St. Helens says PUD unfairly raised rates without proper notice
St. Helens city officials say a 72 percent electric rate hike in street lighting fees imposed by the Columbia River People's Utility District is unjust and could effectively kill the equity and return on a recently completed $900,000 LED street light upgrade.
Columbia River PUD directors and staff were met Tuesday evening by staff from St. Helens, who pleaded with the utility's board and general manager to rectify a street light rate increase that equated to a 72 percent jump in monthly billing rates for the city.
Matt Brown, finance director for St. Helens, said the city was blindsided by the increases, and now the energy efficiency project barely pencils out.
PUD directors approved a new rate schedule for LED street lights in May after a cost of services study revealed the PUD wasn't charging enough for power usage in its street lighting category.
"The PUD was under-collecting on our lighting rates by 155 percent in 2017 and 171 percent in 2018," John Nguyen, general manager of the PUD, noted Tuesday. Nguyen said the PUD's rate advisory committee reviewed proposed rate increases for all classes.
"The city did not receive any notification from the PUD that you were running any studies," Brown said. "I would have hoped to receive a notification from staff about that, but we didn't know anything until I received an email from Tim (Lammers, the PUD's energy services and key accounts supervisor)."
Brown said when the city of St. Helens was working with an outside firm to study the feasibility of upgrading its street lights to energy efficient LED lights, it reached out to the PUD to get detailed information about current rates, noting the PUD was "at the table" during project discussions.
He said PUD staff didn't mention the rates would likely be subject to significant changes, pending a study.
Consultants then used past trends and current rates, with a projection of 3 to 5 percent increases every couple of years, to try to estimate what the city's costs and potential savings would be.
Brown said the city projected to save about $660,000 in energy costs over the course of several years, but that was before it got a bill with the new rate structure.
"With the 72 percent increase, that $660K drops down to $18K," Brown later stated by email. "The real main issue is the debt that the City took out to complete this LED project without knowing or expecting a specific study and rate increase to this magnitude."
Alternatively, Brown also proposed the PUD pay off all or a portion of the city's debt service on the loan it took out to pay for the lighting upgrade project.
"I'm not asking you to pay off the entire loan," he told directors Tuesday. "Any amount that you give us could help pay down that debt service."
Directors asked why St. Helens didn't clarify its rate structure assumptions with the PUD prior to taking out the loan.
"Had you gone to the PUD back then and said, 'I'm gonna take out a $900,000 loan ... our rate assumption is 3-5 percent each year. Is this correct?' We would have had an opportunity to say, 'No, it's not,'" Nguyen told St. Helens representatives.
Revenue from street lights represents .5 percent of the PUD's budget, Nguyen noted.
Directors said they felt there was likely "miscommunication" and "missed opportunities" on behalf of both the city and the utility district, and offered to continue further discussions with
the city about possible solutions.
Brown asked PUD staff and directors to consider rescinding the rate hike or opting for a lower rate increase for now to allow the city to better budget for the impact in subsequent years.