Central Electric Co-op raises rates in Ocober
Central Electric Cooperative has announced that due to a 56 percent wholesale rate increase imposed by the Bonneville Power Administration, it will raise its overall rate for all customer classes 20.3 percent, effective with the October billing.Al Gonzalez, president and chief executive officer of the Redmond-based utility, said the co-op regrets imposing the rate increase-its first since 1984-but that it had no other option.
"The 'good old days' of infrequent and relatively small rate increases from BPA are probably gone forever. Extreme price fluctuations in the cost of electricity will be the order of the day for as far into the future as anyone in the electric utility business can see," he said.
The new rate structure, which was ratified by the co-op's board of directors after joint meetings with the co-op's Rate Advisory Committee, calls for a 23.3 percent increase for its average residential customer, a 9.9 percent increase for its average commercial/industrial customer, and a 42.3 percent increase for its domestic irrigation customer. A new rate for agriculture irrigators will be established next spring.
Central Electric serves about 25,000 accounts in its 5,300 square mile territory. Of the 25,000 accounts, more than 21,500 are residential customers.
Gonzalez warned that the new rate could be in effect for as little as six months, due to a special clause in its contract with BPA. "Our new 10-year contract specifies that BPA is entitled to adjust its rates up or down every six months, depending on its financial situation. Given water conditions and other factors, we wouldn't be surprised if rates went up again in the spring," he said.
The 56 percent BPA rate increase to Central Electric is greater than the 46 percent increase announced earlier because of the variety of contracts BPA is signing with more than 80 utilities in the Northwest. "We're a 'full-requirements' customer who will buy 100 percent of our power from BPA, but we're also one of dozens of utilities who are also customers. Customers will have the opportunity to sell any surplus BPA power created during the 10-year life of the contract."
Gonzalez also said a special "cost-of-service" study commissioned from an independent rate consulting firm, determined that the rates currently applied to all three customer classes served by CEC should be revised.
"The study showed that our actual costs of providing service to the various customer classes has shifted a lot and our rates need to reflect that," Gonzalez said.
"The irrigators on our system are already having a difficult time because of the increase in other energy costs and falling prices for many crops," Gonzalez said. "The study made it very clear, however, that we had to increase the rates significantly to irrigators in order to ensure parity among all three classes. Almost all of our irrigators are also residential customers, so they are aware of the historic reasons for the difference in rates."
Until recently, the actual cost of electricity used in the summer for irrigation pumping was considered low-cost "surplus," the same as that normally sold by BPA to California to assist with that state's summer air conditioning load. BPA is legally bound to sell its generation at the actual cost of production at federal generation facilities.