Budget hearing and commission meeting recap – Oct. 12, 2017

Fiber build-out supporters flock to 2018 budget hearing

The first of three public hearings on the PUD’s proposed 2018 budget drew a crowd to commissioners’ Ephrata board room Tuesday to speak out in favor of continued build-out of the fiber-optic network to the 30 percent of the county still unserved.

PUD staff has recommended the district not use any more of its own funds at this time to complete the network, but instead seek find funding from within the community, or via state or federal grants to continue build-out. Continued use of PUD funds for build-out would require a permanent electric-rate increase of between 2.5 and 5 percent on top of the 2-percent rate-revenue increase already planned.

Ten audience members spoke out, saying the PUD has an obligation to continue build-out that began 17 years ago with the original intention to cover the entire county. Many pointed to the advantages of fast internet for students, individuals with medical conditions, families and businesses, including agriculture.

“The fiber program has been a gamble, but we love it and we don’t want to see it stop,” said Mick Qualls, chairman of the Grant County Fiber Active group.

Trish Hunter of Ephrata said her electric bill has been 8-percent to 9-percent higher for 17 years because of the fiber build-out costs that everyone in the county has had to pay, yet she still doesn’t have service. “I don’t want to be left behind any longer,” she told commissioners.

“Find it in your budget until fiber is available to each and every household in this county,” said Bob Murphy of Royal City, speaking on behalf of MacDougall & Sons, one of the county’s big fruit growers and packers. “Let’s get back on track and get this job done. We’ve been paying for it for 17 years.”

A PUD-funded fiber-focused customer survey in April that showed 46 percent of customers questioned said they weren’t willing to pay more for additional build-out.

Driving the staff recommendation are financial forecasts that show declining market prices for the PUD’s surplus electric generation, and a continued need to borrow to fund tens of millions of dollars in ongoing capital expenses, including unit upgrades and at Priest Rapids and Wanapum dams, improvements and expansion of the transmission and distribution system, purchase and installation of the new advanced meters and the remaining upgrades on Crescent Bar Island.

The fiber build out has so far cost the PUD $258 million. Construction to the remaining 30 percent of the county is estimated at $68 million over 10 years. Of customers with access to the network, only 48 percent actually subscribe to the service, but that number has increased over the past year through increased promotional efforts that will continue into the future.

Budget 2018 Presentation: Chief Financial Officer Jeff Bishop reviewed highlights of the proposed, $263.8 million budget for 2018. The budget reflects a 12-percent decline in overall spending from 2017, $133.1 million in capital spending and $93 million for service on the PUD’s $1.3 billion in outstanding debt. Operations and maintenance spending of $111.2 million would be a less than 1-percent increase over 2017, Bishop said.

The PUD is expected to end 2018 with $164.9 million in reserve funds, which are forecast to grow to $173.4 million by 2022. Staff and commissioners told the audience that robust reserve funds are necessary to maintain the PUD’s excellent AA bond rating. High bond ratings mean lower interest rates on future borrowing. PUD Finance Manager Bonnie Overfield told the audience that the PUD will need to issue $300 million to $400 million in new debt in the coming years to cover expected spending.

Commissioners are expected to vote on the proposed 2018 budget in November.

In other business:

Manual meter read fees presented: Customer Service Manager Terry McKenzie told commissioners Tuesday that staff is recommending a $64.34 a month fee and a one-time deactivation fee of $250.99 cost for customers who choose to a manual meter read service rather than participate in the remote-read Advanced Metering Program. The new fee schedule will be up for approval by commissioners in an upcoming meeting.
The extra monthly charge for the manual read program will cover the PUD’s cost to send a truck and meter reader to the homes or businesses to continue reading the meter.

Defective wire won’t slow down Rocky Ford–Dover 115kV project: Defects were discovered in late July in the electric wire purchased for the new 115kV Rocky Ford to Dover transmission line under construction along Highway 17, rendering the wire unusable, project manager Randy Kono told commissioners. Another supplier will provide replacement wire to keep the project on schedule with completion in late 2018. The defective wire was supplied in January 2016 by Sunni Electric Wire and Cable Company from Wuhan, China, and has a three-year warranty, Kono said. PUD officials await the company’s response to a request for compensation. The project’s contractor, Summit Line Construction of Herber City, Utah will provide replacement wire under a $338,133 change order to the contract.

Quincy Plains 230kV tap ready to energize: Severe wind on Oct. 7 has delayed energizing the approximately one-mile new Quincy Plains 230kv transmission line tap in Quincy, commissioners learned Tuesday. The line stretches along Road 11 NW and connects the new Quincy Plains, Cloud View and the existing North Quincy substations. A date to energize the approximately $3 million line will be scheduled soon.

Contract awarded for new Crescent Bar wastewater system: Commissioners unanimously authorized General Manager Kevin Nordt to enter into a $3.27 million contract with Clearwater Construction & Management LLC of Spokane to build a new wastewater-treatment facility on Crescent Bar Island. Both Nordt and Rich Wallen, managing director of Power Production, agree with PUD staff that the KRCI bid was the “lowest responsible and best” of the 10 bids received and is less than the PUD engineers’ estimate $3.4 million. Work on the new system will begin late this month and be finished in November 2018.

Wheeling charge discussions continue: Grant PUD, the Federal Bureau of Reclamation and county irrigation districts have agreed to adjustments that would reduce the cost of a proposed new “wheeling charge” – the cost incurred by using the transmission and distribution system to deliver the power – by about 13 percent, from $1.2 million to just over $1 million, commissioners learned Tuesday. Grant PUD purchased transmission lines from Bonneville Power Administration decades ago, but agreed not to charge wheeling fees for 40 years. That 40-year agreement expired June 30, 2017. Grant PUD intends to charge the Bureau and irrigation districts the cost to deliver the power, no more or less.

Grant PUD to join Local Government Investment Pool: Commissioners unanimously authorized the district to open an account with the state Treasurer’s Local Government Investment Pool. The district’s investment policy allows for such participation. The pool is a free, voluntary investment vehicle operated by the state treasurer. More than 530 local governments have used the pool since it was created in 1986. Pooled, invested funds total approximately $15 billion. Yields from the fund have been similar or better than rates on the Bank of New York Melon’s Treasury bond index since January 2016.

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