Energy rates will stay competitive
Effects of proposed hike dulled in several ways
Sunday, October 16, 2011
In a world of rising consumer prices, Clark County residents won’t feel the pinch of next month’s planned increase in electric rates. At least, not for two years.
The breather comes courtesy of a rebate connected to a complicated legal settlement.
As a result, a household that uses 1,200 kilowatt-hours a month and now pays about $106 will actually see its bill decrease by about $2 or $3.
After the rebate expires in 2013, that same household will pay around $110 or $111 per month, depending on which rate hike option the three elected commissioners who oversee Clark Public Utilities choose.
Even then, residential customers’ rates, although not the cheapest in the state, will remain competitive. Residential customers of Portland General Electric, for example, pay about $129 a month to consume 1,200 kilowatt-hours per month.
Commissioner Nancy Barnes said Clark County residents aren’t alone in facing rate hikes, which are “widespread across our state” as utilities grapple with budget crunches.
That comes as little comfort to Vancouver resident Sharon Gutz, who, along with two other residents, criticized the utility during the commissioners’ public hearing this week. On top of paying more for electricity, Gutz said, she’s already getting hit with higher gas and food prices. “I can’t afford anymore increases,” she said. “You guys need to see the human side.”
A two-year reprieve
The utility is considering rate hikes of up to 4.9 percent for residential customers and 3.9 percent for industrial and commercial customers to bridge a $13.7 million revenue shortfall on an anticipated $380.42 million electric system budget for 2012.
The utility’s three elected commissioners — Barnes, Carol Curtis and Byron Hanke — are expected to further review and adopt new rates on Oct. 25. Rate increases would go into effect Nov. 1.
The impact of the rate increase wouldn’t show up in utility bills until 2013 because of a legal settlement of a complex and controversial issue: the residential exchange program. The exchange gives residential and small-farm customers of for-profit utilities such as Portland General Electric a share of low-cost hydropower generated by the federal system.
Earlier this year, the Bonneville Power Administration and regional power providers reached a $4.07 billion agreement on residential exchange payments, which puts about $13.8 million in the pocket of Clark Public Utilities each year for the next two years. The agreement mandates that those funds be returned to residential and small-farm customers in the form of a credit on their bills.
As a result, residential customers will see their rates go up but their bills go down because the credit they’ll receive through 2013 more than offsets the higher rate.
Wayne Nelson, general manager of Clark Public Utilities, has said he anticipates that the credit from the exchange program settlement will expire after two years, at which point customers would pay the new, higher rate.
Adding wind power
Clark Public Utilities, which provides electricity to more than 183,000 residential and business customers in Clark County, currently gets its energy from the Bonneville Power Administration, its own gas-fired River Road Generating Plant and purchases on the open market.
The BPA’s decision to increase wholesale power rates earlier this month is a major driver of the utility’s projected budget gap. The other big factor is Initiative 937, approved by Washington voters in 2006. The law requires large utilities to get 15 percent of their power from renewable sources by the year 2020, following step-up requirements of 3 percent in 2012 and 9 percent in 2016.
Complying with I-937, including adding wind power to its energy mix and investing in conservation measures, bumps up the cost to Clark Public Utilities of providing power to the region.
The utility last raised rates in August 2010, when commissioners adopted a 5.7 percent increase to cover a projected year-end shortfall.
At that time, a lousy economy and mild weather depressed demand for electricity, prompting the utility to examine ways to cover the deficit.
It was the third rate increase since 2003.
This year, faced with the additional costs imposed by BPA and I-937, commissioners are reviewing four rate-hike plans, each involving a rate increase of either 3.9 percent or 4.9 percent.
For example, one alternative that raises the rate by 3.9 percent would add $2 to the base monthly residential customer charge of $10, and boost the energy cost, which is currently 7.98 cents per kilowatt-hour, to 8.16 cents per kilowatt-hour.
However, that household’s bill would actually fall to about $103 despite the 3.9 percent rate hike. In fact, under all four rate hike alternatives, residential customers’ monthly electric bills would decrease by as little as $1.58 or as much as $2.70.