|The First "Corner" for Commissioner Seely - Feb 2008|
|Friday, 01 February 2008 01:00|
A Few Words From Commissioner Truman Seely, District 2
For this first “Corner” for me, I want to briefly describe the PUD’s business activities. The two-line summary seems straightforward enough; the PUD purchases power, builds and maintains a distribution system. It sells power to consumers in its service district at the lowest sustainable cost.
To cover our customers’ needs, the PUD makes contracts with power providers that take several different forms. Since there is no direct way to store electricity, we always want to have access to more power than we typically need. This in turn gives the PUD an opportunity to engage in another business activity, resale of power to other users outside of our service area. The PUD tries to gain on those transactions, taking advantage of price fluctuations in the power market.
Sales of power to in-district customers actually make up less than 60% of the PUD’s total revenue, while wholesale power sales to outside customers makes up nearly 40% of revenue. The rest of revenue is mainly “pass thru” taxes, but wholesale access rental to our fiber optics cables, pole attachment fees and the like play a part.
One of the PUD’s challenges is to be sure that the outside sales we engage in represent a gain for our customers. Your cost of power should be, and indeed is, lower because we engage in outside sales.
If you are a typical residential customer, the rate you pay for power is a composite of the PUD’s cost to acquire that power and what the PUD must spend to operate and maintain the electrical transmission and distribution systems that it owns. The actual energy component of a residential PUD bill is only about half of the bill, the rest is the cost of transmission and distribution.
So, as a business, the PUD works to acquire power at the lowest sustainable cost for its customers and to transmit and distribute that power cost effectively to its customers. If we under-maintain the system, reliability suffers. If we over maintain the system then electric bills are too high.
Power rates for our various classes of customers are reviewed annually as part of the budget process. The approach is conservative. We try to minimize rate variability and allow for sufficient operating reserves to cover most contingencies. From my perspective, looking back at the impact of the December 2 storm, a conservative approach is a very good idea.
|Last Updated on Thursday, 11 February 2010 11:29|