Commission recap 10/24/2023 — Rate-setting process will take all customers into account. More...
Grant PUD commissioners Tuesday told an audience that packed the Ephrata headquarters’ boardroom that their ongoing discussion over how to set electric rates and arrive at a rate increase for 2024 will take into account all the county’s economic sectors and ensure “core customers” are protected.
Commissioner Cox invited the audience to a commission workshop, Nov. 21, at 9 a.m. in the Grant PUD Ephrata Headquarters commission room for an in-depth discussion about rates.
Comments from Commissioners Tom Flint, Judy Wilson, Terry Pyle and Larry Schaapman reinforced their intention to represent all voters of Grant County, not just the industrial and ag sectors.
They added that industrial demand for electricity should not come at the expense of Grant PUD’s core customers — residential, irrigation, small and medium business and large commercial — billed under rate schedules 1, 2, 3 and 7. Core customers pay below cost for their electricity. Industrial customers pay above-cost for their electricity.
They called for a need to revise Resolution 8768, approved by the board in 2015. Based on a Grant PUD analysis of the cost to provide electricity to its different customer groups, the resolution proposed yearly rate adjustments to eventually arrive at the target “goal posts” that no customer group would pay less than 20% below its cost to serve, nor more than 15% above its cost to serve by Dec. 31, 2023.
The resolution remains in effect, but rates for some customer classes remain outside of the goal posts. Rates were not increased, nor adjustments made within the target “goal posts” for four consecutive years.
Grant PUD staff has proposed an average 2.5% or 3% rate increase, starting in 2024, with annual, 2% increases from 2025 through 2028. With strong load growth projected well into the future, a costly need for Grant PUD to build new service center and headquarters buildings and develop new sources of carbon-free electricity generation to meet customer demand, commissioners said they now see the need to modernize the resolution.
Not all currently appear to agree on how to do that, but encouraged active participation from audience members while they continue their discussions.
Commissioner Tom Flint recapped Grant PUD’s rural history and said Resolution 8768 has caused core customers’ below-cost benefits to deteriorate over the years. He called for modifications that would lead to small, predictable rate increases wherever possible and possibly link rate increases to the consumer price index. He called for an end to the above-cost/below-cost “goal posts.”
Commissioner Judy Wilson agreed, adding “As far as I’m concerned (Resolution 8768) will not be renewed in its current form. The industrials want to see goal posts. We may put goal posts in there, but I’m sure they won’t be where the industrials want them to be. We have a responsibility to provide power for the entire county and do what’s best for the entire economy.”
Wilson also clarified a statement she’d made at the Oct. 17 commission workshop that the cost-to-serve analyses can be manipulated to achieve any desired result and should not be the only consideration when setting rates. “I did not mean that nefarious activity was going on by staff in the background,” she said. “Our RCW (state law) requires us to do a cost-of-service analysis.”
She called for an analysis more tailored to Grant PUD’s unique circumstances as an owner/operator of two Columbia River dams that generate carbon-free hydropower.
Commissioner Terry Pyle said he agreed with Wilson. “I’ve worked in the financial world my whole life. I can take numbers and tell you any kind of story,” he said. “I also understand that for where we’ve been and how we’ve gotten where we are – what it’s costing us to do business – we can’t accurately and adequately project the future. We can’t. The cost-of-service is a necessary requirement. We need to take a stronger hand in how we’re doing it and manipulate it to accurately reflect our operations. That will give us a better look at how it’s affecting us.”
He added, “I understand the pros and cons of goal posts. I think there is more protection with having some kind of definition about how we’re going to protect the core customers, but without having to modify it as we go forward, it can be a hazard.”
Commissioner Larry Schaapman cited industrial rates charged by Chelan and Douglas PUDs to show that Grant’s own industrial rates were in alignment with those neighboring utilities. He said industrial customers also bring benefits to core customers in the above-cost rates they pay and the taxes they pay to Grant County and its cities. He defended Grant PUD’s cost-of-service analyses as having been conducted by expert staff and trusted contractors who took into account Grant PUD’s unique qualities as a utility.
“The notion that the cost of service is flawed needs to be addressed,” he said. “We’re using standards indicative of this utility… Not having a cost of service is like flying an airplane in the fog without instrumentation.”
He also called for available power to be reserved for more segments of the economy. As Grant PUD builds a higher-capacity transmission system, he said, it needs to remain mindful of agriculture, the backbone of the county’s economy.
Nine representatives of Grant PUD businesses, mostly big industry, but also Big Bend Community College and smaller companies, spoke to commissioners about the need for gradual, predictable rates. They pointed to the benefits they bring to an ag-dominated region, citing jobs created, tax revenue generated and diversity added to the economy. They expressed willingness to continue to work with the commission and the ag sector to create a rate-setting structure that reflects the Grant County economy but ensures an electric rate that allows them to remain competitive.
“We have to hear from you,” Commissioner Terry Pyle said. “Come talk to us. We’re certainly not going to agree on every point, on every side. It’s our job to come up with the best solution we can.”
Hear the full conversation at 7:30:00 (commissioners’ comments) and 2:44 (public comment) on the commission audio.
Power Delivery exceeds power-outage metrics
Grant PUD’s Power Delivery team is exceeding goals for duration of power outages and also for how often power is available to customers, stated Ron Alexander, Managing Director of Power Delivery.
Power Delivery has a goal of less than 100 minutes for an average outage as measured by the System Average Interruption Duration Index (SAIDI) and another goal of 0.75 on the System Average Interruption Frequency Index (SAIFI). The average dropped to 69.93 minutes in September for SAIDI and to 0.469 for average interruptions per customer per year on SAIFI.
"Fortunately, Mother Nature has been kind to us, and we have not experienced many big issues,” Alexander said. “At the same time, the work all our crews are performing, the power quality effort, and our maintenance programs have added to this outcome.”
He added that his team will look at raising the bar on the goals next year if there is a track record of success at achieving the present targets.
— Unanimously approved property and liability insurance policy renewals with rates 15% higher due to inflation and insurance company’s wildfire concerns. Hear the full discussion at 1:57:54 on the commission audio. This item was expedited for a vote this week via Motion 3457 (39:49:00 on the commission audio).
— Unanimously approved a $4.1 million, 5-year renewal of the Microsoft Enterprise Agreement for cloud-based software services. The agreement replaces an expiring 3-year agreement and includes cost savings due to its longer term. See the full presentation on pages 17-20 of the presentation materials. Hear the discussion at discussion at 1:50:44 on the commission audio. This item was expedited for a vote this week via Motion 3458 (3:40:57 on the commission audio).
— Approved a resolution to refund Electric System bonds to a new long-term, fixed-rate bond series. The refunding has the potential savings to the district of $6.56 million in interest and the cost of issuance of bonds over shorter terms. For more information, see pages 8 to 60 of the commission packet. Hear discussion on the commission audio at 3:38:14.
— Approved a three-year contract with Portland General Electric for a 20% slice of the Priest Rapids Project output. The slice contract means that Portland General Electric will receive a 20% share of the Priest Rapids Project’s energy, capacity, pondage, ancillary services, plus carbon-free attributes. PGE will also incur their share of the risks associated with low water inflows into the Priest Rapids Project, capacity restrictions, project spill, minimum generation requirements, and any operational limitations on the project ponds. In exchange, PGE will return power back to help Grant PUD meet the needs of its retail customers, plus a premium for ancillary services provided by the Priest Rapids Project. By doing the slice sale, Grant PUD protects itself from risks associated with hydropower production, plus captures a premium for the Priest Rapids Project’s favorable attributes. For more information, see pages 61 to 110 of the commission packet. Hear discussion on commission audio at 3:39:02.
— Received a report about the impracticality of using the Jericho Tap route to connect the Wanapum Switchyard to the Mountain View Substation. See pages 137 to 140 of presentation materials. Hear discussion on commission audio at 5:53:58.
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