Benton PUD customers could pay an average 1.5 percent more for their electricity starting in April.
Public utility district staffers are recommending the commission adopt the increase. Meetings are scheduled Jan. 15 in Kennewick to explain to customers the factors affecting power rates.
The rate for residential customers would increase 2 percent. For businesses and institutions that pay the small general service rate, rates would increase 1.4 percent.
All other rates, including for larger businesses, irrigators and industries, would increase 1 percent.
Rates also are going up for Richland city residents this year. The Richland City Council approved an 8.93 percent increase in the residential rate and increases of 7.4 to 20 percent for commercial and industrial rates starting Jan. 1.
The Franklin PUD has not made a decision on 2013 rates.
The proposed Benton PUD increase would be higher, but the PUD plans to spend some of its reserves to cushion the blow.
In addition, the Benton PUD has negotiated a reduced rate by prepaying for power from the Bonneville Power Administration that will result in an average savings for customers of about 0.5 percent to hold the proposed increase to an average of 1.5 percent.
BPA has started a prepay program to borrow money to pay for hydro system infrastructure, and Benton PUD will be participating by paying $6.8 million in March for $9.3 million in credits through September 2028.
However, the Benton PUD still is expecting the BPA to raise rates on the power it sells to the PUD by 9.6 percent.
About 60 percent of the rate increase that will be passed on to the Benton PUD is the result of less money from selling excess power not needed by BPA customers, according to BPA. Energy prices are low in the Northwest because of the abundance of natural gas, according to BPA.
Paying for improvements at hydropower dams also is driving up BPA power rates.
In addition, BPA is expected to increase transmission rates by 13 percent, although that will have a smaller increase on Benton PUD costs. Transmission lines need to be built or replaced, and cyber and physical security need to be increased.
The Energy Independence Act, the result of Initiative 937 passed in 2006, also is increasing Benton PUD power costs. The initiative requires utilities the size of Benton PUD to buy 3 percent of its electricity from qualifying renewable energy sources now and 9 percent in 2016. Hydropower cannot be counted toward the percentage.
As a result, the Benton PUD is buying wind power in addition to the adequate supply of power it already has under contract. It also must pay a higher price for the qualifying renewables than the BPA power it buys.
Benton PUD expects that in the foreseeable future, rates could continue to increase by small percentages annually.
However, even with the proposed rate increase, residential electricity will cost less than it did in 2003, according to the Benton PUD.
If a homeowner was paying $100 a month then and continued to use the same amount of electricity, the bill would have dropped to $80 in 2008 and then increased in recent years to hit $95 in 2012. The bill would be $97 with the proposed rate increase this year.
The Benton PUD has dropped average rates several years since the turn of the new century, but raised rates in 2010, 2011 and 2012. At the start of 2012, residential customer rates increased 5.4 percent.
The Benton PUD will hold an 8 a.m. meeting Tuesday with information for large customers and a 6 p.m. meeting with information for residential and other smaller customers. Both meetings will be at the Benton PUD auditorium, 2721 W. 10th Ave., Kennewick.
The PUD commission could vote on the rate increase Feb. 26.
-- Annette Cary: 582-1533; acary@tricityherald.com
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