Benton PUD electric rates will not go up as expected

By Annette Cary, Tri-City HeraldFebruary 27, 2013 

The Benton PUD will not raise electric rates in April as expected.

Commissioners held public hearings this winter on a proposal to raise rates an average of 1.5 percent April 1, but newly completed 2012 financial reports were better than expected.

As a result, Benton Public Utility District commissioners decided against a rate increase for now during their Tuesday meeting.

They had been considering an increase of 2 percent for residential customers and increases of 1 to 1.4 percent for businesses and other customers.

That was less than the money needed to completely cover rising costs.

The PUD's financial forecasts had shown a need for an average 4.9 percent increase in rates this year. However, the increase was going to be partially offset by using a cash reserve of $4 million to bring the average increase down to 1.5 percent.

However, 2012 year-end financial results showed the PUD had $5.9 million in cash reserves that could be used to help avoid a rate increase, said Karen Miller, PUD spokeswoman.

Some expenses also were lower than expected for 2012. That included operation and maintenance costs not directly related to power, power supply costs and capital costs.

The commission has found a way to avoid an immediate rate increase, but the financial pressures that had an increase under consideration continue.

Benton PUD expects the Bonneville Power Administration to raise rates on power it sells to the PUD by 9.6 percent.

About 60 percent of the BPA rate increase is the result of less money from selling excess power not needed by BPA customers. Energy prices are low in the Northwest because of the abundance of natural gas, according to BPA.

Paying for improvements at hydropower dams also is driving up BPA power rates.

The Energy Independence Act, the result of Initiative 937 passed in 2006, also is increasing Benton PUD power costs. The initiative requires utilities the size of Benton PUD to buy 3 percent of its electricity from qualifying renewable energy sources now and 9 percent in 2016. Hydropower cannot be counted toward that.

As a result, the Benton PUD is buying wind power in addition to the adequate supply of power it already has under contract. It also must pay a higher price for the qualifying renewables than the BPA power it buys.

The Benton PUD also has higher capital costs for planned replacement of aging infrastructure, system improvements to serve the steady growth in its service area and continued improvements to ensure reliable service.

The city of Richland already has raised its electrical rates 8.93 percent for residential customers and 7.4 to 20 percent for commercial and industrial services. Those increases began Jan. 1.

The Franklin PUD Commission is considering raising electric rates by either 4.9 percent or 8 percent in May. If the 4.9 percent increase is picked, another rate increase of possibly about the same amount would be likely in 2014. If the 8 percent option is picked, there's a good chance no rate increase would be needed in 2014, Franklin PUD staff said.

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