Coming off two of its best financial years, Chelan County PUD is considering gradual rate increases and pouring money into its hydropower system and grid infrastructure during the next five years.
The proposed rate increases in the PUD’s draft 2020-2024 strategic plan would be the first in eight years. Even with moderate hikes, the utility means to keep retail rates among the lowest in the U.S., Chelan PUD General Manager Steve Wright said at the district’s Sept. 3 commission meeting.
“We are committed to having among the lowest rates in the country and strong financial resiliency over the long-term,” Wright said.
The draft plan proposes using Chelan’s current financial strength to keep debt low and invest in its long-term assets. The plan prioritizes spending on hydro system capability and distribution system reliability. Chelan’s hydro projects currently operate at about 70 percent capability. The utility’s goal is to exceed 89 percent. To that end, the utility already increased annual spending on its hydro system starting in 2016.
The draft plan proposes continuing that spending increase. From 2010 through 2015, the PUD spent an average of about $18 million a year. Starting in 2016, that jumped to an average of about $62 million. It wants to maintain that level through 2024.
`The plan also includes incremental rate increases to add some buffer against wholesale price declines. The proposal is to increase the residential rate from 3.2 cents/kWh in 2020 to 3.7 cents/kWh in 2024. That would still ensure Chelan has one of the lowest retail rates in the country.
“Rate increases are proposed not because there is an immediate need, but rather because they are prudent from a long-term planning perspective,” Wright said at the meeting.
Respondents to a Chelan PUD customer survey indicated strong support for preemptive, incremental rate increases.
In addition to increased spending on hydro projects, Chelan PUD plans to roll out smart meters and construct seven new substations during the next five years.
Chelan PUD’s commissioners expect to vote on the proposed strategic plan at their Oct. 7 meeting.
In other business at the Sept. 3 meeting, the board agreed to continue Chelan PUD’s membership in the Northwest Energy Efficiency Alliance through 2024. The PUD expects to save 1.2 aMW per year during that time, and will pay annual dues of about $332,000.