– UPDATED: Statements from all local utilities added. –
On Wednesday, the Bonneville Power Administration announced that they will institute a “5.4 percent average wholesale power rate increase and an average transmission rate decrease of 0.7 percent” which will take effect Oct. 1.
They say the change will “help support long-term rate stability and maximize the value of the regional federal power and transmission systems.
The 5.4% increase will bring an average wholesale power rate of $35.57 per megawatt-hour, which translates to an increase of 2.7% annually, according to an official release.
Bonneville says that the overall rate increase is due primarily to a “lower-than-expected demand for power, a declining forecast of surplus power sales revenues due to lower market prices, and escalating costs of programs driven by legal requirements”.
Bonneville Power supplies power to the Grays Harbor PUD, McCleary Light & Power, and the Pacific County PUD.
“Although any rate adjustment will have an effect locally, we are pleased to see the increase is lower than the originally projected 9 percent,” said PUD General Manager Dave Ward. “Consumer-owned utilities were largely successful in communicating to the BPA that a higher increase would be a burden that public power utilities and their customers could not afford.”
About 78% of the PUD’s power resources come from BPA and power supply is the largest cost in the District’s operations and maintenance budget. While the PUD has adopted many internal cost-saving measures, BPA rate increases continue to be a significant challenge.
“Grays Harbor PUD continues to monitor costs internally and reduce spending where it makes sense,” said Chief Financial Officer Kathryn Skolrood. “We will analyze the financial implications of the BPA rate increase and determine how to best minimize the impact on our customers as we enter into 2018 budget discussions.”
Todd Baun, Director of Public Works for McCleary told KXRO that McCleary Light & Power receives all of their power from Bonneville, and their rates are tied to the increases from the wholesale utility. Any increases to the local power authority will be passed to the customers.
Doug Miller, General Manager of the Pacific County PUD told KXRO that a resolution was passed some time ago that will automatically add 50% of a Bonneville adjustment onto the customers as an increase. Miller says that they will be speaking with their BPA representatives to find out the exact costs that will come to Pacific, as the 5.4% is an average across the market.
The rate adjustments are part of the 2018/2019 fiscal budget.
In November 2016, Bonneville proposed a 3.5% average wholesale power rate increase and a 1.1% average increase to transmission rates for the period. Local power representatives said that the original proposed increase was at 9%.
“We worked very hard on behalf of our customers to manage our costs and make changes that will strengthen our finances and improve our competitive position in the rapidly changing electricity market,” said BPA Administrator and Chief Executive Officer Elliot Mainzer. “However, despite aggressive cost-management actions, costs beyond our direct control continue to place significant upward pressure on our power rates. BPA will further address these cost pressures through the completion of a long-term business strategy later this year in collaboration with customers and regional partners.”
Bonneville also adopted a new Financial Reserves Policy, which they say will use “Approximately 1 percent of the power rate increase” to replenish their financial reserves for their Power department, while financial reserves in Transmission remain stable.
The 0.7% decrease in transmission rates are attributed to “cost-management efforts and savings from debt-management actions”.
“This rate case is ultimately about investing in our future and continuing to deliver value to our customers and the broader region for many years to come,” said Mainzer.
BPA also announced on Wednesday that an additional “spill surcharge” will be added in addition to the new power rates “to recover the costs associated with increased spill that is anticipated as a result of a ruling issued this past spring by the U.S. District Court for the District of Oregon”.
This charge will be added “once sufficient information becomes available regarding planned annual spill levels”.