Grant County PUD 2023 budget includes recommended rate increase

EPHRATA — Grant County PUD commissioners will consider a 3% overall rate increase for 2023, followed by a 2.5% increase in 2024 and a proposed 2% increase in 2025. That’s the recommendation of the PUD’s staff, presented to the commissioners at a budget hearing Oct. 11.

Utility district rates have remained unchanged since 2019.

John Mertlich, senior manager of financial planning and analysis, said the 3% rate increase next year, decreasing to 2.5% in 2024, best fits the PUD’s long-term goal of predictable rate increases, while taking into account the impact of inflation. And inflation is having a big impact.

“Compared to the 2022 budget, the most significant cost driver is inflation,” Mertlich said. “Generally we assume a 3% (increase in inflation). This year our (projected increase) was 8.7%.”

“So when you start wrestling with a rate increase, it’s pretty simple to explain a rate increase, just through inflation alone,” said commissioner Larry Schaapman.

“It’s generational in magnitude,” Mertlich said.

Expenses in the 2023 budget are projected at about $439.7 million. Over the course of the year, the PUD financial analysts have adjusted their 2022 budget projections in light of changing economic conditions. Projected expenses for 2023 are about $28.8 million more than expected expenses in 2022.

Schaapman said it’s not that the PUD is adding more projects; rather, inflation is driving up the costs. Mertlich said when inflation is added in, spending on some projects has been scaled back.

Retail demand is projected to grow by about 5%, Mertlich said, and that’s a faster rate of growth than what’s anticipated for 2022.

The PUD is adding a new division in 2023 that will be charged with finding new sources of power generation. The expenses associated with starting that unit were projected at about $3.5 million.

Mertlich said the PUD will spend an estimated $30.5 million on upgrades to the turbines and generators at Priest Rapids Dam, and about $21.4 million on work along the riverbank and Priest Rapids and Wanapum dams.

The utility district has other sources of revenue in addition to the money paid by PUD customers. Mertlich said those revenues are expected to be about $119.8 million, an increase of about $18 million from 2022. That’s due to an increase in the price of power sales to outside customers, he said.

If the commissioners approve the recommended rate increase, the PUD is projected to finish 2023 with about $93.7 million after expenses, Mertlich said.

“I don’t think it’s going to come as any surprise to our customers that there’s going to be a rate increase,” Schaapman said. “I guess smaller increments, i.e. 3%, would be a whole lot better than when I first stepped on this commission – they were asking for eight (percent).”

“I think the inflation factor is something we hadn’t planned on, something we have to deal with,” said Commissioner Tom Flint. “The recommendation to me makes a lot of sense.”

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