In our view: Smart Savings

Clark Public Utilities commissioners would be wise to return to the rainy-day type of savings philosophy that was exercised several years ago. As Erik Robinson reported in Wednesday’s Columbian, the three commissioners are considering a stronger commitment to cash reserves starting next year.

Currently that fund is $2.7 million, not much when placed alongside the utility’s proposed $373 million electric system budget for next year. A rate stabilization fund was created in 2004 when commissioners correctly decided the cash reserve could help keep rates as low as possible. In just three years that fund grew to $18 million, but now it’s back down below $3 million. The protection against rate increases diminished to the point that a 5.7 percent increase in electricity rates was approved by the commissioners in August.

Politically, for Commissioner Nancy Barnes, this came at the worst possible time: three months before she ran for re-election. Barnes barely beat challenger Mike Lyons, by just six-tenths of a percentage point, winning by 641 votes among 117,715 cast.

Using this year’s rate increase to help rebuild cash reserves would demonstrate to angry ratepayers that the commissioners are serious about preventing another rate increase. The utility’s projection is to set aside about $10 million next year. Robinson reported two tactics that could be used. If the cost of natural gas drops, the utility could save money on fuel for the River Road Generating Plant (fuel costs there are projected to be $124.4 million next year).

Also, commissioners will enter into a “slice” contract with Bonneville Power Administration in October. This would mean purchasing a fixed percentage of Bonneville’s overall energy output, then reselling any surplus power. This differs from a “block” purchase of energy at a fixed price.

Here’s a third recommendation: Get tough in union negotiations. About 100 union workers at Clark Public Utilities received a 2 percent raise last March and will get a 3 percent raise next March, then a 4 percent raise in 2012. Officials with the utility point out that less than one-third of the workers are union members, and total labor costs represent only 9 percent of the budget. Still, angry ratepayers would like to see union members join them in the sacrifice that’s needed to balance a budget.

The three commissioners are scheduled to finalize their budget on Dec. 14. A bigger cash reserve would help prevent future jolts to the customers: about 183,000 residential, commercial and industrial consumers of electricity and about 30,000 water customers.