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PUD 3 Commission Adopts 2022 Budget and Rates

PUD 3 Commission Adopts 2022 Budget and Rates

by Mason PUD 3 on

November 24, 2021

Mason PUD 3 adopts a $88.4 million budget for 2022, which includes a rate increase due to impacts from the COVID-19 pandemic, increasing mandates, and system growth.

On November 23, 2021, Mason PUD 3 Commissioners adopted a $88.4 million budget. The proposed budget includes a $0.15 increase in the system charge as well as an energy rate increase of three percent (3%) for residential customers. The adopted budget takes a conservative approach based on the evolving economic impacts of the COVID-19 pandemic, the increasing capital needs of the utility to respond to community growth, while also prioritizing the safety and reliability of the local electric grid.

PUD 3 Commissioners conducted two public hearings on the budget and rates on Tuesday, November 9, where public testimony was heard and considered.

2022 BUDGET:

Commissioners and staff developed the 2022 budget with a zero-based approach, meaning every function in the utility was analyzed for its needs and costs. The 2022 budget is 8.4% higher than 2021. However, the increase reflects spending and reimbursement of grant dollars the PUD has been awarded. Accounting for those dollars, the rate funded budget growth is six percent (6%) over 2021.

The 2022 budget sustains the priorities set in the PUD’s five-year strategic plan, as well as considers increasing regulatory requirements and other impacts outside of the utility’s control.

Highlights of the 2022 budget include:

  • The budget reflects a 10.8% increase in transmission rates and estimated decrease of 2.65% in wholesale power rates from the Bonneville Power Administration.
  • The PUD anticipates paying $3.6 million to meet the requirements of the Energy Independence Act. This includes power purchases and conservation programs.
  • Increased infrastructure costs to meet continued customer growth. In 2021 the PUD saw a fourteen percent (14%) increase of new service applications over 2020 and anticipate a similar trajectory in 2022. The rapid nature of this growth requires upfront costs to plan, design, and prepare for infrastructure such as substations and transmission needs to meet ongoing community and system growth.
  • In 2022, the PUD will invest $1.2 million for the continued implementation of the grid-modernization project, which includes a SCADA network for grid monitoring, control, outage restoration and system optimization.
  • The COVID-19 pandemic has intensified the need for faster deployment of high-speed broadband to our community. Much of 2020-2021 was spent juggling priorities to meet the increased demands for broadband.  The PUD will continue to apply for state and federal telecom grants and will focus on making significant progress in 2022 on the grants already awarded. Additionally, the PUD will be performing system maintenance to its fiber optic network by upgrading capacity, installing distribution huts, and creating access points while working in areas with legacy fiber plant to allow customers to connect to the existing network more easily.
  • Costs for PUD’s pole inspection and treatment program (set up on a ten-year cycle) to ensure continued safety and reliability.
  • With the COVID-19 pandemic, there have been significant increased costs to the utility for inventory, material, and other goods. Supply constraints and impacts due to these extensive delays, further compounds the rising costs.

To partially offset some of the increase in costs, the PUD is using the remaining 2010 bond funds for capital expenses such as the SCADA system and infrastructure builds. The PUD also raised pole attachment rates in 2021 to assist in recovering increased costs for maintenance of its pole inventory.

RATE INCREASE DETAILS:

The residential rate increase includes:

  • A three percent (3%) increase in kWh rates; and
  • A $0.15 increase in the system charge.

Based on 2,000-kWh use, the residential rate increase amounts to approximately 4.68% over 2021 rates, while the increase to qualifying customers participating in one of the PUD’s low-income discount programs is about 2.94%.

The small commercial rate increase includes:

  • A four percent (4%) increase in kWh rates; and
  • A $0.15 increase in the system charge; and

The industrial rate increase includes:

  • A $0.50 increase in the demand rate.

The rate increases will go into effect with meter readings on or after January 1, 2022.

To help families financially impacted by the COVID-19 pandemic, the PUD continues to make long-term payment arrangements for customers with arrearages, connect customers with the various sources of funds available for help with utilities, and direct customers to take advantage of the PUD’s Project Share fund. Additionally, the PUD partnered with Mason County to distribute $300,000 of CARES Act funding to qualifying customers impacted by the pandemic who successfully applied for the help through the PUD.

Low-income senior citizens and low-income disabled customers may qualify for a discount that waives the system charge on their bills.

PUD 3 will be conducting financial analyses throughout 2022 as part of an ongoing process to ensure its rates support the most reliable, economical, and safest service possible for its customers.