Electric rates will take a dip

Published on Thu, May 16, 2002
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Electric rates will take a dip

Riding the Bonneville Power Administration (BPA) roller coaster, Blaine will trim electric rates by four percent this month but are expecting to jack them up again in the fall.

City finance manager Meredith Riley explained that the current cost recovery adjustment clause (CRAC) in the city’s BPA contract, which allows BPA to charge more for power under heavy loads, boosted the city’s bill for wholesale power by 46 percent during the last six months. That led to a 22 percent increase passed along to Blaine customers. “The power charge portion makes up approximately half of the overall cost of the utility,” she said at the May 13 city council meeting, adding the rest of the cost was for personnel, infrastructure and maintenance.

With BPA predicting the add-on CRAC could drop to 39 percent for the next six months. Riley said staff proposed passing over half of the savings on to customers. “I like to think of our utility as a cooperative,” said public works director Grant Stewart. “We try and get our customers the best deal we can.”

“With a four percent reduction in we felt our cash flow would stay above minimum requirements and we’ll still be in a good financial position if the financial CRAC hits in the fall,” Riley said.

In the complicated world of the city’s power contract, BPA can activate one of three CRACs: one if load demands exceed their capacity and they need to buy more power, a second if they can’t pay their debt-service and a third if they have a sudden danger of insolvency. The second one could kick of in October on top of the load-based CRAC, which will be reviewed again at that time. While she didn’t say as much, Riley’s charts showed Blaine’s power costs could double in December.

The coming rate cut will translate into few dollars for an average family – Stewart likened it to the cost of a cappucino – but could be a significant monthly break for local industry.

Council were united in supporting the staff recommendation to cut the electric rate while the city can, but city council member Bonnie Onyon asked if very small fluctuations might not cost more to administer than they were worth. ‘When it comes down to pennies, let’s look at it,” she said.

City manager Gary Tomsic said the city might want to plan for a bigger financial buffer in the bucking power market. “This is a fund that’s been healthy and we need to be especially careful about picking away at our reserves,” he said..