By Joe Smillie
Peninsula Daily News
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The increase adds about $3.35 to the monthly bills of the average PUD customer who uses 1,200 kilowatt hours, a PUD spokesman said.
The PUD provides power to more than 30,000 customers in Clallam County — everyone outside the city limit of Port Angeles but including those in the cities of Sequim and Forks.
Commissioners for the utility district unanimously approved the increase, which was included in the 2014 budget, Monday afternoon.
“Rate increases are never popular, but with rising costs associated with regulatory mandates and [Bonneville Power Administration] increases, there was little option,” said Hugh Haffner, commissioner from the 2nd District and president of the PUD’s board of directors.
The increase is targeted to offset an October 2013 increase of roughly 9.5 percent on rates charged by the Bonnev ille Power Administration, prime supplier of electricity to the PUD.
“Customers can expect rate increases annually of about 3-4 percent because we anticipate future BPA increases are on the horizon,” Haffner said.
Payments to the BPA this year are expected to be $25,353,000, equalling about 45 percent of the PUD’s $55.5 million 2014 operating budget.
The largest expense in the 2014 budget is $10.2 million to build a new headquarters building next to the central warehouse facility on 100 Hooker Road in Carlsborg and an expansion of the operations center off Carlsborg Road for the engineering department.
PUD spokesman Michael Howe said those construction costs did not factor into this rate increase, but may be a factor next year.
Howe said increasing costs for materials, operations, maintenance and technology will continue to affect rates.
So will renewable energy mandates, Howe added, like those required by the Washington Energy Independence Act.
The act sprung from Initiative 937, which voters passed in 2006 to require that utilities obtain 15 percent of their electricity from new renewable resources such as solar and wind by 2020.
“Commissioners spent much time during the public budget hearing process considering when to increase, and by how much to increase, rates,” said Doug Nass, PUD general manager.
“This rate increase is consistent with our strategic objective of maintaining stable rates and financial responsibility to our customers.”
The utility decided to split the cost of the BPA increase over two years in an effort to maintain stable rates.
“Rate stability is important to us, meaning we try to avoid extreme measures and instead give some certainty to our customers for planning purposes,” said Will Purser, PUD commissioner for the 1st District.
The PUD has enlisted Utility Financial Solutions LLC of Holland, Mich., as a consultant to undertake a study of how much it actually costs to run the electric utility.
Howe said that study should be finalized this fall and will be considered when the utility’s commissioners consider next year’s rates as part of the 2015 budget process.
Sequim-Dungeness Valley Editor Joe Smillie can be reached at 360-681-2390, ext. 5052, or at email@example.com.