OKANOGAN A decision on potential rate increases for Okanogan County Public Utility District customers likely won’t be coming this month.
“We’re about 80 percent though the process, but we’re by no means at the end of it,” General Manager John Grubich said. “And when we get close to the end of it, we will have evening public meetings for the commissioners to get input from customers.”
In the utility’s most recent draft of the equity management plan and rate study, presented to the board April 23, the base case scenario called for a 13 percent increase this year and another 13 percent next year to help pay for the estimated $102.4 million in capital projects that are on the utility’s to-do list through 2022.
“It’s just the process we have always gone through since I’ve been here,” Grubich said of the plan and rate study. “Here is the work we plan on doing, here is the revenue we have to acquire if we plan on doing it. The most important thing we try to do is we try to measure cost-causer to cost-payer (and) set the rate to which rate class is driving the cost.”
More alternatives were presented to commissioners during the May 14 meeting by Don Coppock, the utility’s director of accounting, finance and administration.
Utility staff and contracting firm SAIC Energy, Environment and Infrastructure considered options such as increasing the basic charge to $50 per month, implementing one large rate increase rather than two or three smaller ones, and decreasing the rate increases while borrowing from the rate stabilization fund to make up the difference, Coppock said.
“Some of the options considered were suggested by me,” Commissioner Ernest Bolz said. “Before any decisions are made about rates, we have to look at every possible approach for raising capital and meeting operational needs. Indeed, there is a lot to consider.”
The new base case scenario presented last week showed a 13 percent rate increase this year and 12.5 percent next year, with 2.5 percent increases for each of the following three years. That would require the utility to draw $2 million from the rate stabilization fund rather than the $1 million from the original base case, he said.
Another option showed two level increases of 16 percent this year and next, with $1.5 million drawn from the fund. Still another provided for three 9.5 percent increases, followed by one 2.5 percent increase and another 2 percent increase.
In the latter scenario, the utility would have to “rely heavily in the first two years” on the fund, drawing $2.6 million in 2013 and $1.2 million in 2014, Coppock said.
The staff even ran a scenario, upon commissioners’ request, for one large rate increase and came up with 25 percent this year and nothing for the next two years. However, the utility would have to implement another 9.5 percent increase in 2015, he said.
In borrowing from the rate stabilization fund, the utility would pay those amounts back by 2022 to reach the $3 million goal amount, Coppock said.
The commissioners asked for more options to be presented at next week’s regular board meeting.
“We’re just refining that process,” Grubich said. “For instance, (Commissioner) Dave Womack asked for us to run a model to show us what it looks like up to 2018.”
The study will also consider smaller rate increases, such as 8 or 9 percent over the next three years, he said.
Even the suggested 13 percent in the base case scenario last month is smaller than the first draft study presented in December 2012, which recommended two 15 percent increases.
“We’ll probably run two more iterations before we get to a point where we say, ‘OK, let’s have some public meetings,’” Grubich said.
The next meeting will be at 12:30 p.m. May 28 at utility headquarters, 1331 N. Second Ave.
Projects listed in the 10-year equity management plan include construction at Enloe Dam – the utility anticipates a cost of about $35.2 million from this year through 2016 – as well as $17.3 million for transmission, $9.8 million for substations, $24.8 million for replacements and additions, and $15.3 ,million for other assorted projects, according to SAIC’s report released last month.
Enloe’s $35.2 million is expected to be covered with bond proceeds of $64.2 million, with the first payments to begin next year; the other $29 million will go toward general capital improvements. The utility also has about $7.3 million in unspent bond proceeds this year. SAIC estimated about two-thirds of the projects will be funded through bonds.
If the utility approves a 13 percent increase this year, $4.7 million would be generated to cover the total operating costs of $48.3 million, SAIC said.
“I am glad that community members have been included in the process early on,” Bolz said. “At least there are some folks who now understand better the financial needs of a system that is 50-75 years old and in need of updating.”