Customer opinion sought on future Grant County PUD rate structure

MOSES LAKE — Grant County PUD electrical rates, relative power use and revenue and rates in the future were topics of discussion and questions during a “rate strategy” presentation from PUD employees Tuesday in Moses Lake.

It was one of a series of presentations by PUD employees to different groups of utility customers. Chief Customer Officer Ty Ehrman said the discussions are an effort to explain how rates are calculated and why it’s done that way, and to ask for suggestions from customers on how they should be calculated in the future. 

“We’re looking for input on how Grant PUD should move forward with rates. How should we allocate costs? How should we address increasing costs? How do we leverage rate strategy to affect customers and communities? And then, in 20 years, where do we want to be as a community?” Ehrman asked.

Cary West, senior manager for customer solutions, said 2023 total retail revenue was about $272.42 million. Of that, about $124.41 million, approximately 46%, came from large industrial customers. About $49.87 million, around 18%, was generated by retail customers. Irrigation customers accounted for about $27.77 million, around 10% of revenue.

The large industrial customers also are using most of the electricity, about 45%. Residential customers used about 15% of total kilowatt hours in 2023, and irrigators used about 10%. 

Utility district staff did a “cost of service” analysis in 2023, looking at how much it costs to provide electricity to each customer class, and whether or not different customer classes are generating the revenue to pay the cost of delivering electricity to them. Julio Aguirre, manager of rates and pricing, said it used available data from 2021. 

The results showed that the large industrial customers were paying about 48.6% more than it cost to provide them with electricity. Residential customers paid about 29.3% under what it cost to provide their electricity, and irrigators paid about 27.8% under their cost. 

Some customers, including residential and irrigation, are designated as “core customers.” Grant County PUD operates Wanapum and Priest Rapids dams, and since it produces a lot of its own power, its customers pay less. Utility district commissioners have directed that core customers are first in line for the price break that the PUD provides by making its own electricity. 

A questioner said that the imbalance meant large industrial customers are, in essence, subsidizing core customers. He asked if large industrial customers had asked about that.

“We do occasionally hear about it,” Ehrman said. “But I will say this is not unusual. We’re not the only utility that does this, by a long shot.” 

Grant County PUD rates are among the lowest in the nation, he said, and all customers are paying a reasonable rate. 

“So the industrials that have been able to locate here are still looking at very favorable rates compared to what they’re looking at elsewhere,” Ehrman said.

Commissioner Tom Flint said he thought industrial customers were still getting a reasonable rate, given the low cost. 

Aguirre was asked what residential customers would be paying if the large industrial class didn’t exist. 

“Based on our estimate, it’s about eight cents, 8.3 cents per kilowatt hour,” Aguirre said.

The large industrial customers also are driving demand, and John Merltich, managing director of energy supply management, said they’re expected to keep driving demand. 

Demand is projected to grow by about 3.6% annually, Mertlich said.

“In utilities across the country, you don’t generally see this type of (growth) rates. For most of my career, you saw 2% growth across many utilities in the whole country. Any time you saw a utility growing 3%, it was an eye-opener,” Mertlich said. “Usually it was associated with large industrial growth.”

The information gathered at the customer meetings will be summarized and reviewed at a public presentation from 6 to 8 p.m. June 4 at the Moses Lake Civic Center, 401 S. Balsam St.

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