A combination of the increasing cost of buying power from the Bonneville Power Administration and the initiative-based Energy Independence Act has the Benton PUD considering raising rates.
The public utility commission is expected to vote May 26 on a PUD staff-recommended increase of about $4.55 per month per household. The increase would take effect in October.
Other rate classes, including those for commercial, industrial and irrigation customers, also would see increases.
But before the commission votes, the PUD plans to explain the proposed increase to customers and hear their feedback at a 6 p.m. May 5 meeting at the PUD auditorium in Kennewick.
Rather than raise the residential cost per kilowatt hour, the PUD staff is recommending the base fee for electric service to residences be raised to about $15.60 per month. The base fee would be charged per day so it would vary according to the number of days in a month.
As is common in the industry, the fixed costs of providing service is more than the base fee of $11.05 now charged monthly to most residential customers, with additional costs for the amount of electricity used. Some residential customers who require a higher level of service already are charged a higher base rate.
The proposal to raise the base rate is driven partly by the expected increase in customers who have home solar systems, allowing them to use less electricity from the PUD.
With the base fee lower than costs to provide service, customers without solar could end up paying more of the costs for the power lines, power substation and high-voltage transmission lines that all customers require.
Jon Meyer, the PUD finance director, called the change a more modern pricing model.
Benton’s residential base charge of $11.05 is below the median base charge of $17 of other utilities in the state, according to PUD staff.
Buying power and its transmission makes up about 60 percent of the PUD’s budget, Meyer said.
The Bonneville Power Administration increased its rates by 5.2 percent in October 2013, but the PUD did not raise rates with it. Instead, it used its cash reserves to cover the increased costs.
The proposed PUD rate increase would coincide with another BPA rate increase of 6.5 percent that is expected this October, Meyer said.
BPA’s wholesale power rates are expected to climb because of money required to refurbish hydroelectric dams and because of reduced revenue from surplus power sales, Meyer said.
Its transmission costs also are expected to increase to cover building new transmission lines, replacing existing lines and complying with new regulations, including for cyber and physical security.
Benton PUD also faces increased requirements next year under the Energy Independence Act, which was created when Washington state voters approved Initiative 937 in 2007.
The initiative requires utilities with more than 25,000 customers to buy 9 percent of their power in 2016 from qualified renewable resources, such as wind or solar, or to purchase credits.
The requirement started at 3 percent in 2012 and will increase to 15 percent in 2020.
Benton PUD now is spending $3.1 million to comply with the act and said that will increase in 2016 to $3.4 million.
The PUD last raised its rates in 2012. The commission rejected another proposed increase in 2013.
Since then, a new cost of service analysis model has been developed for the PUD. It shows the need for a 5.9 percent increase in revenue. However, financial reserves are proposed to be used to keep the total increase at 3.9 percent.
Other customer classes would have rate increases of 1 percent to 7 percent. Rates also would be simplified with no more time-of-use or seasonal rates offered.
Paterson farmer Pat Tucker, one of the large power users of the PUD, told commissioners at their recent meeting that the rate increase should be delayed for a year, with more of the increased costs paid from reserves.
He has criticized the PUD for collecting and keeping more cash from ratepayers on hand than he believes is needed. The Benton PUD cash reserves are slightly below the median for PUDs in Washington.