PORT TOWNSEND — Although rate increases are not included in the Jefferson County Public Utility District’s present 2021 budget, that could change as commissioners revisit the utility’s finances periodically throughout the next year.
Jefferson County Public Utility District (PUD) commissioners approved on Monday a 2021 budget that anticipates an operating surplus of roughly $1.2 million while using more than $2.57 million in cash reserves, reducing the PUD’s unrestricted cash reserves to about $9.53 million.
The PUD has not raised its customer rates for water or electric service for the past two years, but an ongoing study suggests an increase — especially in water rates — will be needed by 2022 or possibly sooner.
“It feels like we know as much as we can in advance of the rate study,” said Commissioner Jeff Randall, “and we will be making changes next year as we go ahead and the rate study comes in.”
FCS Group, which has been conducting the rate study since April and presenting its findings to the commissioners along the way, projects both electric and water services will need rate increases, with water needing the greatest hike.
In September, FCS reported that, without an increase in 2021, water rates would need to increase from the current monthly residential average of $37.83 to $51.83 in 2022. If commissioners were to opt for an increase in 2021, FCS recommended an average rate of $42.83.
“They’ve taken these [budget] numbers and pushed them forward into 2021 and said, ‘If you’re going to do this spending, this work, then this is how you need to look at rates moving forward,’ ” said General Manager Kevin Streett.
The budget shows that the PUD’s water division is expected to start losing money in 2021 — nearly $401,000.
The water division accounts for nearly $2.7 million in the PUD’s 2021 revenue, while the electric division accounts for more than $37.5 million in projected revenue.
“For us to move forward and to supply water to our customers, we’re just going to have to start spending some money,” Streett said. “I wish we didn’t have to. But that side of our division has to start growing, has to start paying for itself, and we need to increase some rates.”
One of two commenters during Monday’s public hearing on the budget expressed concern that electric service revenues appear to be propping up water services.
Randall pointed out that the PUD is considering a $5 million, 10-year loan to help offset the cost of water system infrastructure improvements over the coming years.
“We have capital improvements to make on the water side, which the rates won’t catch up to for awhile, so we’re proposing an inter-fund loan from electric to water,” Randall said, “but the water side has to pay that loan back with interest, paid for by rates. So, as an electric customer, am I subsidizing the water side? The answer is no, you’re really not.”
In the first quarter of the year, the PUD is planning to use $1.25 million in capital reserves to complete expansion of its operations center at 310 Four Corners Road, a project that saw delays this year due to the coronavirus pandemic’s impact on construction activity.
The PUD also expects to increase staff from 53 to 56 people, increase cost-of-living expenses by 4 percent, boost departmental training budgets by 10 percent and raise fleet expenses by 2 percent.
The new budget also adds $50,000 for tree-trimming, hikes the Low Income Program by $100,000 and devotes all $675,000 in property tax revenues to broadband network expansion, an increase of $150,000.
Broadband
Outside of the new budget, the PUD is negotiating a contract with Communications Consulting Group to develop a business plan for deployment of last-mile broadband infrastructure. That work will be funded with a $50,000 grant from state Department of Commerce’s Public Works Board.
“This consultant will help us nail down a business plan for how we connect end users,” spokesman Will O’Donnell said, noting the PUD has already made about 50 such connections in the county but is not allowed to provide retail internet services under state law.
“We can bring fiber to a home or business, and then they can use that connection to work with an ISP (internet service provider) to get their internet service,” he said.
The PUD is also working to access a major fiber optic pipeline that runs between Olympia and Port Angeles that would allow for broadband build-out in Brinnon, Quilcene and Discovery Bay, O’Donnell said, noting that the PUD plans to explore business models for that build-out early next year.
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Jefferson County senior reporter Nicholas Johnson can be reached by phone at 360-417-3509 or by email at njohnson@peninsuladailynews.com.
