Rates
UPDATE:
September Rate Increase
June 2001
Salem
Electric’s rates will increase the first of September due to the wholesale
power increase from the Bonneville Power Administration that will take effect
October 1. Salem Electric’s increase begins a month earlier. At the end of
October when we pay BPA at their new rate, we will have collected money from
bills that were mailed out in September.
Rates for the next two
years will not be stable. BPA has adopted a plan under which their rates will
be trued up every six months, otherwise they would have had to set rates that
would carry them through at least two years of uncertainty. The ability to
adjust their rates every six months will allow BPA to start with a lower
increase since these rates will more closely reflect BPA's current costs.
BPA will release their
final "record of decision," including their new rates, in June. They are
quoting a range that could increase our customers' bills by 50% to 125%.
Obviously, the larger
increase would be devastating to the Northwest economy. BPA and its customers
are doing everything they can to keep that from happening. BPA is working with
the region’s aluminum industry to shut down their operations for two years. In
exchange, BPA would provide them with a cash payment intended to provide full
pay and benefits for aluminum workers during the two-year down time. At least
one aluminum firm has already signed an agreement.
BPA is asking its
investor-owned utilities, including PGE, to reduce their demand on BPA by 10%
for two years. All of BPA’s consumer-owned utilities, including Salem Electric,
are being asked to do the same. If they are successful, according to BPA, this
could substantially reduce the projected rate increase. Investor-owned
utilities have their own sources of electricity, making it easier for them to
reduce their loads on BPA. Consumer-owned utilities, especially those like
Salem Electric who get all of their power from BPA, can only meet the 10%
reduction through intensified conservation efforts and negotiated load
reductions by large customers. A third option of contracting with outside power
producers is possible, if the resource is renewable and does not exceed three
megawatts.
Salem Electric is
exploring each of these methods. After nearly 20 years of aggressively pursuing
conservation, we benefit from having a staff of professionals who are aware of
the new technologies available for increased conservation in residential and
commercial applications. We have been meeting with our larger customers to see
if there are ways to make their already efficient operations even more so. Some
customers have indicated that they have load which could be removed from Salem
Electric and negotiations are underway. We are exploring several renewable
resource opportunities that could also help us meet BPA’s 10% reduction goal.
In the meantime, while
we wait for BPA’s final rate number, we have hired a consultant to review the
way we allocate the "cost of service" among our three classes of customers:
residential, commercial and lighting. As soon as we have BPA’s new rates we
will inform our customers of our new rates.
All the while, Salem
Electric will continue its long-time and long-term efforts to provide our
members - who are also our customers - with reliable power at the lowest
possible cost.
Robert
J. Speckman
General Manager
June 2001
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