Recent OPALCO announcements on the need to increase customers’ rates in order to recoup a $1.4 million revenue shortfall in 2014 and to plan for future capital improvements raise fundamental policy questions.

Utilities generally charge customers a low basic charge and a usage charge (per kilowatt-hour). The basic charge is based on number of days of service and the bulk of the revenue collected is through the usage charge.

In March 2014, the OPALCO “basic charge” was re-branded and called a “facilities charge,” which in 2015 was increased for all members. For residential members this increase is 36 percent and will continue to rise.

This raises the following questions with respect to rates:

Why do small commercial members pay 1.5 and residential members pay 1.2 times more than large commercial members? Is this what is meant where each member pays their fair share?

How does the new rate structure encourage conservation or the installation of renewable energy sources, when the “facilities charge” is substantially increased while the usage rate stays the same in future years?

Why would anyone pay 2.4 times more than the cost of electricity saved by spending $30,000 to install a grid-tie 8,280-watt roof-mounted solar system producing 10,000 kilowatt per year, and take out a 20-year loan at 4.5 percent to pay for it?

As noted in the recent OPALCO advertisement (Islands’ Sounder, April 8, 2015): “It no longer makes sense to have 75 percent of our fixed costs recovered through energy usage (kilowatt-hour charges) because it leaves the co-op vulnerable to revenue shortfalls, as we experienced in 2014.”

Our revenue shortfall occurred because the usage rate was set too low. Other utilities raise usage charges when facing a shortfall and to plan for future capital improvements. Some even have a reduced usage charge for low-income households.

Without conservation, energy demand will grow ,and the need for further expensive infrastructure will accelerate.

To encourage conservation and the installation of alternative energy sources raise the usage rate and lower the “basic charge.”

Please tell the board members how you feel, demand changes to the rate structure so that it is fair, encourages conservation and efficiency.  After all, it is our co-op.

John Van Lund

San Juan Island