Okanogan County PUD rate structure discussion continues

The PUD continued the discussion regarding adjusting rate structures to move closer to actual costs.

OKANOGAN – The Okanogan County PUD continued the discussion Feb. 8 regarding adjusting rate structures to move closer to actual costs of providing services and more equitable rates for the different customer classes. The discussion will continue in a workshop at 2 p.m. Feb. 22, followed by the regular board meeting at 3 p.m.

Necessary upgrades and replacements to the PUD’s aging infrastructure have led to a more aggressive capital program. The PUD recently borrowed about $40 million to make upgrades to the Tonasket substation, Okanogan-Brewster transmission line, substation power transformers and more.

The 2021 final budget included a 3.25 percent revenue increase, but how that will be applied to rates exactly is still being determined. The PUD is working with cost of service studies and equity management plans to determine the most equitable options for adjusting individual customer classes. Changes to rate structures are still under discussion:

  1. State taxes could be designated on customer bills to reflect the state privilege tax (2.14 percent) and state public utility taxes (3.8734 percent) the PUD already pays. These would become additional line items on bill statements (similar to how city-based taxes are currently designated). This leads to additional transparency for the PUD to show customers more specifically where their dollars go.
  2. The COPA (Cost of Power Adjustment) could be rolled into the current kilowatt-hour charge. From there out, the COPA would be revisited every April 1 to reflect changes in power costs from the PUD’s sources of power (such as Bonneville Power Administration, Wells Dam, etc.).
  3. Tiered residential kilowatt-hour charges could slowly be merged into a single rate. PUD staff looked at consolidating them in one year, but it would lead to a more dramatic increase in rates to the average user, so will propose a 5-year process instead. This will both simplify the billing process and give relief to low- or fixed-income customers who have higher usage.
  4. Base charges, kilowatt-hour charges and demand charges (non-residential classes) will be adjusted differently to achieve the revenue needed per class, some decreasing to reflect the new state tax designation or with the move toward a single residential rate.
  5. Proposed new rate structures will be shared at the Feb. 22 meeting. Anyone can access the discussion via Zoom; links and agendas are posted on the PUD website, www.okanoganpud.org, the week before board meetings. Other ways to contact the PUD are also listed on the website.

In other business, the board:

  • Authorized the budgeted purchase of a new line truck from Altec for $386,901 plus tax, licensing, and shipping. Operations Manager Randy Bird said the truck will replace a 20-year-old truck in Oroville, and will likely cost about $420,000 total and arrive either late this year or early 2022.
  • Heard from Human Resources Manager Katie Pfitzer that the district had one reportable injury for 2020, which involved a trip to the doctor. Despite all the overtime during the Cold Springs Fire, staff managed to stay safe last year and Pfitzer will enter the district into safety award programs.
  • Heard Director of Finance & Accounting Janet Crossland share about the state audit, which was recently completed with a good report from auditors. Crossland said in the exit interview Feb. 3 that the PUD was praised for its compliance with both state law and PUD policy. Four comments were made for possible improvements to controls, and the district will accept those.
  • Heard an update on steel pole bids from Engineering Manager Allen Allie that the lowest bid was missing freight costs, so the district selected the next lowest bidder, Valmont, at $1.19 million for 187 steel poles (558,000 pounds of steel). The poles will be used to replace the Okanogan-Brewster transmission line, much of which was destroyed in the Cold Springs Fire.
  • Signed a letter thanking legislators for their pressure to get presidential declarations of emergency and, therefore, FEMA eligibility for Cold Springs and other statewide fires in 2020. President Biden signed the declaration Feb. 4.
  • Heard the final power sales report for 2020 from Director of Power Resources and Broadband Services Ron Gadeberg. All told, wholesale power was about $524,000 over budget, and retail sales were $1.5 million under budget, bringing the total budget shortfall to almost $1 million for the year. The low retail sales were mostly due to mild weather throughout the year. So far in 2021, January wholesale sales were $272,000 over budget.
  • Also heard from Gadeberg that broadband connections are up to 3,519, with 2,966 on wireless and 553 on fiber.