Rate Hearing April 6th, Increases Proposed
At 5pm on April 6th, Jefferson County PUD’s Board of Commissioners will hold a public hearing to discuss proposed rate increases for water, electric, and sewer services provided by the PUD. The PUD does not provide water and sewer services in the city of Port Townsend.
The proposed increases follow recommendations from a recently completed Cost of Service Study performed by FCS Group on behalf of the PUD. The study, which began in July of 2020 and concluded in December, showed most current PUD service rates did not match the cost of providing the services.
Expenses outpaced revenues for water and sewer services in 2020, and a $400,000 shortfall in net margins is predicted in the 2021 budget. Though the 2021 budget for the electric department is forecasted at $1.6M to the positive, FCS found that current rates would result in the PUD failing to meet required ratios for debt service beginning in 2023.
According to General Manager Kevin Streett, the PUD must raise rates. “Current water rates do not cover the day-to-day costs of providing the service nor the millions of dollars in capital improvements that we know our aging water and sewer systems need over the next few years. On the electrical side, upcoming capital improvements are also a driving factor. Most outages in our county are weather related, but some are due to aging equipment that we cannot improve or replace without adequate capital reserves.”
In reviewing FCS Group’s Cost of Service Study and subsequent Rate Design discussions, the PUD’s Board of Commissioners expressed a preference for a phased-in rather than sharp rate increases to ease impact on the PUD’s customers. Streett has accordingly proposed a program of smaller annual increases beginning in 2021 and extending to 2024.
In Streett’s proposal, electric rates would increase across all classes by 3% in 2021, followed by a 7% increase in 2022, with 3.5 % increases in both 2023 and 2024. If approved, residential electric customers would see a $2.50 increase to the base fee each month for the remainder of 2021, with no increases to consumption charges below 1600kWh per month. Above 1600kWh, a new rate of $0.1143 is proposed in 2021. In subsequent years, consumption rates would rise across all classes.
Water rate increases in Streett’s proposal would increase by an average of 16% across all customer types in 2021, 2022, and 2023, with a smaller 6.75% increase in 2024. Because the average PUD residential water bill is under $40 per month, according to Streett, the effect of a 16% rate increase is an additional $7 per month. The fee would be added to the base rate.
No consumption rate increases are proposed for 2021 except for a limited number of customers in Kala Point. According to Streett, these Kala Point customers have historically paid lower rates than other PUD water customers. Staff is proposing phased-in increases that will bring the rates these particular Kala Point customers pay even with all other PUD water customers by 2022. In 2022 Streett is also proposing the assessment of a $5 capital surcharge for all water customers. “The surcharge is for capital repairs and improvements only. It will show up as a separate line item on customer bills as requested by our commissioners.”