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Commission Report - Near Historic Cold Affects Mason County Energy Consumption

Commission Report - Near Historic Cold Affects Mason County Energy Consumption

by Mason PUD 3 on

January 31, 2017

PUD 3 staff shared a presentation regarding winter bills at the January 31 commission meeting.

Winter Bill Briefing for Mason PUD 3 Commission
Issues to be Covered in This Briefing
What is a PUD?

Public Utility Districts were authorized in the early 1930’s by a vote of the people on Initiative 1. All PUD 3 services are delivered at cost. There is no profit markup as is allowed by the state for other utilities, such as Puget Sound Energy. PUD 3 is governed by a three member elected board, which sets policy and rates. Nearly all of the electricity used by PUD 3 customers is generated at dams in the Columbia River Basin, and sold to us by the Bonneville Power Administration. These purchases represent nearly half the operating budget of the PUD.

Signs and Warnings of Cold Weather and its Effects on Power Bills Were All Around Us

Signs and Warnings of Cold Weather and its Effects on Power Bills Were All Around Us

Signs and Warnings of Cold Weather and its Effects on Power Bills Were All Around Us

Signs and Warnings of Cold Weather and its Effects on Power Bills Were All Around Us

Signs and Warnings of Cold Weather and its Effects on Power Bills Were All Around Us

Signs and Warnings of Cold Weather and its Effects on Power Bills Were All Around Us

Signs and Warnings of Cold Weather and its Effects on Power Bills Were All Around Us

Signs and Warnings of Cold Weather and its Effects on Power Bills Were All Around Us

PUD 3 Rates and Budget Driven Primarily by Wholesale Costs from Bonneville Power Administration

The most recent rate increase, a response to a hike in BPA wholesale rates, occurred October 1, 2016. There is no increase included in the adopted 2017 budget. Rates do not change seasonally, however energy consumption does. There are no time of use rates, and none are anticipated. Mason PUD 3’s rates and budget have followed the trend lines of BPA rate increases and inflation.

Rates for Selected Utilities Bordering Mason County & Located in Western Washington State

Franklin Delano Roosevelt saw public power as two sticks. On one hand, they were a birch rod that regulators could use to force private utilities companies to behave and charge fairly. On the other hand, he saw public power as a yardstick, whereby the prices and services of private utility companies could be measured to ensure they were fair. The Utilities and Transportation Commission sets rates for private power companies to ensure that services of regulated companies are safe, available, reliable and fairly priced. The UTC uses public power rates to set a baseline for their evaluation. If current rates of, say Puget Sound Energy, are considered fair after examination by the UTC, how does that utility measure up when compared to Mason PUD 3?

Comparative Rates for Three Levels of Energy Use

These calculations do not include local and state taxes. Taxes vary between customers served by cities and those who are located in in unincorporated areas of a county.

About two thirds of Mason PUD 3’s budget goes to power purchases, mostly out of the PUD’s control, and taxes and depreciation; also not under the Utility’s control.The PUD has received clean audits for the past 37 years from the Washington State auditor for its financial management and meeting the requirements of state law over its operations.

Electricity is a Commodity, Like Other Fuels

Electricity is a Commodity, Like Other Fuels

What Makes Up a PUD 3 Bill

Daily system charge. Anyone aware of last night’s Mission Creek Road outage. This is one of the services covered under the daily charge. Including maintenance of the power system, keeping it ready to serve for full-time and vacation home residents. Having people ready in operations, engineering, customer service and support roles. Energy Charge. Buying energy from BPA, meeting Energy Independence act requirements ($1.9 million last year, will be higher this year). This includes power purchases and conservation programs. The percentage of qualifying renewable energy as a part of power purchases went from three percent (3%) last year, to nine percent (9%) this year. By 2020 that level will be 15 percent (15%).PUD 3 purchased 8 million more kilowatts of energy in December 2016, compared to the previous year, to meet customer demands for electricity.

The Daily System Charge

Many rural utilities design their rates to balance the cost of service for full-time residents and vacation home customers. The result is usually lower per kilowatt-hour rates and somewhat higher system charges when compared with more urban areas. Most of the utilities on the Olympic Peninsula have a similar rate structure for the same reason. Some utilities have a lower system charge and higher kilowatt-hour charge (Puget Sound Energy, Seattle). That’s mainly because they have a much larger commercial/industrial base to guarantee revenue from and a much lower seasonal customer effect. We have a large percentage of vacation homes (about 25 percent). We conducted a study that suggested a higher daily charge and lower per kilowatt-hour rate spreads the cost more equally among seasonal and full time residents that make the system “ready to serve”. Think of the system charge as a “ready to serve charge.” Regardless of the amount of electricity a customer uses, or when, they assume that the service will always be available when they are ready to use it. This helps share costs across all customers; full-time and seasonal.

The Energy Charge

The energy charge is what you pay for the commodity, the per kilowatt rate. Similar to buying gas by the gallon. It’s directly tied to a customer’s use. The wholesale rate is set by the Bonneville Power Administration. BPA has made three consecutive and significant hikes in its wholesale rates. In addition to 2015’s seven percent increase, the federal power-marketing agency implemented a nine percent (9%) power rate increase in 2013, and a 7.8 percent increase in 2011. Overall, BPA has increased its wholesale energy prices 29 percent since 2008.

Nearly Record Cold Weather

Coldest December since 2009, and fifth coldest start of January in 70 years! Measurement of heating degree days showed customers' heating systems were working overtime to keep home interiors at a constant, comfortable temperature.

Heating Degree Days
PUD 3 Has Programs to Help Customers with Conservation and Bill Concerns

PUD 3 has many programs and services to help customers with energy conservation and bill concerns.

pud-3-crews-in-the-snow.jpg(SHELTON, WA) – Mason PUD 3 commissioners this week (1/31/2017) learned that near historic cold temperatures resulted in higher than usual winter bills for customers, and a big jump for energy needed to meet those power demands.

In December 2016, PUD 3 purchased an additional eight million kilowatt hours of energy compared to the previous year to meet customer demands for electricity.

Justin Holzgrove, PUD 3 engineering services & community relations manager, told commissioners that December 2016 was the coldest since 2009. Holzgrove noted that January was Mason County’s fifth coldest start in 70 years. He said 11 of 15 days in the first two weeks of January were at least 20 percent colder than normal; in some cases 56 percent colder.

Mason County residents lavishly documented the intensity of December and January’s cold weather. Local pictures of deep snow and frozen lakes are liberally sprinkled online.

Because of the cold temperatures, many PUD 3 customers had heat pumps, furnaces, and space heaters working overtime to keep up with heat lost to frigid outside temperatures. It’s also likely many woodpiles were shrinking as residents used up fuel stored away for times like this.

Joel Myer, public information and government relations manager, stated that some customers had expressed concern about their winter bills. Several customers were at the meeting to express their concern about their bill. Myer said energy use due to bitterly cold temperatures is the primary culprit with this season’s heating bill. He said the local price of electrical service does not change with the seasons, but patterns of consumption do.

Myer said that each home or business has different energy efficiency levels, different preferences of heating or cooling for comfort, and therefore consumption levels vary widely during temperature extremes.

Mason PUD 3 has programs to help customers with their bills, including energy conservation advice and assistance.