Meeting recap: Commissioners cautious of carbon-tax proposal

Commission meeting recap Feb. 13, 2018

Even in light of the shorter 60-day legislative session, it has proven to be a busy and jam-packed scene in Olympia. Wednesday (Feb. 14) is the cut-off day for a proposed bill to make it out of their respective committees. Any bill that doesn't pass committee by 5 p.m. Wednesday is considered dead for this legislative session. (Recording time stamp, 2:25:55)

Andrew Munro, senior manager of External Affairs, provided commissioners with a 2018 state legislative update. Most of his comments centered on the Governor's Carbon Tax Proposal. Senate Bill 6203, as requested by Governor Inslee, addresses the reduction of carbon pollution within our state. Munro noted that this bill is one that has had lots of attention and input from utilities throughout the state in hopes of making it as favorable as possible for the industries and customers we serve.

"We haven't said we support this and that we are ready to jump on board, but what we are doing is trying to improve (SB 6203) as much as we can," said Munro.

Munro is encouraged by how responsive the bill's sponsors and the governor's staff have been to suggestions from Grant PUD and other utilities. He said he sees the revisions that have taken place within the bill as a promising step in making the bill workable. Munro cautioned that if this bill doesn't move forward in the legislative process, other potentially less favorable bills could take its place, including a proposal to increase the state's current Renewable Portfolio Standard.

As of Feb. 13, some of the key provisions worked into the bill include:

  • Tax rate of $10 metric ton down from $20 metric ton.
  • The ability for consumer owned utilities to claim a credit, up to 100% of the tax owed, if the revenues collect are invested in a commission approved Clean Energy Investment Plan.
  • Tax exemptions on fossil fuels and electricity sold to or used by ag-food processors, off-road diesel for farmers, energy intensive trade-exposed industries.
  • The inclusion of netting language to ensure electricity transmitted through our state that is not produce or consumed in the state are netted out and not taxed.
  • Preemptive language that negates the carbon tax if there is an expansion to the Renewable Portfolio Standard.
  • Provisions created for rural economic development and rural broadband.

All of the commissioners where appreciative of the efforts that have gone into this year's legislative efforts. A few voiced their overall concern with a potential carbon tax bill.

"I appreciate you trying to make the best deal for us. Our challenge is to come through it as the best we can," said Commissioner Tom Flint. "It's all the unintended consequences that come back to bite you. I think we need to do the best we can with the hand of cards we have been dealt."

"I think you are heading in the right direction because whether you like it or not we are probably going to end up with a carbon tax," said Commissioner Dale Walker.

General Manager, Kevin Nordt added that, "We aren't looking to be trailblazers with this potential bill. The path we've taken isn't to argue that you should do it as much as to try to provide caution and determine how we can craft it to be as least harmful as possible."

There are still concerns with the potential legislation. Namely that a proposed July 1, 2019 implementation date is problematic as it doesn't provide much time to work out complicated rule-making issues. Munro and his team will keep the commission informed as to what transpires with SB6203, as much can happen in the days we have left in the 2018 legislative session.

Other noteworthy bills: House Bill 2555 sponsored by Representative Dent and Senate Bill 6384 sponsored by Senator Warnick would provide the director of the Department of Fish and Wildlife (DF&W) with the authority to issue permits to the Wanapum to catch sturgeon and other freshwater food fish for ceremonial and subsistence purposes. Other tribes have this authority. It does not give them the authority to fish commercially. This bill is currently in the Senate and House Rules Committee. Floor action is anticipated very soon.

Other Commission Meeting Highlights:

Public comments cover various topics- (3:03:00)

Marvin Price took time to share his issues and concerns with the commission regarding the proposed rate increase. His request was for the commission not to raise rates and asking them to look at other alternatives such as accessing the cash balance on-hand to offset the need to raise rates. He also asked the commissioners to take a closer look at the cost of service among the various rates classes.

Sharon Hastings of Ephrata and Deb Murphy of Royal City jointly presented to the commission the efforts they are pursuing on behalf of the Fiber Active group, which has proposed creating an external advisory board. The group will provide input to the commissioners as the PUD looks to move forward with its expansion of the high-speed fiber optic network. Their hope is to have an advisory board consisting of five members representing various geographic/industry sectors throughout the county. They are communicating with Grant PUD staff to refine the details. The group hopes the advisory board will provide support to the commissioners and keep momentum of the expansion going.

Glenn Stockwell thanked the commission for their previous support of his proposal to federal lawmakers to complete the Columbia Basin Irrigation Project. He said interest is there but more work needs to be done. He encouraged commissioners to continue positive conservations with federal representatives.

Commissioners Discuss Potential Rate Increase (3:42:10)

In a follow-up to the Jan. 23 public meeting regarding potential revisions to customer rate schedules, commissioners discussed the proposed changes and the feedback they have heard from the public.

The potential increases would raise rates among most customer classes. It would equate to an overall 2-percent increase in electricity rate revenues. If approved by commissioners the proposed increases would go into effect April 1.

Commissioners agreed that keeping the district financially strong is paramount for current and future customers.

Commissioner Tom Flint said Tuesday, "I'm not saying we don't want the district healthy or we don't need rate increases. I'm just saying the way we have allocated it has not reaped the satisfaction level we had hoped."

In 2015 Commissioners approved a resolution that would eventually align rates within each customer class to more closely match their respective cost of service. The target range within the resolution is to ensure no customer class pays more than 15 percent above its cost of service nor 20 percent below.

Currently Grant PUD's core classes (residential, irrigation and general-service commercial customers) are operating at below the 20 percent cost of service level. While the large industrial customers are paying more than 15 percent their cost of service. The approved approach would align all of these rates to fit within the targeted range through small and predictable increments over time.

Commissioners discussed the challenge of balancing the amount of cash the utility has on hand to help ensure the district can secure the best financial rating to keep borrowing rates low versus doing what they can to avoid an increase in electrical rates for customers.

It is anticipated that commissioners will vote on the proposed rate changes at their next commission meeting on March 13.

Transformer purchase

-Unanimously approved Virginia Transformer Corporation's bid to supply power transformers to the District. The $19.5 million contract was structured to meet current customer service requests and anticipated growth over the next five years. Nine companies responded to the open bidding process. Power transformers are used in substations to convert transmission-level voltages to lower distribution-level voltage. Each substation requires at least one transformer. The first two transformers purchased under this contract are scheduled to be installed at Mountain View substation.

Injury-accident claim

-Unanimously approved liability claim charges in the not-to-exceed amount of $10,000 to compensate and cover medical costs for occupants of a vehicle struck by a Grant PUD vehicle in October 2017 on SR 243. District policy requires all liability claims in excess of $5,000 be reported to the commission prior to any payment.

Substation contract upped

-Unanimously approved authorizing the general manager to approve a change order in contract 130-4106 with HDR Contractors. The change order would increase the not-to-exceed contract price by $391,238.62 to compensate HDR for unexpected costs during its work to build or refurbish the first seven of eight Grant PUD substations. The district and HDR both anticipate this will be the last change order related to the work on these seven substations.

Contract extended to manage Crescent Bar

-Unanimously approved authorizing the general manager to approve a change order in contract 430-4318 with Central WA Management Group (CWMG). CWMG has managed the operations and maintenance at the Crescent Bar Recreation Area since November 2016. The current contract with CWMG expires on Feb. 28. The change order allows CWMG to continue providing site management of Crescent Bar Recreation Area through Dec. 31, 2018. Construction on the island is slated to be finished by November of this year. The change order increases the not-to-exceed price of the contract by $900,028.80.

Next commission meeting: March 13

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