Everett, Wash.
Published: Tuesday, June 23, 2009

PUD to seek rate increases more often

Officials say the move would help them maintain the power grid better.

By David Chircop
Herald Writer

 EVERETT -- For years, Snohomish County PUD has been forced to eat the increasing rate of electricity that it buys from the federal government because its commissioners haven't passed on the cost to customers.

On Tuesday, the utility is proposing a new policy that would trigger hearings for rate increases whenever the Bonneville Power Administration, the utility's largest electricity provider, boosts the cost of power. Hearings would also happen if power costs decline.

It's a move utility officials say can help them avoid deferring maintenance of the power grid and cutting back on projects such as tree trimming and power pole replacements.

"I think it's a healthy proposal because Bonneville is our largest wholesale provider, and we have no direct control over its rates," PUD Commissioner Dave Aldrich said.

The utility this year has grappled with a $54 million budget deficit. It made up $43 million of the shortfall by tapping into reserves. The remaining $11 million will come through a 3.5 percent rate increase that went into effect this spring.

PUD electricity rates shot up by more than 50 percent in 2001, a devastating blow to the area's economy brought on by the 2000-01 West Coast energy crisis.

Rates were actually cut by 5 percent in 2002 and stayed steady until this spring.

The PUD, which serves about 320,000 customers in Snohomish County and Camano Island, purchases about 87 percent of its power from the BPA, a government agency that markets and sells electricity from federal dams on the Columbia and Snake rivers.

Power costs from the BPA are the utility's single largest item. This year, the PUD is on pace to spend $200 million of its $711 million budget on electricity from the BPA.

Because PUD relies on Bonneville for so much of its power, its wholesale rate changes, whether up or down, have a big impact on the utility's bottom line.

The BPA can adjust its rates once every two years. The BPA is expecting to increase its wholesale rates by 5.4 percent, starting Oct. 1.

If the PUD passed the rate increase directly through to its customers, it would translate to a 2.4 percent increase.

Most of that increase won't be passed along to residential customers. The BPA is expected to offset most of the increase with a credit. That means, that residential customers will only see their bills increase by one-tenth of 1 percent. That's an increase of about 18 cents a month for an average home.

Under the proposal, PUD would not automatically adjust its rates in tandem with the BPA.

PUD would still hold public hearings to hear from ratepayers and the Board of Commissioners would still vote on any rate changes before they are made.

"Since we're public power and elected by the public, we should have a public process," PUD Commissioner KathyVaughn said.



David Chircop: 425-339-3429, dchircop@heraldnet.com.

Meeting today

The Snohomish County PUD Board of Commissioners is considering a change that could trigger more frequent electricity rate adjustments.

Commissioners are scheduled to meet at 1:30 p.m. today at the Board of Commissioners Meeting Room, 2320 California Street in Everett.

For more information, go to www.snopud.com.
© 2009The Daily Herald Co., Everett, WA