Local News

PUD bill increase funds projects

Sheila Corson

Okanogan County PUD

Feb 26, 2021

As Okanogan County PUD continues its plan for critical infrastructure upgrades, the board has approved a 3.25% overall revenue increase effective April 1.

The PUD had originally planned a 2% increase in 2020, but due to COVID-19 issues, cancelled that increase. Since then, the PUD has suffered damage from both the Palmer and Cold Springs Wildfire, and has borrowed $40 million to cover several critical infrastructure projects and refinance debt.

Current projects include replacing the fire-damaged wooden Okanogan-Brewster transmission line with a new steel line for about $13 million. Although FEMA funding was recently approved, it will not cover the total amount of the project with the upgrades. The PUD also plans to rebuild the Tonasket substation for just over $4 million, which needs additional capacity in order to improve reliability. Several substations are also in need of new and/or upgraded power transformers, which will cost the PUD about $2.4 million.

The PUD also has been under budget in power sales – about $1 million last year – and the costs of inflation, especially in construction costs, continually rise.

The PUD also borrowed from the rate stabilization fund to cover the loss of the cancelled 2020 rate increase ($622,455) and to pay off the remainder of a 2016 debt (about $1.6 million).

And although the PUD is pursuing several large capital projects, many projects have been deferred to a later date to ease budget requirements. Staff still anticipate about $35 million in projects in the next couple years, funded mostly from the borrowed $40 million.

In order to pay back that debt and provide more capital funds, the PUD will raise revenue this year. Several changes will happen on bills after the April 1 effective date:

The COPA (Cost of Power Adjustment) will roll into the current kilowatt-hour energy charge. For example, residential has a $0.006/kWh COPA, which will be rolled into the energy rate of $0.045650/kWh to make it $0.05165/kWh. The COPA will be revisited every April 1 to reflect changes in power costs from the PUD’s sources of power (such as Bonneville Power Administration, Wells Dam, etc.).
State taxes will become an additional line item on bill statements (similar to how city-based taxes are currently designated). This leads to additional transparency for the PUD to show customers more specifically where their dollars go. The PUD pays about $2.8 million per year in state taxes.
Tiered residential kilowatt-hour charges will slowly be merged into a single rate over the next five years. PUD staff looked at consolidating them in one year, but it would have led to a more dramatic increase in rates to the average user. This will both simplify the billing process and give relief to low- or fixed-income customers who have higher usage.
Base charges, kilowatt-hour charges and demand charges will be adjusted differently to achieve the revenue needed per customer class. Most will decrease to reflect the state tax designation. For example, the $0.05165/kWh residential energy rate (see COPA rate above) will be reduced to $0.05127.

Although the board reviewed a 10-year plan in their Feb. 22 workshop and board meeting, the revenue adjustments were only approved for 2021. Any other adjustments will be reviewed and considered by commissioners at a later time.

“The rate design process is still to be determined,” Commissioner Jerry Asmussen said. “I’m committed to the (2021) increases because of the debt incurred.”

Part of the 10-year plan is also to move rates to a more equitable structure, where the customer classes pay for their actual cost of service. Because of this, each customer class will have individualized percentage-based increases to achieve the overall 3.25% revenue increase.

Residential: 4.5% increase
Small general service: 3% increase
Large general service: 1.18% increase
Irrigation: 2.5% increase
Industrial: 1.18% increase
Frost control: 5% increase
Area lighting: 3.25% increase
Street lighting: 3.25% increase
Domestic pump base charge: raised from $10 to $14.95

Originally, the PUD had considered a 10% increase for frost control, but amended the resolution to be a 5% instead, to try to ease any burden on agricultural producers.

“We have to protect our biggest asset in the county,” Commissioner Scott Vejraska said, mentioning that he had recently discussed the revenue increase at a producers’ meeting.

“Ag is the No. 1 industry in the state,” Commissioner Bill Colyar agreed.

The votes for both the frost control amendment and Resolution 1742 approving the new rate schedules and general provisions were unanimous.

More information, including recordings of the meetings and the final resolution approving the new rates and charges, are available on the PUD website, www.okanoganpud.org.