|
|
Doug Bechtel
|
|
If you have been following the regional news, you have heard that BPA has finally announced their proposed 1996 electric rates. I say "finally" because these rates were originally scheduled for release last February. If you will recall an OPALCOGRAM I wrote at that time, there were so many unresolved issues with BPA's customers (utilities like OPALCO) and the cost of power from alternative suppliers was falling so rapidly that no one was sure they would even buy power from Bonneville. Since 85% of Bonneville's expenses are independent of the amount of power they sell, even a small sales loss would have a major impact on BPA's rates.
In February, I was really concerned that our rates would skyrocket. BPA was talking about an 8% or 9% rate increase plus other rate changes that could have driven our rates up 25%. All at once BPA realized that they would not have any customers if this happened. BPA asked for and almost every customer agreed to a one year 4% increase effective October 1, 1995, to give BPA time to look at what they could do to reduce rates and remain competitive.
BPA did a good job on many fronts to get their costs under control. They reduced conservation spending by $200 million per year by transferring that responsibility to the utilities. They have agreed to reduce staffing by 20%. Several special rates (discount for irrigation sales, low density discount, payments to investor owned utilities) were eliminated or significantly reduced. Like any other budget cuts, those who benefited from the programs objected to the cuts. Eastern Washington farmers who irrigate their crops will be hard hit. Utilities like OPALCO with high costs or a low number of customers, will also be impacted through a reduction of the low density discount.
If you have been reading the Seattle newspapers you have read about the $135 million reduction in the Residential Exchange Program. You and I pay for this program through our payments to BPA. The money is paid to the investor owned utilities like Puget Power, so they can keep their rates down. Not too fair when you consider the investor owned utilities already have rates far below ours.
BPA's current rates change seasonally (cheaper in the summer) and diurnally (cheaper in the middle of the night). Their proposed rate structure is so complicated it is almost impossible to understand. The only way to understand how the new rates will affect OPALCO is to take a past year and recalculate the bills. While the average BPA utility customer will see their rates decrease by 11% (after going up 4%), our rates will decrease by 17%. This would translate to an 8% to 9% decrease in the rates we charge you (in October 1996). Even more important, BPA has offered to keep these rates constant for five years (until October 2001).
Remember, these are only proposed rates. There is a long process before they become final. There will not be many changes that benefit us more than the initial proposal. Our efforts will be to hold the gains we have made.
More on this as the rate case unfolds.
Doug Bechtel
|