By Mike Williams

mwilliams@crbizjournal.com

RAYMOND — Pacific County PUD No. 1 on Oct. 7 adopted a tiered system for new large-load power customers. Mostly, this is meant to facilitate a major influx of marijuana growers and processors in the county, while keeping rates stable for existing customers.

Commissioners voted 3-0 during to implement the new rate structure for “large commercial, small or large industrial customers requiring a three-phase, 300 kVA padmount transformer or larger ... or any customer increasing load that requires the addition of 300 kVA or more of cumulative transformer capacity after Oct. 7, 2014.”

Existing customers are grandfathered in at current power rates.

General Manager Doug Miller presented several options at a public hearing on the large-load policy during the meeting. An earlier hearing was held Sept. 16 during the PUD board meeting in Long Beach.

PUD’s existing share of electricity produced by the Bonneville Power Administration system is nearly all committed.

“Eight months ago, maybe a year ago, if you thought about Pacific County PUD and you looked at loads, you thought you’d have plenty of wholesale power for a number of years,” Miller said.

The passage of Initiative 502 in 2012, legalizing recreational marijuana, changed that.

The interest of cannabis growers and processors in Pacific County — especially the Raymond area — created potential for a lot of additional power usage, Miller said. “It will use up what’s called Tier I,” he said.

That’s the lowest-cost electricity from the BPA. The 20-year contract was signed in 2008. Each public utility gets a percentage of the federal system.

The PUD’s Contract High Water Mark is 36.87 average megawatts. If the utility needs more power, it can purchase Tier II power from the BPA at a higher cost or buy it on the open market.

The PUD’s total power draw in 2013 was 34.89 average megawatts, Miller said. Increased loads will push the district past the contract high water mark in 2015, he said. That drives the need for a large-load policy to limit the impact on existing customers.

Non-federal power could run 25 percent or more than what PUD is now paying for Tier I power, he said.

The 300 kVA transformer-size threshold for the New Large Load classification allows those customers to enjoy a portion of low-cost Tier 1 (up to a 300 kVA delivery amount). Anything needed above that would have to be paid by the new large-load customer at higher cost non-federal based rates.

The policy requires new large-load customers to sign a power purchase agreement with the district.

Rebecca Chaffee, director of the Port of Willapa Harbor where many marijuana operations have set up, raised concerns about the purchase agreement.

Miller explained that the agreements are necessary to secure the power supply.

“You’re not going to be able to go out, more than likely, and buy from a resource for a two-year contract,” he said. “You’re probably going to have to have a five-year, 10-year — whatever.”

The contract protects the PUD if the new customer goes out of business, leaving the PUD responsible for the power with no customer to pay for it.

Chaffee said she worried the requirement could scare potential investors away if they have to pay a high deposit for power.

Customers can use a financial instrument such as a surety bond or insurance for the agreement rather than a cash deposit, Miller said.

Raymond resident Dick Anderson objected to a potential annual increase of up to $4.70 per PUD customer, per new large-load customer.

Miller explained after the meeting that the PUD estimates that the annual cost per average residential customer will increase by $4.70 for each connection of a new large load. This $4.70 is a worst-case number based only on a $40 per megawatt hour non-federal cost, not taking into account that the new large loads will pay for a portion of the Tier 1 and district operational costs, thus lowering the number, he said.

The actual number won’t be known until non-federal costs can be secured in a purchase contract, and a cost of service/rate design study can be undertaken by an outside consultant, Miller said.

“In doing calculations on it, that’s about $80,000 a year that your ratepayers are paying to assist a business ... that’s going to be making a profit off the use of your power...,” Anderson said. “I don’t quite understand why everybody in the district has to provide revenue to, I would say, help the green agriculture.”

Miller said the increase was worth it to aid economic development. The timing and amount of the increase would depend on growth of large-load customers, he said.

Chaffee applauded the decision.

“Economic development is going to be a huge benefit in jobs, local spending ... we’ve already hired Dick [Anderson] to put in some infrastructure,” she said. “I think we’re all going to benefit, so I appreciate that middle ground.”

  • • Aggregates transformer usage for service to buildings on the same or adjacent parcels with meters under the same name to prevent customers from setting up a facility and installing multiple meters to stay below the 300 kVA threshold;

  • • Once a new large load, always a large load;

  • • A customer moving into an existing facility that has been disconnected from the PUD for more than a year will be considered a new customer;

  • • Primary metered customers adding load will be assessed on a case-by-case basis;

  • • Special contract negotiated for those existing customers above 300 kVA adding an additional 300 kVA or more.

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