Commissioners discuss changes for resolution driving current rate policy

Grant PUD commissioners discussed possible changes to the rate-setting policy outlined in Resolution No. 8768 during their board meeting June 12 (10:00 in the recording).

Resolution 8768, which was passed May 12, 2015, outlines which customer class would receive "core" or preferential status when it comes to being first in line for the benefits of Priest Rapids Project power and also the eventual bands of how much each customer class would pay above and below their cost of service.

Under the resolution, core customer groups first in line for Priest Rapids Project power benefits include residential, general service, irrigation and large general service.

Industrial customers with loads greater than a yearly average of 10 megawatts would have to pay any extra costs if Grant PUD has to rely on additional power resources to serve its Grant County customers. The resolution also states that by 2024, no customer class would pay more than 15 percent above Grant PUD's cost to serve nor less than 20 percent below the cost of service.

Resolution 8768 calls for residential and irrigation customers to receive the largest subsidy at 20 percent below cost by 2024, with general service customers receiving any remaining subsidy. Large industrial and other customer groups would pay no more than 15 percent above their cost-of-service by 2024.

Residential customers' rates are currently at 27 percent below their cost to serve. Irrigation customers pay 35 percent below their cost to serve. The current policy means rates for these groups will continue be adjusted each year until they reach the 20-percent-below-cost threshold in 2024.

Commissioners Terry Brewer and Bob Bernd both stated that they didn't think the resolution perpetually locked in the percentages that customer groups would pay above or below costs to the 2024 targets.

Brewer said he would like to see if it is possible to bring the groups paying above cost of service to move closer to costs rather than always stay at 15 percent above.

"With the boundaries being what they were intended to be at the end of the 10-year window … with the main emphasis on the (rate) schedules 1 and 3 getting the major benefit as the core customer group," Brewer said. "I didn't ever understand that we intended to push the industrials to the max 15-percent above costs. It bears the discussion."

He later added that he would like to see the residential and irrigation customers always stay at the 20 percent subsidy but he wasn't sure that would be realistic, while at the same time keeping industrial customers at the 15-percent-above-cost threshold if rates have to be increased overall annually.
"That was intended to be the maximum below and above and to get everybody within that bandwidth," Bernd said, adding that the subsidy may have to be adjusted at some point to less than 20 percent below costs after 2024.
Commissioner Flint said he would like to see the "birthright" preference for residential and irrigation customers be greater than 20 percent below cost.

Many agriculture activities are in the general service category, Flint said, and Larry Schaapman agreed. They said commissioners and staff should consider creating an additional customer class for those activities so they can receive a benefit similar to the irrigation customer class. Brewer said he believed that's something the board should look into doing.

General Manager Kevin Nordt said staff is planning to update the cost of service analysis and present it to the board for future rate policy considerations.

Brewer appointed an ad-hoc committee of Schaapman and Commissioner Dale Walker to be involved with staff as they participate in the process to evaluate request for proposals and in the selection of a rate design consultant.