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Don Gronning
Staff recommends 4.25% annual increase
NEWPORT – The Pend Oreille Public Utility District has not raised electric rates since January 2022, financial manager April Owen told commissioners at the Feb. 4 commissioners’ meeting. It will need 4.25% annual rate increases for the next several years to keep pace with inflation and for improvements to the system to keep the electricity going, she said.
“We’ve had three years where we haven’t had a rate increase,” she said. “We’ve absorbed basically the 12% inflation we’ve had over that three-year period.”
She said the PUD has been able to do that by using its cash reserves. “We certainly can’t sustain that,” she said.
She calculated a 3% per year inflation rate in her projections, as well as a 1% increase in population growth. Based on that, she said the PUD will have $400,000 in increasing costs — labor and supplies — each year.
A 1% rate increase would raise $200,000, she said. “We need a 2% rate increase just to cover inflation,” Owen said.
Other cost increases the PUD is facing between now and 2030 include installing new electrical substations at Bare Mountain and two other locations and significant expenses for improvements to Box Canyon Dam. The PUD will also have to spend money for low income energy assistance required by the state’s Clean Energy Transformation Act.
Owen said the PUD plans to take on about $20 million in new debt by issuing bonds mainly for the new substations. Owen told commissioners that the Bare Mountain substation will cost $15 million between 2025 and 2027.
Without a rate increase they wouldn’t be able to cover power costs, let alone capital improvements and debt service.
“If we do not have a rate increase, we really do start to bleed cash,” she said. “Basically, we end up in a place where we don’t have any cash at all.”
If there were no rate increase in 2025, by 2028 there would be a $1 million gap between what was coming in and what was being spent. By 2034 it would be $1.5 million, Owen said.
Commissioner Troy Moody asked if a big increase in the population would help. Not really, General Manager John Janney said.
The cheapest power the PUD gets is from Seattle City Light’s Boundary Dam. Currently the PUD buys Boundary Dam power at about $8.5 or $9 a megawatt hour (see sidebar). Power from PUD’s Box Canyon Dam costs more to produce than Boundary Dam power. Power that the PUD does not use it is able to sell on the open market for much more, in the neighborhood of $50, $60 or $70 per megawatt hour, Janney said. If the population grows so much that the PUD uses up what it gets from Boundary, it would have to buy power, he said.
On its website at www.popud. org/top-links/about-your-pud/ourrates, the PUD says Pend Oreille PUD electric rates average about 16% less than neighboring utilities. An average customer using 2,000 kilowatt hours pays $6.23 a kilowatt hour, $160.10 per month. A 4.25% increase would amount to about a $5.50 a month increase for residential customers, according to the website. In addition to paying for the kilowatt hours, the PUD charges $35 a month for a service availability charge. That will remain unchanged.
The PUD will hold a public hearing on the proposed rate increase at 9:30 a.m. on Tuesday, Feb. 18 at the PUD building at 130 N. Washington Ave., in Newport. People can attend online via the Microsoft Teams or by phone at (802) 673-1244, using access code: 882 085 132#. People can also email comments to information@ popud.org.
