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Economic and dam related articles

PUD Announces Zero Rate Increase

by Stephen Mercer
The Star of Grand Coulee - November 19, 2003

Grant County residents used to budgeting money each month for their electricity may not need to make any changes next year.

Grant County Public Utility District officials announced last night they do not plan to raise rates next year. That's a change from an anticipated 4-percent increase for 2004 that the PUD had announced in 2002.

And the PUD's eight-year "unofficial" financial forecast shows no projected increases through at least 2011.

That was one of three major components of the PUD's preliminary budget that was discussed in the North Cascades National Bank's basement yesterday.

Cliff Appel and a reporter were the only people not affiliated with the PUD to attend the meeting.

The PUD's relicensing of its two hydroelectric dams and its wholesale telecommunications business were also discussed. The PUD plans to have more rate stability with the relicensing and continue to expand its telecommunications.

The PUD raised rates by average of 4 percent this year because of high wholesale prices, reduced industrial and irrigation loads from a lagging economy, a 46-percent rate increase from the Bonneville Power Administration and drought water conditions.

Several changes for next year year, however, eliminated the need for a rate increase this year.

Those include efforts by the PUD to conduct business in a more efficient manner, lower increases in Bonneville Power Administration power rates than expected and a projected return to a normal amount of water flowing in the Columbia River next year.

By planning for more water than the last three years, the PUD figures it can generate more power and sell the surplus power to other utilities. It also should allow the utility to keep from purchasing more high-priced power from the BPA and others to meet demand.

Even if the water doesn't flow as freely as planned, the PUD will use its Reserve and Contingency Fund of $17 million to make up the difference.

The BPA had planned another 46 percent increase this year, plus an additional 20 to 25 percent "safety net" rate increase. But political pressure led them to drop those demands to now raise wholeale rates approximately 50 percent.

The PUD has spent the last several year preparing a license renewal application for its Priest Rapids and Wanapum dams. It delivered that 39-volume application last week and must now receive more input from federal, state and local agencies, tribes, organizations and individuals.

There will also be additional study and information requests.

The new license from the Federal Energy Regulatory Commission (FERC), if granted, will end sales contracts in force with other utilities since the building of the dams, and allow the PUD to keep more of the power they generate. That will allow the PUD to buy less power from BPA, thus lowering costs and keeping rates stable. The current license expires in October 2005.

PUD commissioner Tom Flint said the PUD now gets half their power from BPA. By 2006, they could get all their needs from Priest Rapids Project.

"It will mean rate stability," he said.

PUD Treasurer/Controller Laura Lyon said although the mega-watt hour base rate will go up several dollars from the current $9 per mWh to pay for the relicensing, the amount the customer pays will not change as often as it does now.

Residential customers currently pay $34.15 per mWh, a price that reflects the cost of getting the power to the home as well as other costs, such as improvements to aid salmon migration.

Another major project for next year is part of a $300 million plan to replace worn-out turbines at Wanapum Dam in the upcoming years.

A turbine is now being built and will be tested to see if it works effectively and will allow fish through.

The PUD will continue to accept comments on the proposed budget and rates until Dec. 8. They expect to adopt the budget on Dec. 15.

Zipp network must stand on own

The PUD's fiber-optic telecommunications service, called ZIPP, has been financially separated from its electrical business in response to public concerns.

That means the Zipp network must stand on its own financially, operating on its own revenues. The service wholesales high speed Internet services to retail providers.

The ZIPP fiber optic network will continue to expand in the coming years, with more than 10,500 customers added by 2006.

But to earn revenue to pay for the costs in the budget, they must obtain a federal Rural Utility Services loan and pick up the predicted 3008 added customers.

PUD commissioner Mike Conley said there is a lot of competition for the $1.4 billion loan and they don't yet know what strings are attached.

If they do not receive the loan, the PUD could look for alternative funding, such as bonds or other loans, Lyon said.

Stephen Mercer
PUD Announces Zero Rate Increase
Seattle Times Company, November 19, 2003

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