What is a System Impact Fee?
Based on the feedback we received during the Strategic Plan, that customers want to encourage economic development while keeping rate impacts low, Chelan PUD has proposed a system impact fee to new customers, which will help offset the cost of new infrastructure.
The system impact fee is designed to share the cost of the new substation by assuming that 20% of the substation will be used for system reliability, and the remaining 80% will support new load added to the system. That means Chelan PUD will be responsible for 20% of the cost of a new substation, which is funded through wholesale surplus power sales. The other 80% will be recovered via existing retail rates (there are no rate increases included as part of this proposal) and the proposed system impact fee for new customers.
System Reliability Benefit
Ideally, a substation’s capacity is capped at 80%. We leave the remaining 20% available so that power can be rerouted from other substations to keep the lights on during an outage or maintenance. Having that capacity available is a benefit to system reliability for all our customers.
Considering the county’s growth assumptions and the PUD’s average cost of constructing new substations and related infrastructure, staff arrived at a marginal cost to assess new customers when they connect to the system. The proposed system impact fee has the potential to generate about $1 million annually, based on historic growth rates.
New customers will pay the system impact fee as part of the residential or commercial connection process.
For example, if John is requesting a new single-phase, 400 amp electrical service. Under our current fee structure, John would pay a total of $2,800 for the new service. If the system impact fee were implemented, John would pay a total of $4,095.
We believe the system impact fee will provide the best value, for the most customers, for the longest time by supporting growth in Chelan County while minimizing impacts to existing customers.