Rate reduction voted down

Hansen accuses Claussen, Flint of forcing politically motivated vote

EPHRATA — The commission majority for the Grant County Public Utility District voted against an across-the-board electric rates reduction of up to 4 percent on Monday, a proposal initially backed by Commissioner Tom Flint in March.

The vote pitted Flint and his commission ally, Vera Claussen, against Commission President Randy Allred and Commissioners Greg Hansen and Bill Bjork, who opposed the rate reduction.

Claussen, in an unexpected move, briefly interrupted the commission meeting to renew debate on the electric rates reduction issue and then, along with Flint, forced a vote following months of inaction.

Claussen specifically called for district staff members to prepare an implementation plan for a one-year 4 percent rate decrease and to consider an orderly build out of the fiber optic system.

In March, Flint requested a sweeping electric rates reduction of up to 4 percent by July and elimination of a projected 6 percent rate increase looming in 2011. The projected rate increase first popped up in the financial forecast the utility district's senior staff members presented during last fall's budget negotiations.

A 4 percent rate spike in 2003, triggered in large part by a massive energy crisis in 2001, should be rolled back, both Flint and Claussen argue.

Following Flint's initial proposal in March, General Manager Tim Culbertson and Treasurer-Controller Nick Gerde recommended the commission consider a short-term rate rebate instead of the long-term commitment of a rate reduction.

They said a rebate would put money back in ratepayers' pockets, similar to a rate reduction, but would not commit the district to reduced revenue into the future.

District attorney Ray Foianini cautioned against rebates, which he said may create some legal issues.

Debate about a rate reduction or one-time rebate then ended, leaving Flint's proposal dead.

"We were in a minority position and we didn't have enough support to bring it forward," Flint said Monday.

The utility district's 2006 first quarter financial situation has made Flint even more confident, he said, a rate reduction is necessary.

"Our financial condition is even better than when I first proposed (the rate reduction)," Flint said. "It's better than we had estimated by quite a bit."

The commission majority of Allred, Hansen and Bjork believe a rate reduction is not in the best interest of ratepayers.

"I'm much more concerned about maintaining our debt-service ratio," Allred said. "As well as getting in a position, if at all possible, to pay off debt."

The projected 6 percent rate increase in 2011, Allred said, is a product of an objective and "honest" financial forecast and should therefore be maintained.

"And tweaking (the financial forecast), for whatever reason, because it sounds good, I'm not in favor of," Allred said.

Hansen expressed concern about the impact rate reductions would have on district revenues and bond ratings.

Further, Hansen accused Flint and Claussen of playing politics with the rate decrease proposal and trying to put Bjork, who faces re-election this summer and fall if he decides to run, on the spot.

"I'm a little suspicious, when at this point, it appears, just before elections that (Flint and Claussen) start talking about fiber build out and rate decreases," Hansen said. "It sounds like it's a little politically motivated."

Claussen argued that if Hansen was right, she would be putting herself on the spot, too, because she is also up for re-election.

But Claussen hasn't announced she will seek another term. She likely won't, either, now that fellow Soap Lake resident Terry Brewer, who is the executive director of the Grant County Economic Development Council, has entered the race for her position.

Bjork said he favors a rate rebate. He argued it would be irresponsible to decrease rates now when the district may need to go back and increase rates a few years later because of a bad water year.

"If we decrease the rates like Vera and Tom want to do, this would put additional pressure on that 6 percent possible rate increase in 2011," Bjork said. "I darn well don't want that to happen."

He said the district must leave the possible 6 percent rate increase in place. If future financial forecasting shows the 6 percent remains likely for 2011, the district should work to mitigate it in 2008 or 2009.

Bjork said the district must also continue building its reserve and contingency fund to the commission's goal of $70 million.

Larry Peterson, commissioner of the Port of Moses Lake and board member of the economic development council, said the utility district could eliminate the projected 6 percent rate increase in 2011 and the reserve and contingency fund would still be $18 million over the $70 million set by the commission.

"There are widespread hard feelings against (the projected 6 percent rate increase)," Peterson said. "It sends out confusing signals to the PUD's customers and even the PUD's staff. What's the reason for it? You don't need it to get to the new reserve levels or maintain them or anything else."