Manager’s Message – Spring 2018
We had a great turnout for our 96th Annual Meeting on March 20th. It was nice to have the opportunity to meet and speak with many of those who attended. During my presentation, I spoke about a few issues which are causing external pressures upon the utility industry. I wanted to share a little more about these factors as they may contribute to future increased purchased power costs. An example of this is in the form of state legislation and initiatives calling for more stringent renewable energy requirements. We worked closely with legislators throughout our region to educate them on how these measures would affect their constituents. As a result, Governor Inslee did not have the vote support necessary to get his carbon tax bill (SB6203) out of the state senate this year. A similar carbon tax measure has already appeared on the November ballot as Initiative 1631. Part of I-1631 imposes a carbon tax, which increases each subsequent year, for every metric ton of carbon produced.
Fortunately, we live in a region where our primary source of purchased power already comes from a carbon- and emission-free resource, hydroelectricity. Despite the Bonneville Power Administration’s (BPA) biennial rate increases, WA State still has the second least expensive power prices in the US. Hydroelectric power is also the most reliable and cost-based power available to you and I as end users. BPA balances a very small mix (less than 6%) of their power generation from fossil fuel production. This portion would be subject to the taxation of I-1631 if it were passed by the voters. Since BPA passes on all ancillary charges to its customers, this would increase our purchased power costs and therefore could increase rates accordingly. Be sure to stay informed on this issue and exercise your “voice” by voting on November 6th.
Another external force is the implications of the 2016 Judge Simon Decision and the resulting overspill management of the dams. Last week the Ninth Circuit US Court of Appeals upheld the lower court’s decision, so BPA will be enacting its overspill protocol over the next four months. Overspill means that they allow additional water through the spillways without going through the penstocks and turbines to generate power. The total cost of this is $40 M and LLP’s portion of that charge will be $180,000. We absorbed the charge last year, but it too may impact future rates.
Lastly, In our summer newsletter we will have a new section called “Ask John”. This will provide an opportunity for members and customers to submit questions to me. I will select 3-4 questions each newsletter and respond with answers.