MILTON-FREEWATER — The time has come to pay the piper. Or, rather, Bonneville Power Administration, which supplies electricity to the majority of households here.
On Monday, City Council members unanimously approved a 15% rate increase for electricity use beginning Oct. 1.
The hike will cost the average residential customer $14.88 more per month, said Mike Watkins, the city’s electric superintendent.
Watkins told the City Council BPA raised its rate by 9% last October, a cost that has been absorbed by the city’s existing rate structure so far.
That increase dovetailed with the expiration of the “Residential Exchange Program” with BPA, a partnership that provided residential and small farm customers of Pacific Northwest utilities with access to low-cost federal power, according to the Portland-based power company.
Cities like Milton-Freewater were able to pass along the benefit to customers as a rate credit on their monthly power bills, helping offset power costs and keep rates stable.
The tab for not passing on rate hikes for power purchased from BPA to customers has equaled about $132,000 every year for the past decade. That’s $1.32 million so far, Watkins pointed out.
His department initially sought approval for a rate increase to offset the loss this past spring, a time of year that calls for less power use and would lessen the immediate impact of higher utility bills, he said.
Then the COVID-19 pandemic hit, Watkins said in the virtual meeting.
“The city decided not to increase power costs at that time, when unemployment rates were high and businesses had to close.”
Officials have been buffering the cost of buying electricity with the city’s contingency funding since then, leaving the coffers in poor shape, Watkins said.
City Manager Linda Hall noted the cash reserve for the electric department, currently sitting at about $500,000, is at the lowest level she’s witnessed in 27 years, and as low as her comfort level allows.
That money is supposed to be doled out for unbudgeted repairs, Hall and Watkins told the Council. On top of that, some big utility expenses are coming down the line, due to aging transformers and power poles.
Related expenses are unpredictable, Watkins said, noting the cost of electrical conduit recently jumped 35% in just one day and transformer prices have increased 117% over the last few years.
Should a substation transformer fail, it will take about $1 million to replace and some nine months to arrive, Watkins added.
“So you would be $500,000 in arrears,” Hall told the Council.
Watkins said the rate increase will stabilize funding for repairs and upgrades for his department.
“We agonized over this one,” Hall told Council members.
“We tried to stave it off as long as we could.”