Electricity rate hike tied into
conservation deal

By Brendan Shriane and Meg Olson

Despite serious misgivings that the Bonneville Power Administration was locking the city into a rate increase, city council directed city manager Gary Tomsic to enter into a complicated conservation deal with BPA - but only after council concerns were addressed.

“They’re telling us how much we have to raise our rates if they get approval to raise theirs,” said city council member Frank Bresnan Jr. at the June 18 council meeting. “I’m not going to sit here and let BPA tell me what I’m going to charge my customers. I don’t see how this belongs in a contract about conservation.”

The sticky clause was part of a rebate plan contract under which BPA will pay Blaine’s 27 biggest power-using customers to save electricity. The targeted businesses represent less than 1 percent of the utility’s customers but use 37 percent of the city’s power. The contract states that if BPA gets the federal go-ahead to jump its wholesale power rates by 88 percent, Blaine will raise retail rates by 38 percent.

“This is an agreement that reflects what we can do,” Tomsic said. “It’s just an assumption, not something they can hang us on. They’re willing to save us and our customers 4.9 percent if we help them make their case with federal regulators.”

BPA will be going to the Federal Energy Regulatory Commission at the end of the month to ask for a rate increase to cover the cost of buying power on the wholesale market. The agency will reportedly ask for a 75 – 100 percent rate increase for the next two years. That rate hike would be passed on to the consumers at utilities like Blaine.

BPA is required to set its rates based on the cost of generating and buying power to meet its contracted customer demand. BPA has oversold power and is now going to have to buy electricity on the volatile open market. The agency is now asking its customers to contribute so it can raise rates as little as possible. “We have a goal as a utility to have a 10 percent reduction,” Stewart said.

“In order for us to reach the 10 percent goal, we need to go after a number of different ways (to save power) – try to get the residents to save, try to focus on our big customers,” city manager Gary Tomsic said.

The rate incentive rebate plan would reward large power consumers in Blaine that can reduce their power consumption more than 10 percent compared to the same month last year. BPA will pay each of the power users that exceed the goal 3.9 cents for each kilowatt hour (kwh) saved. The city would get one cent per kwh to help cover lost revenue and increased administrative costs. The city would have to prepare each bill by hand.

Under the plan, a business that used 10,000 kwh of power last October would get $25 back if it could reduce its power usage to 8500 kwh this October. The city would receive $5. The rebate is expected to last for one year, Stewart said.

Stewart had a meeting June 13 with large users such as the school district, Semiahmoo and the General Services Administration. Those customers were all for the plan. Stewart was able to get BPA to drop a plan that would penalize large customers who used more than 110 percent more than the year previously.

“I believe this contract may be an opportunity to save some businesses in Blaine. I’d hate to pass up that opportunity,” said Grant Stewart, director of public works for the city.

City manager Gary Tomsic signed the contract June 19 after a conference call between Bresnan and BPA account executive George Reich satisfied council concerns. The retail rate increase proposed for Blaine was decreased to 35 percent and Reich gave his assurance that the figure was for planning purposes. “There is no intent under this section to limit the council’s rate design or cash management options,” he wrote.

The rebate plan is one of several power conservation measures the city is enacting. Blaine has provided customers with coupons for compact fluorescent light bulbs and is participating in the VendingMiser program, which uses a smart chip that regulates lights and refrigeration in vending machines. Combined with specific load reductions, these conservation measures are expected to cut the city’s power draw by almost 20 percent.

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