PUD won’t cut rates as hoped

Published 12:23 pm Thursday, February 21, 2008

Snohomish County PUD residential customers won’t see a 10 percent cut in their power rates this fall, as the utility had hoped.

The rate cut fell victim to cost-cutting by the public utility district’s board of commissioners, who decided this week to slash the utility’s internal operating costs by $9 million.

By taking that step, customers won’t see a rate increase. But they won’t see a drop in their rates, either.

After cutting residential electricity rates by 5 percent in April, the PUD’s three elected commissioners asked PUD staff to come back with options for reducing rates by another 10 percent by this fall.

Since then, the PUD has been faced with mounting internal costs, including medical and dental insurance, wages and insurance premiums. There also have been outside pressures to raise rates, the greatest coming from the PUD’s biggest power provider, the Bonneville Power Administration. BPA has threatened to raise its rates by up to 38 percent next year.

With these pressures, commissioners said a rate reduction wasn’t prudent at this time. The board wanted to keep rates stable, and directed general manager Ed Hansen to trim the utility’s 2003 preliminary budget from $584 million to around $574 million.

Trimming $9 million might mean cuts in items such as the utility’s operating and maintenance costs, which have been dropping steadily over the years. The operating and maintenance costs were at $75.2 million in 1999, but dropped to $70.8 million in 2001 and are expected to be about the same for 2002.

For 2003, the preliminary operating budget is for $76.4 million, but that amount will likely go down, PUD spokesman Neil Neroutsos said. Commissioners promised they wouldn’t cut into the utility’s $10.1 million public purpose budget, which covers conservation programs, services that help low-income residents weatherize their homes and programs that provide renewable energy sources.

Commissioners are expected to review a draft of next year’s budget Oct. 7. The utility raised rates by more than 50 percent during last year’s energy crisis to cover power costs. Over the winter, customers were hit with record high bills. Although the utility was able to reduce rates earlier this year by 5 percent, PUD customer Grady Sewell told the board this week that he would rather see stability in his power bills.