Goal of recommended rate and upfront charge is to recover cost of service over time
Chelan County PUD commissioners Monday heard staff’s recommended rate design for high density loads (HDL) such as data servers, block-chain and bitcoin operations and continued the hearing on the rate until 1 p.m. on June 20 at their next business meeting.
The proposed rate, based on board guidance provided in March, would apply to technology operations with an average electrical load up to and including 5 average megawatts at a single meter. The proposed rate would apply to businesses likely to have an energy use intensity of 250 kilowatt hours per square foot per year.
Lindsey Mohns, Customer Utilities business adviser, said goal of the rate recommendation is to recover the cost of service over time. Staff recommends a rate that covers the production cost of the energy, plus full recovery of customer and delivery costs. In addition, there would be an upfront charge of $190 per kilowatt of new or increased HDL load. Other key points include:
- Mitigates risk of increased rate pressure for existing customer classes
- Equates to average costs of about 4.57 cents/kWh plus upfront costs
- Based on commercial and industrial rate class costs
Board members also asked General Counsel Erik Wahlquist for analysis of possible contracts for phasing in the rate for existing customers classified as energy intense users, who are using more than 200 kilowatts and have made substantial capital investments.
Monday’s discussion continued a public hearing on the proposed HDL rate that started on Feb. 1, 2016. Board members and PUD staff have worked on the issue since late 2014 following a spike in the number and size of electric service inquires with the potential for doubling existing load. Commissioners put in place a moratorium on new loads of 1 average megawatt or more on Dec. 15, 2014, later modifying it to cover just high density loads.
A hearing on the moratorium is set for Oct. 3, by which time the new HDL rate is expected to be place.
In other business Monday, commissioners:
- Reviewed philosophy and strategy for managing debt designed to create financial flexibility to support low and stable electric rates – even if financial results are lower than expected. Debt strategy would include continuing to pay down debt, targeting a debt ratio of less than 35 percent by 2019 and beyond and considering possible new borrowing in the mid-2020s, depending on meeting District strategic goals and continued strong finances. Heather Irelan, lead Treasury analyst, said the strategy foresees no need for electric rate increases to meet financial objectives for at least five years, except under financially stressed conditions. It supports continuing the Public Power Benefit as long as bottom line results remain strong, balanced with future commitments. Board members will be asked to affirm the strategy on June 20. It will be used in business planning starting in the fall as part of annual budgeting.
- Reviewed the revised portfolio analysis of the 2016 Integrated Resource Plan that outlines the sources of power needed to supply PUD customers through 2026. It describes the mix of resources from generation, conservation and efficiency and new renewable energy that will meet current and projected needs at the lowest reasonable cost and risk to the utility and its customer-owners. Commissioners will be asked to approve the state-required plan on June 20. Comments can be sent to firstname.lastname@example.org.
- Approved a Temporary Water Right Mitigation Agreement and directed the general manager to execute the agreement as a member of the regional water system under the terms set forth. Chelan PUD is a member of the regional system with the city of Wenatchee and East Wenatchee Water District. Three PUD commissioners voted in favor of the agreement between Crown Columbia Water Resources, a Delaware limited liability company, and the regional system. Commissioners Carnan Bergren and Ann Congdon abstained.
- Heard that an opportunity to improve electric service in Yaksum Canyon and along Mission Creek outside Cashmere will shift planned fiber expansion for those areas to a priority for next year. Mike Coleman, Telecomm and Fiber managing director, and John Stoll, Customer Utilities managing director, said collaboration between Fiber and electric Distribution engineers revealed reliability and efficiency benefits in rebuilding the electric system in those areas before expanding fiber. Stoll said about 265 poles in the two areas are 50-plus years old and in need of replacement in the next five years. This change will provide both improved electrical system reliability as well as fiber access in a single project. The broadband network follows the same path as PUD power lines. The Cashmere-area work for this year will shift to the so-called “doughnut hole” along Olive Street and Blue Star Way, in addition to the new access being built on Tigner Road.
- June 17 – 7 p.m., PUD Night at the Wenatchee AppleSox
- June 20 – 10 a.m., commission meeting, boardroom
- June 20 – 1 p.m. , public hearing on High Density Load rate, boardroom
- June 20 – 1 p.m., public hearing, 2016 Integrated Resource Plan, boardroom (following the HDL hearing), boardroom
- June 28 – 6 p.m., community update on Bavarian Substation, Leavenworth City Hall
- July 4 – Holiday, PUD offices closed
- July 4 – 3-10 p.m., Independence Day Celebration, PUD’s Walla Walla Point Park
- July 5 – 10 a.m., commission meeting (moved to Tuesday due to the holiday)
- July 18 – 10 a.m. , commission meeting