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Clark Bumps Electric Rates by About 5.7 Percent by Erik Robinson The Columbian, August 17, 2010

Utility tried to forestall move with austerity measures

Customers of Clark Public Utilities will begin paying about 5.7 percent more for electricity next month.

The utility's three elected commissioners on Tuesday unanimously approved the third rate increase since 2003. The rate hike during the final three months of the year is expected to bridge a $5.7 million shortfall on this year's $388.6 million electric system budget.

Electric sales fell well below projections during the first half of the year, due in part to mild weather and budget-conscious customers.

"This reflects a recession downturn," Commissioner Nancy Barnes said afterwards. "That's the decrease in load that we've seen."

Commissioners boosted the monthly base customer charge by $2 to $10, along with a 4.3 percent increase in the energy charge, from 7.65 cents per kilowatt-hour to 7.98 cents. Combined, it amounts to a increase of about 5.7 percent in each customer's monthly bill -- a higher percentage for customers who buy less.

A household that burns 1,500 kilowatt-hours a month -- a typical amount -- will see its bill rise precisely 5.7 percent, from $122.75 to $129.70.

Sagging demand isn't the only pressure on rates.

The utility was also stung by lower-than-anticipated prices for surplus power it sold from its River Road Generating Plant, in addition to costs associated with its voter-mandated wind farm investment and a $5.2 million increase in the cost of wholesale power purchased from the Bonneville Power Administration. BPA markets energy produced by federal hydroelectric dams and the region's sole nuclear plant near Richland.

About 70 percent of the budget goes toward fueling the utility's gas-fired power plant or buying energy directly from BPA.

Utility officials say they've already frozen wages, reduced travel and curtailed large capital expenditures.

Barnes, the commission president, who is running for re-election, noted that commissioners adopted a tight budget without a rate hike in December. She said they were hoping the economy would turn around before they had to boost rates.

"Maybe we should have, but our policy is not to raise rates unless we have to," she said.

However, the stagnant economy forced commissioners' hands: Without raising rates, they faced the possibility of failing to meet minimum financial requirements to repay $220 million worth of outstanding bonds.

The bulk of those bonds finance the routine large-scale capital improvements necessary to maintain the utility's network of substations and power lines.

But part of the debt reflects the lingering financial hangover from the energy crisis of 2000 and 2001.

Market manipulation, combined with a drought and growth in regional energy demand, fueled a crisis that came at exactly the wrong time for Clark Public Utilities.

The utility paid $350 per megawatt-hour -- more than 10 times typical prices for electricity -- during a two-month gap between the end of Clark's previous power-supply contract and a new one with Bonneville. The utility financed $100 million for the power, along with 50 leased diesel generators. The crisis abated before the generators were needed, but Clark is still stuck with the bill.

That bill, currently about $13 million a year in principal and interest, is due to be repaid in full in 2012.

Commissioners last raised rates in January of 2009, with a 5 percent increase.