Rates and the Costs of Providing Services

Rates

In 2021, after a yearlong rate study, the PUD approved a series of rate increases over multiple years. The increases were put into place in an attempt to recover the costs to the PUD for providing each utility service. The third step of those rate increases goes into effect in 2023. 

Unlike other local government agencies, PUD revenues come almost exclusively from rates, with only a small portion from taxes. Our rates have to cover the costs of providing the services. COVID, supply chain delays, labor shortages, inflation, and other international issues have increased the PUD’s costs dramatically. To make sure that, like you, we can pay our bills, the PUD must pass on some of its increased costs to its customer owners in the form of increased rates.

Water and sewer rate increases went into effect on January 5th and will show up on customer bills this month. Please note, the PUD does not provide water or sewer to the residents within Port Townsend city limits. Electric service rate increases go into effect this July. Our rate increases are staggered to coincide with low usage periods. Summer bills for water are generally highest due to extra water used for outdoor watering of lawns and gardens. In the winter, electric bills are higher because of extra power used for indoor heating, and generally more time spent indoors.

Residential Water
2022
2023
2024
Base Rate (5/8")
$34.80
$40.83
$42.61
Capital Surcharge
$5.00
$5.00
$7.00
0-5,000
$0.31
$0.36
$0.38
5,001-10,000
$0.43
$0.50
$0.52
10,001-30,000
$0.58
$0.68
$0.70
30,000+
$1.07
$1.25
$1.31
Low Income
($15.44)
($17.25)
($19.78)
Monthly Bill @5,000gal
$55.30
$63.83
$66.61
Monthly Bill @10,000gal
$82.80
$95.83
$101.61
Monthly Bill @15,000gal
$126.80
$147.83
$154.61
Residential Electric
2022
2023
2024
Base rate
$23.50
$26.00
$28.50
0-600kWh
$0.090
$0.093
$0.096
601-1600kWh
$0.110
$0.113
$0.117
1600+kWh
$0.125
$0.129
$0.133
Low Income
($50.18)
($55.51)
($60.85)
Monthly Bill @550kWh
$73.00
$74.65
$81.30
Monthly Bill @1000kWh
$133.50
$139.00
$145.50
Monthly Bill @1601kWh
$223.63
$232.53
$241.43

Dollars

What are the costs that the PUD is trying to recover? There’s lots. On the electric side, the PUD continues to service the initial loan that allowed us to enter the electric business to begin with. 

Originally $115M, the PUD pays, on average, around $6M a year to the USDA to cover interest and principal. As of February 2023, we owe $89M, meaning we’ve paid down $26M to date, which as of April 2023, will be 10 years of being in the electric power business.

Besides ongoing operating expenses like labor and materials, the PUD spends millions every year in capital projects to ensure our grid is functioning and reliable. Fierce storms and aging infrastructure have put us to the test the last few winters. This past November, the PUD lost its first substation transformer to age and wear. Fortunately, another replacement transformer was onsite thanks to proper planning. Unfortunately for us, at least 4 more substation transformers are of similar age with no backup onsite. The PUD approved the series of four year increases with this in mind, allowing us to maintain and build up reserves that would not only cover increased expenses, but future replacement of essential infrastructure. 

How a Dollar Earned is Spent: Electric

Electric Service
$1.00
Power Production Cost
$0.00
Cost of purchased Power
$0.37
Transmission Expense
$0.05
Distribution Expense-Operation
$0.07
Distribution Expense-Maintenance
$0.10
Customer Accounts Expense
$0.05
Customer Service & Info Expense
$0.00
Administrative & General Expense
$0.11
Depreciation & Amortization Expense
$0.12
Tax Expenses-Other
$0.06
Interest on Long-Term Debt
$0.06
Total Cost of Service
$0.99
Operating Margins
$0.01

A similar story exists for our water and sewer departments. We have a lot of aging infrastructure reaching the end of its projected useful life and much that has moved well past it. Expenses are up, and not projected to go down. While the water team has found grants and loans to cover some projects, others, like rapidly deteriorating water mains along Rhody Drive, are unlikely to qualify and must be covered by rates in order to keep serving customers.

How a Dollar Earned is Spent: Water

Water Service
$1.00
Power Production Cost
$0.00
Cost of purchased Power
$0.03
Transmission Expense
$0.00
Distribution Expense-Operation
$0.29
Distribution Expense-Maintenance
$0.12
Customer Accounts Expense
$0.06
Customer Service & Info Expense
$0.00
Administrative & General Expense
$0.28
Depreciation & Amortization Expense
$0.08
Tax Expenses-Other
$0.04
Interest on Long-Term Debt
$0.04
Total Cost of Service
$0.94
Operating Margins
$0.06
Wastewater Service Rate Table
3/5/23
3/5/24
3/5/25
3/5/26
Standard Base Rate
$61.99
$72.39
$82.78
$84.93
Standard Low-Income Discount
($18.60)
($21.72)
($24.83)
($25.48)
Beckett Point Base Rate
$81.53
Beckett Point rate reviewed annually
Beckett Point rate reviewed annually
Beckett Point rate reviewed annually
Beckett Point Low-Income Discount
($24.46)
Reviewed annually
Reviewed annually
Reviewed annually
Kala Point Base Rate
$31.19
$42.38
$47.98
$49.22
Kala Point Low-Income Discount
($11.04)
($12.71)
($14.39)
$14.77)

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