As an OPALCO member and retired utility executive, I congratulate OPALCO on attempting to get rate design right.

I was responsible for rate and regulatory matters for a utility with over 1,000,000 customers and our goal was to try to get rate design linked to cost causation.

For most utilities, fixed costs represent 75 percent or more of the cost of providing electric service. The balance is energy or fuel.

Fixed costs are akin to your monthly car payment. The bank does not care how many miles you drive, the payment is the same.

Similarly, the utility has fixed costs that must be paid regardless of how much energy (measured in kilowatt hours) customers use. Energy conservation and rooftop solar reduce energy consumption, but do nothing to impact fixed investment already made by the utility. Raising basic service or fixed charges is the correct way to recover fixed costs rather than through volumetric charges ($ per kWh).

Nationally, utilities are attempting to redesign rates as OPALCO has done. I have not reviewed OPALCO’s embedded cost of service study but will hazard a guess, based on 40 years experience, that a correct fixed-cost charge would be in excess of $50/month and the corresponding energy charge would be about 6 cents per kWh.

So, I believe OPALCO is headed in the right direction and has made a great step towards correct rate design.

David Rumolo/Friday Harbor