Public Notice: Rate Hearing September 18th 5:30 pm
Public Rate Hearing – September 18, 2019
At the September 18th Board Workshop the second Public Rate Hearing will be held for Clatskanie PUD customers. The workshop starts at 5:30 pm. A summary presentation of the staff recommendation for updated rate schedules that include a pass through of the BPA rate increase will be given. The meeting will be open for public comment.
The following is from the back page of our September Ruralite regarding the proposed rate increase:
Every two years we receive a rate increase from Bonneville Power Administration, and this is one of those years. The first public rate hearing was held at the August Board Workshop for staff to present the effects of BPA’s rate increase on our wholesale power and transmission costs. In July, BPA announced their rate increases effective October 1st of this year. Included with the increases for power and transmission is also a 1.5% surcharge to replenish BPA’s reserve accounts. Staff completed an analysis of the cost increases and made a recommendation to the Board of Directors how to best adjust our own rates to be able to maintain our financial
stability and excellent reliability.
Due to the diligence of cost reduction methods by staff for non-power expenses and favorable financial results in 2018 & 2019, the rate change proposal is for a very minimal increase in the kWh usage charge. The proposal breaks the increase into two steps; the first would increase the kWh charge to 5.43 cents from the current 5.39. The next year it would increase to 5.47 cents, for a total increase of eight one hundredths of a cent. Keeping our kWh rate under 5 1/2 cents, and the lowest in the State.
Staff will also make a recommendation for the Board to consider implementing the rate increase in May of 2020 and May of 2021 when usage is lower, instead of implementing on October 1st when we are going into colder winter months and usage is higher. The second public rate hearing will be held at the September 18th Board workshop meeting at 5:30 pm, and the proposal will be voted on during the regular Board Meeting following the workshop.
As a reminder, the debt and rate strategies adopted in September of 2017 included a four year rate strategy to increase the base charge to provide fixed revenue to help cover fixed expenses of the District. Part of that previously approved rate increase is the $4 increase that was implemented this May. One of the reasons that the new rate strategy was necessary is the substantial loss of revenue due to the expiration of our WGA co-gen contract, which has produced millions of dollars in dividends to the District since its inception in 1994. The dividends from the co-gen plant at Wauna Mill have subsidized our rates for over 20 years, but are set to expire in 2021.
The Board approved a debt reduction strategy to ensure we can remain financially stable when the dividends expire, and we experience a substantial loss of revenue. By staying with this proactive strategy, instead of a 24% rate increase in 2021 we reduced the total impact to our customers to only 10%. The base charge is a fixed cost that can be budgeted for, whereas the energy charge is not and can fluctuate considerably due to weather for heating or cooling. No matter how much energy is used, the system costs remain the same to maintain the physical assets to provide electrical service. That is why it is important to have the base charge cover those expenses, and the kWh charge set at an appropriate amount to cover the power purchases.