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Higher Cost of Electricity from Bonneville Power Administration Continues to Drive Price of Local Power

Higher Cost of Electricity from Bonneville Power Administration Continues to Drive Price of Local Power

by Mason PUD 3 on

September 27, 2016

An increase in the cost of wholesale electricity from the Bonneville Power Administration is the primary reason for a local rate change for PUD 3 customers. Effective on or after the October 1 meter reads.

(SHELTON, WA) – Local electricity bills will go up on October first in the second phase of Mason PUD 3’s response to higher wholesale energy costs charged by the Bonneville Power Administration.

Last year, Bonneville increased wholesale electricity costs by seven percent (7%), and increased the cost of transporting that power to local customers by 4.4 percent.

The average increase in PUD 3 residential power bills across various levels of energy use will be about 5.5 percent, or about six dollars a month for a typical PUD 3 electricity customer.

The price per kilowatt-hour will go from $.0699, to $.0727. The system charge increases by ten cents per day (to $1.10 per day).

Commissioners adopted the two-part rate plan in October of last year. The second phase of the increase begins with meter reads on or after October 1, 2016.

Qualifying senior citizens and low income/disabled customers may want to ask about available discounts that result in a waiver of the daily system charge from their bills. PUD 3 also has a wide range of rebates and incentives to help reduce electricity consumption. Services include a free energy audit to identify ways to save energy.

Bonneville Power Administration (BPA) has made three consecutive and significant hikes in its wholesale rates. In addition to last year’s seven percent (7%), 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.

Why is the local price for energy increasing?

  • Wholesale electricity prices have increased for electricity and transmission services from BPA: a minimum of 7.1% for wholesale electricity and 4.4% for transmission services.
  • Because of how BPA determines its wholesale power bills, utilities with a high percentage of residential customers experience a greater rate impact than other public power customers. This increases costs for utilities like Mason PUD 3 and PUD 1. BPA customers with large industrial loads do not generally experience as great of an impact.
  • PUD 3 is spending at least $1.9 million in 2016 to meet requirements of Washington State’s renewable energy law. 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.
  • Maintaining a continued investment in PUD 3’s system reliability projects during a time of fluctuating power sales and energy consumption.
  • Increased costs of material, goods and labor.

In announcing its rate increase last year, the Bonneville Power Administration listed reasons that it will be charging customers more for its services:

  • Increased investment in hydroelectric system operations and maintenance.
  • More money spent on fish and wildlife programs.
  • Increased payments to private utilities to settle a lawsuit over rate subsidies for customers not served by public utilities.
  • New rates will affect local retail utilities differently depending on the amount of power and type of services they purchase from BPA.
  • Higher costs of obtaining energy and transmission for BPA’s off-system customers.
  • A reduction in BPA’s long-term firm power sale to Alcoa.
  • New construction, replacement projects and maintenance of the Pacific Northwest transmission system.
  • Payments to renewable energy producers to cut generation during times of high wind and hydropower output.
  • Integrating more renewable energy output into the region’s transmission grid.
  • Meeting requirements for reliability, cyber and security compliance.

Mason PUD 3 includes about 600 square miles of service territory, with nearly 33,000 electricity customers. PUD 3 also operates a wholesale fiber optic telecommunications network, which supports the operation of its electric distribution services.