Irrigation districts, Grant PUD in discussion over rate proposal

EPHRATA — Grant County PUD commissioners will host a workshop with representatives of the Bonneville Power Administration and local irrigation districts to discuss rates charged for transmitting electricity.

The workshop is the latest meeting in four years of discussions between the PUD, BPA and the East Columbia Basin Irrigation District, the South Columbia Basin Irrigation District and the Quincy-Columbia Basin Irrigation District.

The electricity is generated by the BPA and sold to the irrigation districts, but it is transmitted by Grant PUD. The PUD had provided the transmission free of charge under terms of an agreement signed in 1976. That agreement expired in 2016, and the two sides have been working on possible solutions ever since.

In the meantime, an interim agreement has been extended year by year. The charges are billed to the BPA, passed on to the irrigation districts and eventually to their customers.

Utility district financial analysts have come up with a proposed rate schedule. But irrigation district officials are objecting to some of the calculations used to determine the rates.

“The issue is the rate of return,” commission chair Tom Flint said.

Grant PUD conducted a study of the cost of providing the service, called a wheeling charge, and proposes to add a charge of 9.8 percent, called a return on equity.

Flint said the goal is to offset some of the costs of upgrades and maintenance.

“That rate of return (return on equity) helps pay for that,” Flint said.

It’s the PUD’s policy that rates will reflect the cost of providing service to the customer.

“Who causes a charge will pay for a charge,” Flint said.

Roger Sonnichsen, director of the Quincy-Columbia Basin Irrigation District, said irrigation districts are disputing some of the conclusions reached in the cost study.

“They don’t necessarily reflect the cost of service to us,” Sonnichsen said.

The goal of the return on equity is to generate enough to be able to pay for upgrades and maintenance, which would eliminate the need for a substantial rate increase in the future. Without a way to build a reserve to pay for future costs, Flint said, the costs would be spread among all customers.

“Everyone else has to foot the bill, and I don’t think that’s right,” Flint said.

Sonnichsen said the proposed 9.8 percent return on equity is too much.

“It appears to us it would not be needed at all,” he said.

The PUD is a public agency and doesn’t have to generate a return in the same way as a private company, Sonnichsen said.

While the proposed return on equity is 9.8 percent, the new rate class will increase the cost to the irrigation districts by about 30 percent, Sonnichsen said.

The proposed rate “is not reasonable or justified for the service that’s being provided,” Sonnichsen said.

Cheryl Schweizer can be reached via email at education@columbiabasinherald.com.