Manager’s Message June/July 2016

BPA Overpayment Case Settled

The Skamania PUD has been overestimating the size of our system to Bonneville Power Administration for several years. As a result, we were given a small added discount to what we paid BPA for power. We passed that discount along to you, our customers, in the form of slightly lower electric bills. Now we are being required to fix that mistake.

We expect this error to have little or no impact on our ongoing rates to our customers.

We work hard here at the utility to keep rates low and provide the best service we can. That includes getting the best possible pricing we can on the goods and services that ultimately go into the bill our customers pay. We want to find every dime of discount we are entitled to, but not a penny that we don’t deserve.

Since at least 2008, we provided BPA with data every year that entitled us to a 6% discount on what BPA was charging for electricity. Our data was based on what we thought was the size of our power line distribution network, which sometimes is referred to as our pole miles. However, a mapping project that we completed last year showed that we were a smaller system than previously thought. As a result, we only qualified for a 4.5% discount. That was 1.5% less than we actually received.

The cost of the electricity sold to us by BPA amounts to about half of our total costs, so the savings we passed along to our customers was less than 1% of their bills. If your electric bill was $100, it should have been $101. The discount was also a small part of our total BPA bill. We pay BPA nearly $5 million a year for electricity. The extra 1.5% discount we received amounted to about $60,000 a year.

In 2014, we started a mapping project that would accurately tell us for the first time how large our network was. Shortly after that project began, the Justice Department notified us by letter that it had opened a formal inquiry to see if we were making false claims to BPA about our system size. We now know that we were. While this is not a criminal matter, doing so, even if it were not intended, violated the law.

The Justice Department could have been harder on us, but chose not to be. We accepted their settlement offer. We have to pay back the $362,500 overpayment going back to 2008. We also must pay damages equal to the overpayment, plus some attorneys’ fees. The total comes to about $862,200. We also will pay BPA directly about $180,000 for the last three years that the DOJ chose to exclude from the settlement, freeing us from having to pay damages for those years.

While this was a serious matter, it should have little or no effect on the rates we charge our customers or our ongoing operations. We will pay what we owe from contingency funds that will be built back up over time. With our system now fully mapped, we are confident that the data we provide BPA in the future will be correct, so this kind of mistake is not likely to happen again. We will continue to look for each and every dollar of saving we can find, but will hold fast to our values and only take that which we deserve.

Brent Bischoff, General Manager