Benton PUD customers' bills to climb by 32%

KENNEWICK -- Energy costs and a renewable energy mandate will push power bills up by almost a third over the next four years for Benton PUD customers.

Other power consumers in the Tri-City area are expected to see smaller increases.

Benton PUD board members received updated estimates Tuesday on how much rates will need to increase to cover expected wholesale power rate increases.

A $1.4 million jump in expected power costs since late September swelled earlier Benton PUD estimates. Losses will come from the utility reselling power it bought but hasn't used, according to spokeswoman Karen Miller.

The new figures show power bills will go up for the PUD's nearly 47,000 customers by 8 percent in 2011, 10 percent in 2012, 6.6 percent in 2013 and 4 percent in 2014.

Compounded, that will amount to a 32 percent increase over four years.

Franklin PUD, which serves about 23,400 customers, likely will raise its rates 4 percent in July after a cost of service study is completed, said spokeswoman Debbie Bone-Harris.

Benton REA serves about 10,000 consumers in the western half of Benton County and spokesman Troy Berglund said a rate increase won't come before spring 2012. The REA purchases some power from a Canadian company, which helps hold costs down.

The Richland City Council discussed options for its first rate increase in six years Tuesday night, including an across-the-board 2.5 percent increase starting in January or a variable rate increase that depends on the cost to provide service to each class of customers.

Another option would be to wait until July, when more is known about how much the cost of Bonneville Power Administration power will go up.

Ray Sieler, city energy services director, said the city buys all its power from BPA, but in late 2011 will go to a mix of power providers.

Most of the council members said they preferred the 2.5 percent option because that would allow residents and businesses to budget for the increase throughout the year and avoid a larger hike later in the year.

The 2.5 percent increase is down from a 6 percent increase originally included in the city's draft 2011 budget. The council plans to approve electric utility rates for 2011 at a meeting in November or early December.

While all area utilities probably will need to raise rates because of higher wholesale power costs from the BPA, Benton PUD falls under a state law that requires it to buy more of its power from renewable sources.

The Energy Independence Act, which Washington voters approved in 2006 as Initiative 937, requires power companies with more than 25,000 customers to get at least 3 percent of their power from renewable sources by 2012, and hydropower cannot be counted as renewable. The amount from renewable sources will rise until it reaches 15 percent in 2020.

Sieler said utilities such as Franklin PUD and Richland, which serves 24,000 customers, that hit the 25,000-customer mark in coming years will have a five-year window to meet the renewable targets. Richland expects to hit that mark in 2012 and to have to meet renewable targets in 2017.

Richland has about 1 megawatt of power available for customers who want to buy green energy, Sieler said, but does not have any renewable sources such as wind or solar in its portfolio.

Benton PUD's estimated rate increases jumped from figures the utility's staff presented to the commissioners in late September because of the higher wholesale power costs. Commission members had asked staff last month to trim the proposed 2011 budget to reduce the rate increase, but instead the estimates went up.

"It's a little like it changed so quick -- like we are shooting at a moving target," said Commissioner Lori Sanders.

Benton PUD customers have received a break on power bills in recent years and saw decreases in each year from 2004 to 2008.

But General Manager Jim Sanders said, "It's not as rosy looking forward as it has been these past four or five years."

* Michelle Dupler contributed to this report.