Jefferson PUD consultant studying raising rates

Discussions expected during budget hearings this fall

PORT TOWNSEND — Jefferson County Public Utility District commissioners are expected to consider raising water and sewer rates pending the results and recommendations of a rate study currently being conducted by the FCS Group.

“Staff expects to propose increases to water and sewer rates. But we want to use the data from FCS to help us determine by how much and over how many years,” Communications Manager Will O’Donnell said — in other words, if rates would be raised all at once or over the course of a couple of years.

In terms of electrical rates, the primary goal for the PUD is to look at its rate structure to see if it is recovering the costs for today’s expenses and for future expenses, O’Donnell said.

The hope is FCS will propose some changes to the structuring of those rates at its next meeting with the PUD in August, he added.

The annual budget hearing is set for Oct. 5, O’Donnell said.

“We expect rate increases or adjustments to be a part of the proposed budget and budget discussions,” he said Wednesday.

The last time the PUD raised utility rates was in 2018. Larry Dunbar, former PUD general manager, said then that rate increases to cover costs were likely in 2020.

On July 13, the FCS presented the various components that go into a rate study, such as determining the amount of annual revenue necessary to fund all the PUD’s financial obligations, completing a cost of service analysis, which determines total unit costs by class, and establishing a rate design.

The presentation also posed questions to the PUD commissioners about how they would like to proceed in certain areas.

For example, should all utilities be self-sufficient or continue to be subsidized?

Currently, the sewer utility is subsidized by water utility payments.

“The sewer utility is not set sufficiently enough to meet its obligations,” said Sergey Tarasov, FCS project manager.

“The big question that we have for you that we will need guidance on is that do we want to get the utilities on a stand-alone basis? If so, do we want to do it all in one year, or do we want to do it transitional?”

Commissioner Jeff Randall said he does not believe it is possible for the sewer to be a stand-alone utility due to a significantly smaller customer base than the other utilities.

“We have roughly 20,000 electric customers, roughly 4,500 water customers, then we have 300 sewer customers,” Randall said.

“I think the sewer side of our business is way too small to be expected to stand alone and handle its costs. I think we need to keep it in the water division.”

PUD commissioners met again Tuesday to review the rate presentation and give notes to general manager Kevin Streett to pass on to FCS for future presentations.

Streett said he doesn’t agree with all that was in FCS’ presentations, but at this point, it’s not appropriate for staff to weigh in.

“I don’t know that I agree with what FCS provided to the commissioners, but it’s not staff’s point at this time to really weigh in and say we like this or we don’t like this,” Streett said.

“Some of the things they talked about we would not recommend, but this is a board decision, and the board needs to see all options.”

One of the main things commissioners said they would like to see from FCS at its next meeting is more transparency on how they arrive at the numbers of who should pay for what and why.

“It’s really important to me that they talk about how those calculations are done,” Randall said.

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Jefferson County reporter Ken Park can be reached by email at [email protected].

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