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No rate hike in 2009 Clallam PUD budget

Clallam County Public Utility District's electricity customers received an early Christmas present courtesy of the Bonneville Power Administration.

A $1.8 million credit to settle a long-running lawsuit against Bonneville by 72 of its public utilities in the state means Clallam PUD won't have to increase its electricity rates in 2009.

"We're really excited not to raise rates going into this year. We spent a lot of time on the budget so there would be no need for a rate increase," said Josh Bunch, Clallam PUD treasurer.

"Last year we said there would be a need for rate increases in the future, but the credit from Bonneville will be used to offset our rates. It's a way for us not to have to increase rates to cover costs," he said.

Clallam PUD serves about 28,500 electricity customers in Sequim, Forks and the unincorporated areas of Clallam County, plus the Port Townsend Paper Corp. mill.

The district charges its residential electricity customers a $15 flat monthly rate, plus 6.2 cents per kilowatt-hour of energy used.

So an average residential customer using 1,500 kilowatt-hours a month pays the $15 flat rate plus $93 for daily energy use or a total of $108 a month.

Clallam PUD last increased its electricity rates in April 2008 by an average of 5.5 percent.

Future rate increases had been assumed in planning future budgets but the lawsuit settlement with Bonneville changed that projection.

The district's last electricity rate increase prior to April 2008 was a 22.4-percent hike in September 2001 following the 2000-2001 West Coast energy shortage.

Rates were reduced by 3 percent in April 2002 following a reduction in wholesale power rates.

Clallam PUD's 2009 electricity department budget includes $74.2 million in revenue, including $49.9 million in power sales revenue - virtually unchanged from $49.8 million in 2008 - and a projected ending fund balance of $19.2 million.

That's only $100,000 less than the $19.3 million the district will have in the bank to start the year.

"We try to get it close so we don't have to use reserves, using $100,000 of the fund balance is essentially a balanced budget," Bunch said.

Projected expenses are $55 million including $25.9 million in power purchases from the Bonneville Power Administration. The lawsuit settlement gives the district a $1.84 million refund, making the net power cost $24 million or $3.2 million less than in 2008.

The lawsuit filed in 2001 challenged how Bonneville calculated the "residential and small farm exchange credit."

Approved in 1980, the program provides investor-owned utilities such as Puget Sound Energy with benefits from the hydroelectric system by subsidizing their rates with money from public utilities such as Clallam PUD.

Public utilities sued over the amount of the subsidy - about 13 percent of a Puget Sound Energy customer's monthly bill - and to get back the $13 million they were overcharged over several years.

Along with the credit against 2009 power purchases costs, the lawsuit settlement could include a refund of as much as $750 million over seven years to the 72 public utilities that filed the lawsuit.

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