to a $1.8 million per year hit for the PUD.

To offset the added cost and ease the burden on its ratepayers, the PUD slashed $900,000 in operating, maintenance and capital expenses in 2012.

The PUD gets an allocated portion of Bonneville power at a low-cost "Tier 1" rate, which is being sold at the 8 percent increase.

"Any power that we need above that -- our allocation as a Tier 1 -- we're now purchasing at a Tier 2, or a market-based rate," Bunch said. "So we're exposed to market-based prices, demand, and some of that power has to come from a renewable energy, which also tends to be a higher cost."

Penalties for noncompliance with the Energy Independence Act are higher than the cost of implementing it, Bunch said.

Wind and solar power cost 9 to 12 cents per kilowatt-hour to produce, which is three to four times higher than the 3 cents per kilowatt-hour that the PUD is paying for Tier 1 Bonneville power.

Last month, the PUD and four of its partners walked away from a 32-turbine wind power project in Southwest Washington over new U.S. Fish and Wildlife Service restrictions to protect marbled murrelets, a threatened seabird.

More than $4 million had been spent on planning and permitting for the project, with $300,000 coming from the Clallam County PUD.

In August, PUD commissioners signed a letter supporting pending legislation that would eliminate the requirement for utilities to purchase renewable energy that isn't needed.

Meanwhile, the PUD has ramped up conservation efforts in part to meet the requirements of the Energy Independence Act.

Conservation parts of the law went into effect in 2010.

The PUD plans to spend $160,000 next year on renewable-energy credits to meet the 3 percent renewable requirement in the law, Bunch said.

The Clallam County PUD serves about 27,000 residential customers and 3,200 commercial customers. It has 1,088 miles of underground line, 846 miles of overhead line and 26 substations.

For more information on the PUD, visit www.clallampud.net.