A June 1 rate increase for Flathead Electric Cooperative members will bump up most area residential electricity bills by about $4.75 per month.

The 3.75 percent across-the-board increase is based on a proposed 9.6 percent increase in wholesale power rates from Bonneville Power Administration.

Because BPA is expected to continue raising wholesale rates over the next several years, cooperative members will see annual rate increases, said John Goroski, director of regulatory affairs at Flathead Electric.

BPA says it must raise its wholesale rate to compensate for reduced revenue expectations from surplus power sales and to continue funding needed investments in the Federal Columbia River Power System.

BPA also wants a 13 percent increase in its transmission rates to maintain system reliability and meet increasing demands for transmission in the Pacific Northwest. If adopted, it would be the first transmission rate increase in eight years.

Flathead Electric spokeswoman Wendy Ostrom-Price said the co-op’s board of trustees has chosen not to raise rates at the same pace as BPA.

“Trustees feel that spreading expenses out will help smooth the transition into higher power costs, as many people struggle to pay their bills during this unstable time in our economy,” Ostrom-Price said.

A Flathead Electric residential member using 1,000 kilowatt-hours per month, will now pay $84.52 rather than $80.14 under the old rate. That compares to a $92.60 monthly power bill with Missoula Electric Cooperative and $95.50 at neighboring Lincoln Electric Cooperative.

Goroski said the residential rate increase for Flathead Electric is closer to 5 percent and is slightly higher than commercial rates because the residential class contributes to winter peaks in demand while commercial users tend to have a flatter power load.

BPA’s final 2013 rate increase won’t be finalized until it completes its rate case in June, Goroski said. Because the power administration sets rates based on a federal fiscal year starting Oct. 1 every two years, only three months of this proposed rate increase affects Flathead Electric’s 2013 budget.

“Flathead Electric is anticipating a 4.1 percent overall increase in BPA power costs for 2013 and a 10 to 13 percent increase in BPA power and transmission costs for 2014,” he said.

The last BPA increase was 7.5 percent in October 2011.

“Because this increase also incorporated a major tiered-rate design change from BPA, Flathead Electric experienced an overall 10 percent increase in BPA power costs” from the 2011 wholesale rate increase, Goroski explained.

Flathead Electric’s contract with BPA runs through 2028, and currently there’s enough head room in the contract so the cooperative won’t need to pursue other power options until some time after 2015, Goroski said.

A power purchase agreement with the city of Whitefish for electricity generated from the city’s hydroelectric generator is supplementing Flathead Electric’s power. A second source of additional power will be added this fall as F.H. Stoltze Land & Lumber Co.’s biomass-fueled electric generation facility starts up at the plant near Columbia Falls.

Those two projects have delayed the cooperative’s need to search for additional power right now.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.