Commission recap, 01/22/2019

Power Production earns praise for successful dam-safety audit

Federal dam-safety auditors are pleased with Grant PUD's ongoing efforts to keep Priest Rapids and Wanapum dams safe via routine inspections, monitoring, surveillance, emergency action planning and training of dam operators and engineering technicians, commissioners learned Tuesday.

Grant PUD is mostly finished with its Owner's Dam Safety Program audit, conducted by three external peer reviewers, Ian Hunter, chief dam-safety engineer, told commissioners. The audit's documentation review and site visits are finished. A draft of auditors' findings should be finished by mid-February and the final report in April to May. Most early findings point to a need for better documenting of training, succession planning, continuous improvement and other efforts Grant PUD already takes to meet federal safety requirements.

"A ton of work was done with a good result," Rich Wallen, managing director of Power Production, told commissioners. "The key takeaway is we need to take credit (through documentation) for what we are already doing." (Page 12 of commission presentation materials. Discussion begins at 1:40:15 on the commission audio.)

In other business, commissioners:

– Unanimously approved a 3-year employment agreement with General Manager and Chief Executive Officer Kevin Nordt. The agreement takes effect Jan. 22, 2019 and extends to Jan. 22, 2023. On each 1-year anniversary date, the contract automatically extends one year unless commissioners give Nordt 90 days' notice prior to the renewal date. The agreement reflects Grant PUD's wishes "to recognize Mr. Nordt's considerable experience and proven performance in successfully managing a large public utility," and provides him with "sufficient protection against dismissal without particular reason." It further gives commissioners the ability to terminate his employment "at any time, with our without cause."

The contract begins with Nordt's current annual salary of $292,032, plus an annual deposit of $20,000 in a supplementary 457(f) retirement plan. Annual salary increases will be at the discretion of the commission. His remaining benefits are in alignment with existing PUD employment policies. (View the full agreement on pages 152 – 158 of the commission packet).

– Unanimously approved a three-year, $3.97 million contract with Central Washington Management Group to manage the day-to-day operations at Crescent Bar Recreation Area. The contact

The contract was awarded following a comprehensive of potential bidders. The management group has operated the recreation site since 2016. (See the full contract on pages 27-151 of the commission packet and is discussed at 3:24:00 of the commission audio).

– Unanimously agreed to condemn and purchase for public use 2.9 acres needed to rebuild the right embankment (Yakima County side of the Columbia River) of Priest Rapids Dam. Grant PUD General Council Mitch Delabarre asked commissioners to approve the condemnation as a precaution.

He told commissioners the condemnation would likely not be necessary, because the property owner and Grant PUD have since agreed to terms of sale.

State laws RCW 54.16.020 and 54.16.040 allow Grant PUD to condemn and acquire land and other property rights inside and outside its limits necessary for furnishing itself and its inhabitants or other persons with electrical current… and to build facilities for electric distribution.

The shoreline strip of property is on the route of an old rail line. It currently contains a rustic road. The new embankment must extend across the property to access the bedrock, below. The road would be rerouted around the new construction. (Pages 11 to 21 in the commission packet. 3:19:50 on the commission audio.)

– Discussed a contract with the state Department of Fish and Wildlife for one year and increase the contract's not-to-exceed limit by $439,196.19 for additional, federally required monitoring and evaluation of the fish species associated with Grant PUD's hatchery programs.

Grant PUD's federal license to operate Priest Rapids and Wanapum dams requires Grant PUD to mitigate for the effects of its dams on migratory fish, including spring chinook and steelhead in the Wenatchee and Methow rivers and Nason Creek. Chelan PUD has similar obligations. To control costs and seek efficiencies, the Chelan and Grant PUDs submitted a joint request for proposals and determined the state Department of Fish and Wildlife could provide the most complete and cost-effective work.

The contract extension brings the contract's new not-to-exceed total to $2,321,939.79. (Pages 211 to 214 in commission packet) (The original version of this bullet point incorrectly stated commissioners had already approved this change order. This version has been edited to correct the error.)

– Approved a contract extension for AVANTech, Inc. The group provides specialized engineers for projects in Power Delivery. (See pages 22-25 of the commission packet).

– Unanimously instructed Grant PUD to create an interest-bearing account, separate from general Grant PUD funds, for "Rate Schedule 17 Deposits." Grant PUD will deposit in the fund the difference between what it collects from customers under the new Rate 17 for evolving industries and what it would have collected under the lower-cost Rate Schedule 7, which applied to these customers before Rate 17 was created. Some customers are challenging Rate 17 in court in Blocktree Properties, LLC, et al. v. Public Utility District No. 2 of Grant County.

Grant PUD Attorney Mitch Delabarre advised commissioners to approve the new account so these funds are available to pay any refunds, should the plaintiffs prevail in their legal action. Any funds remaining in the account after the litigation is resolved will be transferred to Grant PUD's general funds. (3:41:15 on the commission audio).

– Learned that Grant PUD ended 2018 with total electric rate revenue of $200.2 million – 1.6 percent below the budgeted forecast of $203.4 million. The reduced revenue corresponds to annual power sales that came in 1.9 percent below budget.

Grant PUD Financial Analyst Jeremy Nolan attributed the below-budget result to cooler late-summer temperatures, which contributed to reduced need for air conditioning, and a wetter than usual summer, which contributed to reduced need for irrigation. Budget estimates were also affected by the delayed start-up of two new companies in Grant County, Nolan said.

The difference in 2018 budget actuals to budgeted estimates was the smallest it'd been in five years, Nolan said, an indication that their forecasting methods are improving – part of Grant PUD's commitment to continuous improvement. (Pages 21 to 24 in the commission presentation materials)

— Heard that contractor crews are mobilizing and schedules for fiber expansion are anticipated to be finalized in the upcoming months. Expansion plans are set for crews to complete expansion to the first nine locations of the expansion sequence this year. That is one of the priorities for 2019 the Wholesale Fiber group shared with the Commissioners.

After adding 1,914 new subscribers in 2018, the high-speed network has a customer take rate of 53.89 percent. A number that has risen 23 percent in the past five years. The goal for 2019 is to achieve an overall network take-rate of 56.5 percent. Which will equate to adding more than 2,500 subscribers in the upcoming year.

The sequence of expansion areas is available at www.grantpud.org/getfiber. (View the entire presentation on pages 40-56 of staff presentations. Report to the commission begins at 3:52:40 of the commission audio).

— Learned about a few of the major initiatives Power Delivery will focus on in 2019. Driven by customer load and system growth, the group will see substation expansion, conduct transmission studies and prepare for a second phase of design build this year.

Following a handful of delays securing supplies, the Rocky Ford-Larson transmission line is anticipated to energize the week of February 4. (View the entire presentation on pages 25-39 of staff presentations. Report to the commission begins at 2:28:25 of the commission audio).

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