PORT TOWNSEND — The Jefferson County Public Utility District’s board of commissioners will discuss a phased-in rate increase of nearly 35 percent through 2028.
A hearing is scheduled for 5 p.m. June 17 as a part of the commissioners’ regularly scheduled meeting, which will start at 4 p.m.
“We realize it’s a big number. We realize it’s a pretty sizable rate increase,” PUD commissioner Jeff Randall said.
If a resolution is passed, initial increases could go into effect on July 5, PUD commissioner Dan Toepper said.
“We have a pretty big challenge,” Randall said. “Our ability to maintain reliable power almost crashed this winter. So, when (PUD General Manager) Kevin (Streett) kind of quickly said, ‘Hey, we’re looking at $68 million of investment over the next few years.’ That’s a big number for us.”
The PUD identified $100 million in capital improvements over the next 10 years and, more recently, a more than $68 million need for capital improvements between this year and 2028.
On Monday, Sergei Tarasov, a consultant from FCS, said the preferred method for raising the funds is a gradual phase-in method.
The first phase would begin in July with a 9.03 percent increase in the cost of electricity for residential users, including discounted residential users, Tarasov said. In 2026, 2027 and 2028, additional increases would be assessed at 7.3 percent, 7.28 percent and 7.25 percent, respectively, he added.
As it is, agricultural, discounted residential customers and school customers are underpaying in the range from 11 percent to about 65 percent below the cost of service, according to a slide in Tarasov’s presentation to the board.
Small demand, large demand and primary demand general service are overpaying in the range of 33 percent to 53 percent above the cost of service, according to a slide presentation.
Tarasov said a 20 percent window from 10 percent under to 10 percent over is generally considered reasonable within the industry.
Gradual adjustments would be made to bring classes of customers currently outside of the range into the correct range, Tarasov said.
For general service customers, a 9 percent increase would hit in 2025, and 6.75 percent increases would be added annually through 2028.
Small demand general service customers, large demand general service and primary general service would see an 8.75 percent increase in 2025, followed by a 3.5 percent increase annually from 2026 through 2028.
Irrigation or agriculture would see an 11 percent increase in 2025 followed by 10 percent increases annually through 2028.
Some schools would see an 11 percent increase in 2025 followed by 7.25 percent increases annually through 2028.
FCS consultants worked with PUD staff to complete a cost of service analysis starting late in 2023. FCS started presenting its preliminary findings to the board last November, Tarasov said.
In subsequent months, FCS gave a series of presentations to the board outlining how the PUD might meet its financial goals to complete upgrades on its aging infrastructure, Tarasov said.
Randall said the utility had looked at ways not only to spread costs among users but also over time by borrowing money.
While the PUD expects it will raise rates in an effort to meet infrastructure needs, those needs also will require debt financing.
“Out of the $68 million of capital that we have identified, $39 million of it is currently anticipated to be debt finance,” Tarasov said. “Now, as you get closer to the construction, this will be updated by your staff and revised. But this is a preliminary estimate, based on the projections that we have in place right now.”
The rates are currently divided into three tiers of usage: $0.0966 per kilowatt hour for customers using from 0-600 kilowatt hours, $0.1172 per kilowatt hour for customers using from 601-1,600 kilowatt hours, and $0.1334 per kilowatt hour for customers using 1,601 or more kilowatt hours.
PUD staff has recommended removing the third tier, which had the intended purpose of energy conservation, Streett said.
“The third tier removal was generated from staff,” Streett said. “It really hit our low-income people hard during the winter cold snap. The reason we put it in was to be a conservation tool. It just didn’t work that way from staff’s point of view. It ended up kind of hurting the lower income during the cold snap.”
Moving forward, the tiers would be 0-600 kilowatt hours and 601 or more kilowatt hours, with the tiers increasing annually based on the rate increase, according to Tarasov’s presentation.
The removal of the third tier is expected to be financially neutral, Tarasov said.
Another area of focus, which is still being fine-tuned, Tarasov said, is time-of-use rates. Those would incentivize use of electricity during times of the day when the electrical grid is seeing less overall use by charging a lower rate during those times.
The rate design also is eventually expected to leave the utility with the advisable $15 million per year on hand at the end of each operating year. The years 2025 to 2027 are expected to range from almost $12 million to almost $14 million, but by 2028, on-hand funds are expected to reach almost $16 million, according to Tarasov’s presentation.
As it is, Jefferson County’s average monthly residential rate, $133.34, sits in the middle of a spectrum that includes seven utilities, starting with Port Angeles at $95.71 and ending with Puget Sound Energy at $143.48.
In July, Jefferson County’s average will top the list at $145, Randall said.
Tarasov said he would need to do some digging to say more about which surrounding utilities also are looking at increases. He said he believed Clallam PUD is in the process of looking at increasing its rates, as is Mason PUD #3 and Puget Sound Energy.
“Everything I’ve heard is extremely reasonable. Everyone is doing their darndest to educate all of us,” said Jason Victor Serinus in a public comment. “Here’s the issue: What I hear is lots of reasonable voices from very calm people who are being very, very rational and bravo for all of us. The reality is, this is a huge increase, and it’s really going to hurt.”
Nicole Gauthier, general manager of the Jefferson Transit Authority (JTA), said the transit board is committed to going electric. JTA already has two electric buses that run on batteries and is slated to receive a third by the end of the year, she said.
“These rate increases are a little bit concerning,” Gauthier said. “Not only because they’re happening mid-year, which will greatly affect Jefferson Transit’s budget, but also our ability to continue to buy electric vehicles moving forward. I have lots of questions.”
“I would just caution, don’t get too comfortable,” Toepper said. “It’s painful, but it could get more painful if things don’t work out the way that we planned for. I hate to always be on the negative side of the equation, but I just don’t want people’s expectations to get so high that they think that this is some sort of silver bullet, even though it’s painful. We have a lot of challenges in the next decade.”
The only thing worse than increased expense is a loss of power, Randall said, referencing last week’s power outage, which saw 17,500 customers without power.
The utility is trying to avoid seeing its infrastructure decline to the extent that power becomes unreliable, Toepper said.
The agenda for Monday’s meeting, including Tarasov’s presentation, can be found at https://tinyurl.com/muzv32zh.
An agenda for the June 17 hearing can be found at https://tinyurl.com/ymnem782. The meeting also can be attended in person at the PUD’s offices, 310 Four Corners Road, Port Townsend.
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Reporter Elijah Sussman can be reached by email at elijah.sussman@sequimgazette.com.
