No rate hike after PUD cuts budget

Published 12:25 pm Thursday, February 21, 2008

Number-crunching staff members for the Snohomish County PUD were able to cut about $13 million to balance the proposed 2003 budget, enough of a cut to ensure that residential customer rates will remain at current levels at least through winter.

And rates are expected to remain stable through April, even though the Bonneville Power Administration is expected to raise its surcharges on power costs by 5 percent. The BPA just raised those surcharges 2 percent Oct. 1.

But because PUD was able to make major cuts to its 2003 budget, the utility won’t have to raise rates, said Glenn McPherson, the PUD’s acting general manager of finance.

Additional bright spots include that the utility does not have to lay off any of its 913 employees.

On Oct. 7, the PUD staff offered $13 million in cuts, dropping the 2002 budget from $584 million to $571 million for 2003, or about 2 percent.

“There was a little bit here and there and pretty soon we were talking about some money,” PUD General Manager Ed Hansen said Oct. 8. “The district’s staff really rolled up their sleeves to find the cuts to meet the commissioners’ objectives.”

Some of next year’s savings will be seen because staff members have proposed that the PUD not hire 10 additional employees.

“We will be reviewing new hires on a case-by-case basis,” Hansen said. “There may come a period of time when we need to do some downsizing but not at this point.”

Part of the bad news is that PUD commissioners had hoped they could cut customer rates this winter.

After cutting rates 5 percent in April, the board asked its staff to come back with options for reducing rates by another 10 percent by this fall.

But that proposed rate cut fell victim to rising internal non-power costs — about $10 million in added expenses as a result of increased liability and property insurance costs and increased medical insurance premiums for employees.

Other good news is that the draft budget also includes $10.4 million for public purpose spending, including $4.5 million for a low-income discount subsidy, Hansen said.

The draft budget also includes a first-time $2.5 million allowance so PUD crews are better prepared for storm-caused power outages.

The draft budget was presented to the PUD Board of Commissioners on Monday.

Power costs are one of the primary drivers behind PUD’s budget. The utility raised rates more than 50 percent last year.

Over the 2002 winter, customers were hit with record-high bills and earned the distinction of being the highest-paying customers in the state at 8.1 cents per kilowatt.

The PUD is BPA’s largest public customer, buying 80 percent of its power from the federal agency. The PUD expects to pay the BPA $230 million this year for power. Theresa Goffredo writes for the Herald in Everett.