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PUD Mulls 5% Rate Hike

by Neita Cecil
The Dalles Chronicle, November 18, 2016

"We've got the cheapest power in the United states in the Northwest, and it's not kind of lower, it's a lot lower,"

Saying it has to catch up on years of necessary but uncompleted work, the PUD is proposing 5 percent rate hikes each of the next two years, each of which would add about $5 per month to the average residential bill.

The first proposed PUD rate hike would take effect next April, officials say.

The Northern Wasco County People's Utility District board will hear a broad overview of the proposed 2017 budget on Tuesday, Nov. 29, from 2:30 to 4:30 p.m. Then, a detailed look at the budget is set for Monday, Dec. 5, from 2-6 p.m. Both public meetings are in the PUD board room at 2345 River Rd. in The Dalles.

The last rate hike was 4.2 percent in 2013, which was preceded by over a decade of no rate increases, said PUD General Manager Roger Kline.

Kline said needed investment in all areas of the PUD, from personnel to equipment, had been deferred for years. Equipment upgrades range from meter replacement to replacing the Threemile substation transformer.

On meters, for instance, the PUD was previously replacing about 20 a year. So far this year, it has replaced 400 of the PUD's 10,000 meters, Kline said.

Meters over time suffer "calibration drift," which causes them to slow down. In effect, people with newer, more accurate meters are subsidizing those with older meters that don't reflect actual usage, said Harvey Hall, the PUD's chief financial officer.

Kline said the PUDs rates are among the lowest in the region. The average customer uses about 1,000 kilowatt hours of power per month, for a typical bill of $68.

Others in the region are $71.69 in Umatilla, $73.50 in Hood River, $88.17 in Skamania, and at the top end, Portland General Electric is at $113.60.

"We've got the cheapest power in the United states in the Northwest, and it's not kind of lower, it's a lot lower," said Hall.

By far the biggest share of the budget, at roughly 68 percent, is the purchase of power from the Bonneville Power Administration every year.

The PUD also recently sold $13 million in bonds. The PUD cannot cover the BPA costs or the bond repayments with existing retail revenue, Hall said. BPA, which raises rates every other year, is expected to increase rates around four percent in fall 2017.

The bulk of the bond, $8 million, will be used to build the new River Trail substation in the port industrial area. Another $2 million is for improvements at the PUD's McNary hydro plant. The rest is for smaller projects, including the new transformer and other upgrades ranging from technology to facility work.

Hall said the $8 million substation is not just a cost, but one that will bring returns to the community in the form of jobs, safety and reliability of service.

"The need is great and the need stems from" a lack of investment and maintenance, Kline said.

Hall said, "The utility had a seven-year history of underinvesting in the system for capital investment, so the system was actually losing functionality."

Over time, the PUD's investment in the distribution system, the network of poles and power lines that takes power to homes, was actually decreasing, Kline said.

Kline said the BPA was increasing its rates to the PUD during the 2000s, but the PUD was eating those costs and making cuts in other areas. "Unfortunately, it was reflected in critical areas," including personnel, IT, infrastructure, and succession planning, or preparing for retirements.

Kline created five new positions, hiring four externally. The hires created controversy -- linemen asked for his ouster in July but the board declined -- but Kline said the culture of the PUD is incrementally improving.

"There just weren't enough people to do all the work necessary," Kline said. He said the PUD had 15 percent less staff per customer than other PUDs. Kline said the PUD "recognizes that we're an economic engine."

Kline noted that under the proposed budget, administration is decreasing as a percent of the total budget, from 8.66 percent down to 8.45 percent.

Hall recently hired another person to help in financial planning.

He said the cost should be offset by a reduction in overtime and by bringing in-house work previously contracted out.

Neita Cecil
PUD Mulls 5% Rate Hike
The Dalles Chronicle, November 18, 2016

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