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Commission Meeting Summary 11-23-2021: 2022 budget Approved with no rate increase

Grant PUD commissioners Tuesday unanimously approved a $285.3 million budget for 2022 that for the third consecutive year includes no electric-rate increase and preserves the utility's financial strength amid a continued high, 4% annual growth rate in the county's demand for electricity.

The budget funds key projects providing upgrades to infrastructure and technology to increase the efficiency, capacity and reliability of the electric and fiber-optic systems. The budget includes $156.9 million for operations and maintenance expenses, a $13.3 million increase over the 2021 budget.

Total capital expenditures of $145.4 million are up $2.1 million over the 2021 budget. Of that total, $55.3 million will fund projects related to the dams. The remaining $90.1 million will fund electric and fiber-optic system growth.

The $397.5 million expenditure budget also includes forecasted offsets of $112.3 million, for total budgeted expenditures of $285.3 million. The projected offsetting revenue includes:

  • $8.3 million in contributions customers pay for expanded infrastructure.
  • $22.3 million from a federal license requirement to sell some power at-cost to long-term power purchasers.
  • $81.5 million in net power proceeds.

Major capital work in the 2022 budget includes:

  • Continued funding of the Design Build 2 project, a multi-year project of substation and power line upgrades to meet growing electricity demands in Grant County.
  • The Quincy Transmission Expansion Project, which increases both transmission and distribution power line capacity to serve the expanding customer base in the Quincy area.
  • Continued work to expand the fiber-optic network to all Grant County residents.
  • Turbine/generator upgrades at Priest Rapids Dam and fortification of the dam's right (Yakima County side) embankment to improve seismic resistance.

Get a more detailed look at the 2022 budget here. The approval can be heard on the commission audio beginning at 2:15:20.

Commissioners also:

- Heard that the third-quarter financial forecast shows the district remains in a favorable financial position as factors including revenues from retail energy sales, wholesale prices and contributions from large customers for new infrastructure costs are exceeding beginning of the year budget expectations.

Compared to the 2021 budget, energy sales to Grant PUD's retail customers are expected to increase by approximately 8% or $17.6 million, while larger customer contributions for infrastructure costs for developing electrical projects is projected at $7.6 million more than the 2021 budget.

Projections for wholesale prices are also more than $29 per megawatt hour higher than the initial 2021 budget driven mainly by the summer heat and regional energy demand, John Mertlich, Senior Manager of Financial Planning and Analysis told commissioners.

The higher prices have driven up the year-end revenue projections from net wholesale power sales by $7.5 million versus the 2021 budget.

Long-term financial targets for liquidity, days cash on hand, debt service coverage, and debt-to-net-plant ratio all remain on target and forecasted to meet targets through 2026.

Third-quarter projections for total budgeted expenditures following offsets in 2021 are forecast to decline from the original estimate of $278.4 million to $264.6 million.

View the full financial forecast presentation on pages 17-53 of the commission presentation materials. Listen to the discussion beginning at 34:00 of the commission audio.

- Heard from Julie Pyper, senior manager of the Enterprise Project Management Office and the Office of Change Management, as she said that her department of 33 employees and 15 contractors is presently overseeing 42 total projects that have expenses of $64.6 million year to date through Oct. 31.

The goal of the Enterprise Project Management Office is to decrease project delivery risk to produce and safe and quality outcomes efficiently. Some of the projects include the upgrades to Priest Rapids Dam's generators and turbines, fiber system expansion, and substation upgrades. The Office of Change Management is also helping to manage 22 change events so stakeholders can be involved in the process as change happens.

Pyper added her budget is operating at $241,806 below a budget of $4.377 million through the end of September.

See Pyper's presentation on pages 54-97 of the presentation packet and hear the discussion beginning at 1:23:30 of the commission audio.

- Unanimously approved four separate contracts for professional services for various engineering projects that either exceed the utility's available resource levels, expertise or require specialized analytical tools that are not economical for the district to own. The services include the following general work classifications:

  • 1.Engineering for transmission lines and facilities
  • 2.Engineering for substation facilities
  • 3.Engineering for distribution line facilities
  • 4.Engineering for SCADA projects and power system protection
  • 5.Engineering for power system studies
  • 6.Construction management services

For full details of each contract see pages 16-207 of the commission packet.

- Unanimously approved three separate contracts for professional service to support Quincy Transmission Expansion Plan for services that include the following:

  • 1.Engineering for transmission lines and facilities
  • 2.Engineering for substation facilities
  • 3.Engineering for distribution line facilities
  • 4.Engineering for SCADA projects and power system protection
  • 5.Construction management services

For full details of each contract see pages 208-339 of the commission packet.

- Unanimously approved a change order for an existing contract with Cogsdale Corporation for $59,389.65. Cogsdale provides licensing and support for an enterprise software application Grant PUD uses for business operations including accounts payable, general ledger, warehousing inventory and construction management. The existing contract expires on the end of year. See additional details on pages 340-344 of the commission packet.

- Unanimously approved a change order for an existing contract with Voith Hydro for the manufacture and delivery of ten turbine runners and associated parts. It also includes the refurbishment of a number of turbine parts that are intended to be reused. The change order changes the not to exceed contract price by $1,473,475. Full details are available on pages. 345-383 of the commission packet