$600K shortfall prompts surcharge on Co-op electrical bills
Published 6:45 pm Monday, June 1, 2015
Journal staff report
Orcas Power & Light Cooperative will add a surcharge onto electrical bills beginning in July, a financial tool that is expected to help the Co-op make up ground on a shortfall in projected revenue of $600,000 so far this year.
The amount of the pending surcharge, approved in concept last week by the OPALCO board of directors, has yet to be determined and could fluctuate monthly, according to a press release circulated by the Co-op following a May 28 meeting of the board and Co-op management.
Record-warm temperatures in 2015 and a resulting lower than anticipated rate of electrical consumption by Co-op members were cited for the shortfall.
“The revenue shortfall is due to lower than projected sales of kilowatt hours because of record warm temperatures this year,” the Co-op said in the press release.
The surcharge follows on the heels of a $10.30 increase in the co-op “base rate,” aka facility charge, that went into effect in February. Individual utility bills were expected to rise by 9-12 percent as a result.
That increase was instituted by the Co-op, in part, to help make up for a $1.4 million shortfall in revenue in 2014. It has also cited a need to generate additional revenue to pay for infrastructure improvements, like the pending $15 million replacement of the underwater power cable connecting Lopez and San Juan islands.
The Co-op 2015 budget called for a 12-percent increase in revenue over last year’s mark. OPALCO’s financial forecast calls for a similar facility charge increase in each of the next five years.
“The Board has a fiscal responsibility to keep the Co-op in the black,” Board President Jim Lett said in the press release. “The surcharge will meet that need as we further evaluate and research longer-term rate solutions to address the changing landscape.”
At Co-op headquarters, warmer than normal temperatures are only part of the changing landscape. The member-owned power cooperative recently acquired Friday Harbor-based Rock Island Communications, a long-established local provider of internet services, under a partnership intended to help provide local residents and property owners greater access to broadband services.
The new internet entity, known as “NewCo,” is forecasted to receive $7.5 million in seed money and loans from OPALCO over the next three years, and become self-sustaining after that. It is also anticipated to be future money maker for the Co-op, according to OPALCO.
As for the surcharge, OPALCO spokeswoman Suzanne Olson said members of the board and management discussed a suggested multiplier of $0.0175 per kilowatt hour as a starting point. At that rate, the monthly surcharge for a household or business that consumed 1,000 kilowatts would equal $17.50. The board is expected to make a final decision on the surcharge when it meets June 18.
The surcharge is described by the Co-op as a “corrective action” required to remain compliant with its federal lender, the Rural Utilities Service branch of the USDA, and as an “interim” measure as future rates and charges remain under discussion. Another “rate structure” shift is expected in 2016.
