Electric rates to rise by 5 percent

Clark Public Utilities’ 181,000 electrical power customers will see an average rate increase starting Jan. 1 of 5 percent, and water rates will go up even more, under a rate plan passed unanimously by utility commissioners on Tuesday.

The increase would have been greater except that the utility tapped into a reserve fund.

Residential customers now using 1,200 kilowatt hours of power in a month would see their electric bill climb from $94.72 to $99.76.

The utility’s 30,000 water customers, who mostly live in unincorporated areas of Clark County, now have a three-tier rate plan that would raise rates 16 percent, from $23.50 to $27.20, for a typical household, and by more for heavy water users. The new rate plan also raises by several thousand dollars the cost of adding a new house or business to the water system.

At present, Clark faces a $20.3 million electric system budget deficit, due largely to the increased cost of natural gas, which fires the utility’s River Road Generating Plant. State requirements, which mandate that utilities obtain power from renewable resources and invest in conservation, also added $3.6 million in 2009 expenses.

Natural gas prices have started to drop, but renewable and conservation requirements will grow in 2010 and beyond; in 2011 Clark’s bill from the Bonneville Power Administration will go up. So future hikes in coming years seem likely, though not certain.

Meanwhile, the water system’s $1.6 million budget shortfall is closely linked to the housing slowdown. Clark is midway through adding wells and increasing its water capacity — and originally expected that new hookup costs would help pay for that work. But water customer growth has slowed considerably.

“These are unsettled times,” Byron Hanke, utility commission president, said Tuesday. “We don’t know what costs and expenses the utility will face later.”

The electric rate hike (see box for specifics) is slightly lower than it could have been, because of a compromise decision to draw $3.6 million out of a reserve fund that Clark Public Utilities commissioners have worked hard in recent years to build.

The $11 million rate-stabilization fund exists to prevent big jumps in rates paid by Clark Public Utilities’ electric customers.

“Taking anything out of the rate stabilization fund goes against what I would like to do,” Hanke said. Maintaining the $11 million balance would allow the utility to limit rate hikes later, although at the expense of a slightly higher rate hike now, he said.

Commissioner Carol Curtis, meanwhile, pushed to use half of the fund — $5.5 million — which would have resulted in a 4.5 percent overall rate increase, instead of the 5 percent increase that was passed.

“These are hard times for a lot of people,” Curtis said.

The utility’s third commissioner, Nancy Barnes, said she was torn on the issue.

“I see the rate stabilization fund as a source of cash in an unanticipated mid-year emergency,” she said. “But why do you have a rate stabilization fund if you’re not going to use it to keep rates stable or down?”

Curtis and Hanke agreed to compromise, drawing down enough from the reserves to knock 1 percentage point off the 2009 rate hike. Barnes endorsed the plan, which leaves Clark with $7.4 million in its reserve.

With a $1.6 million water system gap to fill, utility commissioners opted for a three-tier rate system that pushes a bigger burden onto customers who use more water. (See box for specifics.)

Clark Public Utilities provides water service to about 30,000 homes and businesses in Hazel Dell, Salmon Creek, Lake Shore, Hockinson, Brush Prairie, La Center, Amboy and Yacolt.

A typical residential customer uses about 1,200 cubic feet of water in a month, and would see a total rate hike of about 16 percent. But customers using more than 1,800 cubic feet of water in a month would pay more for that extra water, and the rate for water is still higher above 3,600 cubic feet of water.

A customer using 5,000 cubic feet of water in a month, perhaps to water a lawn or for agricultural purposes, would see rates climb from $87.62 to $110.08 — a 25.6 percent climb.

“It is increasingly expensive to get good, clean potable water,” Barnes said. “We are signaling the value of conservation.”

Courtney Sherwood: 360-735-4553 or courtney.sherwood@columbian.com.