Electricity rates to get hefty hike this fall

Published on Thu, Jul 26, 2001 by Meg Olson

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Electricity rates to get hefty hike this fall

By Meg Olson

Blaine electric rates will go up 22 percent on the first of October to cover the increased cost of wholesale power the city buys from the Bonneville Power Administration (BPA).

“I only like the numbers because they’re better than they looked a few months ago,” said Blaine mayor Dieter Schugt.

Blaine’s wholesale power contract with BPA contains a cost recovery adjustment clause (CRAC) which allows BPA to bump up the set power rate if it needs to do so to remain solvent. With higher power demand than it can produce, BPA has had to buy electricity to fulfill its contracts and is passing those costs on to the utilities it serves. While initial projections for this October’s CRAC increase were as high as 250 percent, BPA announced June 29 that wholesale power rates would only go up 46 percent.

In a July 19 letter to city manager Gary Tomsic, Blaine’s BPA account executive George Reich credited conservation efforts of Blaine and other utilities served by BPA for keeping the increase to a minimum. “Thanks to customers like Blaine, all of BPA’s customer groups pulled together to produce a total of 2,115 average megawatts (aMW) of load reduction,” he wrote.

Blaine’s conservation efforts have reduced the city’s demand for power by 1.8 aMW. “That’s what brought the CRAC down to 46 percent,” said public works director Grant Stewart. “BPA asked all public utilities to come up with a ten percent reduction and Blaine delivered a 20 percent reduction. Now that we’ve committed we have to follow through.” Stewart described the results of Blaine slacking off on conservation as “ominous.” “Failure to achieve these targets could easily result in an unanticipated power rate increase in April,” Reich wrote.

BPA will evaluate its financial position every six months and file a new CRAC. “This isn’t an increase that jumps up and stays high,” said Tomsic. “It’s only until April when they review it again.” Should BPA have enough money to cover its power purchases and the CRAC is eliminated, the 22 percent rate increase would also be wiped out. However, if another CRAC is needed, Blaine rates could go up again in April and potentially again six months later by about half the amount of the CRAC. “The wholesale power cost is about half the costs our electrical utility has to bear,” explained public works director Grant Stewart. “Our other costs aren’t going up. Even the cost of transmission isn’t going up.”

Rather than use the utility’s cash reserves to soften the blow to consumers, the city has opted to retain them to keep capital projects on track and lower the amount the city has to borrow to complete themn. A new substation on Lincoln Road and an express feeder to route electricity around the south side of Drayton Harbor are both on hold now but expected to proceed in 2002. “Your direction was to proceed with those regardless of an increase,” Stewart said. “This preserves our fund balances for those purposes rather than borrowing it all. City financial projections anticipate $2 million will need to be borrowed to complete the two capital projects.

Comparing a typical winter power bill for a Blaine family of three after the increase to what a similar family now pays to Puget Sound Energy outside the city limits, finance director Meredith Riley said city power customers are still getting a good deal. The Blaine household bill will increase from $57.73 to $69.50. Puget Sound Energy Customers now pay $69.54 a month for the same amount of power.

At their July 23 meeting city council members voted unanimously to accept the 22 percent rate increase and the formula to pass on any further CRAC increases to consumers. “We’re just following BPA’s tail,” complained Bonnie Onyon. Stewart said he hoped continued conservation efforts and increasedpower production would soon solve the power crisis. “Bonneville’s going to produce more generation,” he said. “The crisis goes away after three to five years once that power goes online.”

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