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PUD Considers Rate Increase by Darryl Swan South County Spotlight, June 29, 2011

Columbia River PUD is exploring a possible rate increase following the strong likelihood Bonneville Power Administration officials will raise power supply costs an average 8.5 percent in October for Pacific Northwest power utilities.

"We think this is going to be the first time in 10 years that we've raised rates, so it's something we're not accustomed to doing," said Kevin Owens, Columbia River PUD manager.

The PUD absorbed Bonneville's 6.9 percent increase in 2009, dipping into its rate stabilization fund to offset the bump.

There had been speculation Bonneville, the federal power marketing authority, would raise rates for the PUD as high as 11 percent based on the agency's load characteristics. The final figure will be known by July 25.

Meetings of the PUD's rate advisory group have been occurring, including one Tuesday evening this week, to strategize how best to roll out the price increases. Owens said he anticipates BPA to raise its prices again in 2013. For both years, he expects ratepayers to see increases in the 4 to 5 percent range.

"That may hold us pretty flat," he said, assuming no other rate increases over the next five years.

Power costs represent 60 percent of Columbia River PUD's total operational expense, Owens said.

On June 14 the BPA released a 502-page administrator's draft record of decision, which includes preliminary decisions and the positions of stakeholders related to the agency's proposed rate structure. The current BPA rate structure ends Sept. 30.

Owens said Columbia River PUD will maintain an $8.5 million reserve account needed to accommodate planned capital improvements, such as substation and transformer construction.

Earlier exploration for Columbia River PUD to bolster its power portfolio by contracting with new local power-generating upstarts has been sidelined due to the sluggish economy, Owens said, though he said there is still the possibility those ventures could materialize in the future.

Also, he said a drop-off in merchant contributions, attributable to the economy, has created a buffer between the amount of energy allocated to the PUD and that which is needed.

"If we just grow at nominally - and we're still hardly growing at all - I might not need additional power supply until 2018," he said.