Snohomish residents could see power rates rise more

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Snohomish County residents, still recovering from a recent 33 percent leap in their power rates, could see them soar another 33 percent in January under a new Bonneville Power Administration contract.

Commissioners for the Snohomish County Public Utility District (PUD) this week voted 2-1 to approve a new five-year contract with the BPA, effective in October. The PUD's staff estimates the new contract will allow the district to partly offset next year's rate increase by reducing rates 18 percent in 2003.

Rates are expected to remain stable the remainder of the contract's term.

For the PUD's typical residential customers, next year's increase would equate to a $28 increase in monthly power bills, which now average $112.50, said utility spokesman Neil Neroutsos.

The projected 33 percent boost in rates assumes that the current water shortage won't be offset by rains this spring and summer. If there is no shortage, next year's increase could be as low as 6 percent, according to the PUD staff.

Under the new contract terms, the PUD's overall power costs will depend upon Bonneville's fluctuating supply of hydroelectricity coupled with open-market power prices. That's because when Bonneville finds itself in a power shortage, the PUD will have to look elsewhere for electricity. Conversely, if Bonneville in the future has a surplus, the PUD will be able to sell some of that on the open market.

Commissioner Kathy Vaughn voted against the contract because she dislikes the risks involved. "You get the good, the bad and the ugly" with that plan, she said.

She preferred another contract option, similar to the PUD's current Bonneville contract, in which the BPA simply charges the PUD a flat rate.

PUD analysts predicted Vaughn's preferred contract would require a 22 percent rate increase in January, followed by a 4 percent drop in 2003.

Depending upon how much rain falls on the region in coming months, the contract approved Tuesday could save the PUD up to $187 million over Vaughn's preferred plan, PUD analysts estimated.

Under either plan, the PUD would buy about 80 percent of its power from Bonneville next year, up from its current 50 percent.

That represents a return to the PUD's earlier dependence upon Bonneville. In the early 1990s, the PUD bought 80 percent of its power from the federal agency.

But the power industry changed drastically after then-President George Bush signed the Energy Policy Act. That allowed power companies to sell electricity on the open market by delivering power over other utilities' lines.

Beginning in 1995, the PUD started buying more power from other sources. That year, it purchased only 45 percent of its electricity from Bonneville.

Now the pendulum has swung back.

Diane Brooks can be reached at 206-464-2567 or dbrooks@seattletimes.com.