WENATCHEE — The Chelan County PUD is proposing a roughly 3% annual electric rate increase for county residents starting in either 2020 or 2021.
The increase is still in the early proposal stages and will require more planning before it’s implemented, General Manager Steve Wright said Tuesday.
It’s part of the PUD’s five-year strategic plan. After spending months collecting public input, including more than 3,700 responses to a survey, commissioners were presented with a draft of the strategic plan at their meeting Monday.
The proposed increase would likely repeat every year through this strategic planning period, which ends in 2024, PUD spokeswoman Kim Craig said, but that could change as commissioners continue to review public feedback.
Power rates in the county are subsidized with revenue the PUD earns by selling surplus power on the wholesale market. But that market can be volatile, so a modest rate increase now will help the utility stabilize rates in the long run, Wright said.
“Wholesale markets can treat us good or they can treat us bad,” he said. “If they treat us bad, we’re at risk of really large rate increases and doing them quickly.”
The increase would generate roughly $1.5 million a year and would be saved in a rate-stabilization fund for use if the market takes a downturn in the future, he said.
About 80 percent of the energy generated by the county’s hydropower goes to the wholesale market, which returned $256.8 million in revenue in 2018, according to the draft plan. Revenue from retail customers in the county was $52.6 million that year.
Through its public feedback process, the utility found that 76% of customers favored this kind of small increase rather than larger increases down the line, according to the strategic plan draft.
The PUD hasn’t had a retail rate increase in eight years and rates have increased 9% since 2000, while inflation has seen a 40% increase, according to the draft plan.
The average residential rate in the county is 3.2 cents per kilowatt hour, while the state average is 9.7 cents and 12.9 cents nationally, according to the draft plan.
The PUD is also proposing a 4% annual rate increase for its water and wastewater customers, which would bring them closer to self sustaining within a few years, according to the draft plan. Fiber service providers would also see a 3% increase in their wholesale rates.
The utility implemented its first five-year strategic plan in 2015. At that time, the three major priorities were to reinvest in physical assets and people, reduce its debt-equity ratio below 35%, and initiate a public power benefit program.
Refined versions of those goals will continue in this plan. The PUD’s transmission system reliability and customer service technology, for example, will be improved as part of the first goal, Wright said.
The PUD achieved its debt goal and is now focused on maintaining that financial stability for the next five years, he said.
The PUD also added a fourth priority for this plan: engage in county-wide growth planning and job creation.
During the public feedback process, 61.3% of people said they would support a higher monthly electricity rate to support economic development, according to the draft plan.
The draft plan lays out some possibilities of what that support for economic development might look like:
- Consider creating a dedicated liaison position to connect with prospective large-load customers.
- Consider creating “industrial hubs” to attract new business and industries.
- Explore buying solar or wind power that could serve large-load customers without impacting hydropower capacity.
The PUD will seek public feedback on the strategic plan at open houses on Sept. 5 in Wenatchee and Sept. 9 in Leavenworth, as well as its Sept. 16 board meeting. Feedback can also be emailed to email@example.com.
The commission is expected to vote on the plan at its Oct. 7 meeting.