OKANOGAN – Damage to critical infrastructure from the Cole Spring wildfire last September and the August 2020 Palmer Lake wildfire has compelled the Okanogan PUD to approve a 3.25 percent overall revenue increase effective April 1. As a consequence of that damage, the utility has borrowed $40 million to pay for pressing infrastructure projects and refinance debt, said PUD Community Relations Coordinator Sheila Corson.
“Current projects include replacing the fire-damaged wooden Okanogan-Brewster transmission line with a new steel line for about $13 million,” said Corson.
Recently approved FEMA funding will not cover the total upgrade project.
“The PUD also plans to rebuild the Tonasket substation for just over $4 million, which needs additional capacity in order to improve reliability,” Corson said.
In addition to Tonasket several substations need new or upgraded transformers which will add another $2.4 million to the tab.
Corson said the utility came in about $1 million under budget from last year’s power sales. It also borrowed from the rate stabilization fund to cover losses from 2020’s planned two percent increased that the PUD cancelled due to COVID-19.
To keep from overtaxing the budget the utility has deferred other projects, estimating that repairs over the next couple of years will use up some $35 million of that borrowed $40 million.
“In order to pay back that debt and provide more capital funds, the PUD will raise revenue this year,” said Corson illustrating the following changes that will occur on bills after the April 1 effective date:
1.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.).
2.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.
3.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.
4.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 later by commissioners.
“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 percent revenue increase.
• Residential: 4.5 percent increase
• Small general service: 3 percent increase
• Large general service: 1.18 percent increase
• Irrigation: 2.5 percent increase
• Industrial: 1.18 percent increase
• Frost control: 5 percent increase
• Area lighting: 3.25 percent increase
• Street lighting: 3.25 percent increase
• Domestic pump base charge: raised from $10 to $14.95
Originally, the PUD had considered a ten percent increase for frost control, but amended the resolution to five percent instead, to try to ease any burden on agricultural producers.
“We have to protect our biggest asset in the county,” Commissioner Scott Veraska 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.
Votes were unanimous for both the frost control amendment and Resolution 1742 approving the new rate schedules and general provisions.
Visit the PUD website okanoganpud.org for recordings of the meetings and the final resolution approving new rates and charges.
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