PUD staff counters proposed rate drop with rebate

EPHRATA — Following Grant County Public Utility District Commissioner Tom Flint's proposed rate decrease of up to 4 percent last week, senior PUD staff officials during Monday's regular commission meeting suggested giving ratepayers a rebate or refund as an alternative.

By providing short-term rebates or refunds, rather than a rate decrease, the district would not be committed to lower rates in the future, said district General Manager Tim Culbertson.

With the utility's improved financial performance in 2005, the policy-making board of commissioners have a lot of options, he said.

The commissioners may chose to build out the district's fiber optic communication network, reduce debt, increase the size of the reserve and contingency fund or provide a rate rebate, Culbertson said.

"One of the topics that is a constant source of debate is whether or not (the commission) should spend some of that money on a build out of the fiber system," he said in a Friday interview. "Those are the policy level decisions that the commission makes."

They may also opt for a rate reduction, Culbertson said. "My preference is that they don't do that, but that they do it through a rebate program of some kind."

A rebate, Culbertson explained, rewards the district's ratepayers for the good financial year.

"The rates stay the same, but (ratepayers) get some kind of credit against the rate or (they) get a one-time check," Culbertson said.

The future is too uncertain for a committed rate decrease, he said.

"We don't know financially how well we're going to perform and we are to some extent at the mercy of what our fuel supply is on the Columbia River," Culbertson said.

District Treasurer-Controller Nick Gerde said a rebate would be the better of the two strategies.

"(Rebates) could achieve the same thing for the ratepayers — money back in their pockets — in comparison to reducing our revenue stream going forward," Gerde said at the commission meeting.

"A decrease in rates would be viewed as negative to the rating agencies," Gerde said. "We're going to be borrowing an awful lot of money in the future."

The district's legal counsel cautioned Gerde and Culbertson about rebates Monday.

"Just for the record," district attorney Ray Foianini said, "There may be some legal issues with rebates that you might want to look at."

Commission President Randy Allred said it was too early to be getting "carried away about rebates (and) refunds."

Allred said the commission's goals of having $35 million in working capital and $70 million in the district's reserve and contingency fund are "still a long ways away."

As part of his proposal last week, Flint insisted the district must mitigate for a projected 6 percent rate increase in 2011 as well. That increase first showed up in the utility's recent financial forecast.

"That number, to me, is relatively not meaningful," Culbertson said. "Because there is just so much that can happen between now and then. I think some people are overly sensitive."

The district's staff would not abandon the commission's financial-forecast parameters by eliminating the projected 6 percent rate increase in 2011, Culbertson said. Instead, they would be reducing the amount of money held in the reserve and contingency fund.

"You still maintained your financial parameters you've established, you've just reduced your (reserve) and (contingency) account," he said.

The commission will receive a full report on Flint's proposal and senior staff's recommendations next week, Culbertson said.

"I don't think that is the only proposal we might see about what to do with this improved financial performance of 2005," he predicted.