BPA rate hike likely to be felt by PUD ratepayers eventually

Grays Harbor PUD customers will likely see a rate increase next year after the Bonneville Power Administration, a federal agency that supplies power to the utility, announced a rate increase effective in October. Bonneville will increase power prices by 9 percent and transmission prices by 11 percent.

PUD General Manager Dave Ward said it’s still unclear how much the Bonneville increases will affect Grays Harbor customers, but he predicts a smaller rate increase for PUD customers — no more than 5 percent.

“You’ve got to remember that there are a lot of dynamics in the budget,” Ward said. “If we did nothing, if everything else is frozen, it’s about a 3 percent to 5 percent increase for us. But we have to look at other things. We have to look at our expenses, because those fluctuate, so it’s really an incomplete answer at this point.”

According to a press release from the Bonneville Power Administration, the 9 percent increase in power prices is the result of increased maintenance and operations costs, as well as the cost of funding fish and wildlife mitigation programs. The 11 percent transmission increase is the first in six years, and will be used to fund system improvements.

“We recognize that rate increases are very challenging for customers, especially for those still in the throes of a slow economy,” said Bonneville Acting Administrator Elliot Mainzer in the press release.

“But the increases are necessary so that we can help preserve the long-term value of carbon-free federal generation and support the reliability of the high-voltage transmission lines that serve Northwest public utilities.”

Ward said there are several factors that could mitigate the impacts of a Bonneville increase, including a possible debt restructure. Chief Resource Officer Doug Smith said the PUD doesn’t get all of its power from Bonneville, and if other providers keep rates constant, that could help keep PUD rates down.

Bonneville Power Administration is the PUD’s largest supplier, but state and federal regulations mandate that some of the utility’s power come from renewable sources, such as wind farms.

“Primarily because we’re a slice customer on the power side, that will reduce the impact to us,” Smith said. “And that’s why we’re saying 3 to 5 percent instead of 9 percent.”

And the Bonneville increases wouldn’t affect PUD rates this year, as PUD officials predicted an October Bonneville increase in the 2013 budget, said Chief Financial Officer Doug Streeter. PUD staff and commissioners are just beginning the process of creating a 2014 budget.

“We haven’t really started getting into it yet, this is just the kick-off,” Streeter said.