BPA’s proposed rate increase to cost PUD millions

A proposed Bonneville Power Administration rate increase announced Thursday could increase Grays Harbor PUD power supply costs for power and services purchased from BPA by about $1 million in 2013 and just under $3 million in 2014, the district said in a statement.

BPA filed the proposal to increase power and transmission rates in the Federal Register. It begins the public process called a “rate case,” which will set rates for a two-year period beginning Oct. 1, 2013. Most of the PUD’s power resources — low-cost hydropower and some nuclear power — are supplied by BPA.

The PUD’s preliminary 2013 operations and maintenance budget currently anticipates a BPA rate increase beginning in 2013 and assumes a 5 percent increase in local rates.

“This proposed increase overall is slightly less than the figure we used when we developed our preliminary spending plan for next year,” said Rick Lovely, PUD general manager. “While the financial impact is slightly less than anticipated, it still represents a significant increase in our power supply costs in 2013 and 2014.”

Lovely is retiring at the end of the year and PUD commissioners still are considering the process to replace him.

The rate increase being considered as part of the PUD’s preliminary 2013 operations and maintenance budget of $110.5 million assumes increased BPA costs as well as increased costs for compliance with state mandates for investments in renewable resources. The budget also is based on a forecast for continued declines in revenue from selling surplus power into power markets and little change in the local retail market.

“With power supply costs making up 60 to 70 percent of the operations and maintenance budget, rising costs including BPA rate increases continue to be a significant challenge,” Lovely said in the PUD statement on the BPA rate decision. “This initial proposal by BPA is not a done deal and we will be an active participant in the rate case to ensure any impact on our ratepayers is minimized.”