Clark Public Utilities board weighs $388 million budget
Save now, pay later?
That may be the quandary faced by Clark Public Utilities’ three elected commissioners, who are weighing a proposed electric system budget of $388 million for 2010.
The utility’s staff is recommending holding rates steady next year, partly by eating into cash reserves. The agency, which serves 189,000 business and residential customers, will head toward a new power-contracting deal with the Bonneville Power Administration with a relatively thin margin of error.
Keeping rates low as possible is a priority in a county wracked by unemployment.
“Under ideal circumstances, we would be asking for a rate increase this year … if the economy were fine and people weren’t suffering out there,” utility General Manager Wayne Nelson told commissioners during a budget workshop Tuesday.
Commissioners enacted a 5 percent rate increase — the first since 2003 — in January.
Residential customers using 1,200 kilowatt-hours of power in a month saw their electric bill climb from $94.72 to $99.76.
About 70 percent of the electric system budget goes toward fueling the utility’s gas-fired River Road Generating Plant or purchasing power directly from BPA. Utility managers cited a runup in costs associated with its new wind energy project, spending on conservation, a rate increase from Bonneville and declining customer growth among the reasons for the tight budget.
Holding rates steady is not without risk, Commissioner Byron Hanke said.
“I wonder how our customers would react to saving rates in 2010, but then turn around and hit them in 2011?” he said.
Utility managers propose drawing $4.7 million out of Clark’s rate-stabilization fund to make ends meet, along with a variety of cutbacks in utility programs.
In October of 2011, meanwhile, the utility will shift to a “slice” contract with BPA.
In contrast to a “block” purchase of energy at a fixed price, the slice option refers to the utility receiving a fixed percentage of Bonneville’s overall energy output. When the federal hydropower system generates plenty of energy, Clark will benefit from the arrangement by reselling surplus power. During drought years, however, the utility could be forced to buy energy on the open market to keep the lights on in Clark County.
The new contract takes effect just as the utility recovers from a financial hangover lingering from the West Coast energy crisis of 2000.
Market manipulation, combined with a drought and growth in regional energy demand, fueled a crisis that came at exactly the wrong time for Clark Public Utilities.
The utility paid $350 per megawatt-hour — more than 10 times typical prices for electricity — during a two-month gap between the end of Clark’s previous power-supply contract and a new one with Bonneville. The utility financed $100 million for the power, along with 50 leased diesel generators. The crisis abated before the generators were needed, but Clark is still stuck with the bill.
That bill, currently $13 million a year in principal and interest, will be repaid in full in 2012.
Erik Robinson: 360-735-4551, or erik.robinson@columbian.com.
