Small Town News

Powering Grant Countys future

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Guest Editorial

After six years without a rate increase, Grant PUD Commissioners are considering a four percent rate increase in 2010 to maintain the utility's financial health. To the average residential customer, this means an extra $2 per monthly bill.

The largest drivers for the rate increase include capital projects tied to electric system reliability and growth, the replacement of ageing infrastructure at Priest Rapids and Wanapum dams and the requirements associated with our new, long-term license.

Delivering electricity to Grant County homes and businesses calls for ongoing improvements to power lines, substations and other electrical infrastructure. Since the last rate increase in 2003, Grant PUD's energy load has grown by 31 percent. In that same time, inflation significantly outpaced rates, contributing to the need for an increase.

After nearly 50 years of operation, our dams require significant new investments to rebuild and replace turbines and generators. Combined with measures required in the new license, this means that Grant PUD will acquire $870 million in new debt over the next five years.

This increased debt will place extra emphasis on protecting Grant PUD's AA credit rating. Higher bond ratings mean lower interest rates for borrowed money to fund priority projects. Any reduction in the utility's credit rating will result in added rate pressure due to higher interest rates that could cost Grant PUD an additional $50 to $80 million. These dollars would need to be recovered through increases in power rates beyond what is currently forecasted.

Sound financial health speaks loudly in today's economy. One important measurement of our health is the size of our cash position, that we call our "reserve and contingency fund." These funds reduce risk and insure against low water years, volatile power prices, unstable bond markets and regulatory risk. The effect of just one drought year can cost $50 million in power purchases to make up for reduced hydropower generation at our dams. Grant PUD's $95 million reserve and contingency fund must be maintained and even increased to reduce these risks and protect our long-term low rates.

Raising rates is never easy, but the risks and uncertainties of the alternatives are unacceptable. By adopting this relatively small increase, we are working to avoid double digit rate increases in the future. It's our responsibility and commitment to ensure a financially healthy utility not only our future, but for future generations.



Copyright 2009 The Star, Grand Coulee, Washington. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from SmallTownPapers, Inc.

© 2010 The Star Grand Coulee, Washington. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from DAS.

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