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Commission Recap 11-12-19: No rate increase in 2020, except for evolving industry

Commissioners unanimously agreed Tuesday that no Grant PUD customer, except those classified as "evolving industry" under Rate 17, will receive an electric-rate increase in 2020.

Commissioners Tom Flint, Judy Wilson and Nelson Cox were present for the vote. They said the absent commissioners, Dale Walker and Larry Schaapman, also agreed.

"This is a big deal, Commissioner Tom Flint said after the vote. "We've been working a long time to get to financial stability and lower the District's debt to get to the position of zero rate increase. It's a very good day for our ratepayers and it's been a lot of work down the road to make this happen."

Commissioners Cox and Wilson agreed.

"I'm glad to see us be in a position to hopefully reduce some of our debt in the next couple of months and keep the rates stabilized for everyone," Wilson said.

Next year will be the second consecutive year without a rate increase. Before 2019, Grant PUD customers had received annual increases of at least 2% since 2009.

The decision exempts only the county's approximately 25 cryptocurrency mining operations — the only businesses in the county that currently qualify as "evolving industries." These businesses pay more for their electricity under Rate 17 to counter the higher concentration, business and regulatory risks they present for Grant PUD and its other customers. The rate is being phased in and takes full effect in 2021.

Grant PUD expects to reduce its $1.3 billion debt in 2020 by using some $95 million in excess cash to cover more of its $140.9 million in budgeted capital expenses next year, as well as pay off or refinance some of its debt to a lower interest rate.

Fiber-optic expansion will continue to be fully funded in 2020 with a budgeted $13.3 million.

Commissioners hosted three public hearings on the proposed $291 million budget for 2020. They expect to vote on the budget at their next meeting, Nov. 26, in the Ephrata Headquarters Commission Room.

In the current 2019 budget, operations, maintenance and capital spending are expected to come in 8 percent below budget, according to the latest estimates through September.

See the most recent budget presentation here. Listen to the discussion at 01:05:40 on the commission audio.

Commissioners also:

— Heard that Grant PUD line crews respond to an average of 1,000 "trouble reports" annually, including pole fires that break out, especially, around tilled fields in Grant County after rain follows a long dry spell.

Mike Tongue, senior manager for Power Delivery, told commissioners that crews now know that the pole fires are caused when the dust that settles on a metal component of the pole gets wet and becomes electrified, generating heat that ignites the dry wood of the pole. Poles around tilled fields are vulnerable, because tilling kicks up dust.

Crews are gradually replacing these metal components – a type of breaker, called a "cut out," – with polymer ones that don't conduct electricity, he said.

That was one of dozens of the year's achievements that Tongue and Will Coe, Grant PUD Power Delivery engineer, highlighted across all departments to improve reliability of the Grant PUD electric system.

Read Tongue and Coe's full presentation here on slides 21 to 34. Listen to the discussion beginning at 02:57:00 of the commission audio.

— Heard from Dave Churchman, chief customer officer, that the annual review of Rate Schedule 17 for evolving industries will be presented to the commission during their next meeting.

Following historic demand for new power requests that began to escalate during late summer of 2017, commissioners and staff worked to determine options for ensuring current and future customers wouldn't be adversely impacted by the potential load growth. At that time total requests for power would have more than doubled Grant PUD's existing demand. Upwards of 80% of the requests for new service came from cryptocurrency operations.

The influx of requests led to a revamped customer-connection process. Grant PUD began instituting application and study fees, as well as developing Rate Schedule 17 for evolving industries. These efforts also led to the formation of a traditional and evolving industry customer queues.

On an annual basis, Grant PUD reviews customers whose industry and activity qualifies them as part of the Rate Schedule 17 to determine the rate's customers:

  • Regulatory risk
  • Business risk
  • Concentration risk

Commissioner Tom Flint complimented the staff as they have worked on this issue for the past two years. "That has been one of our biggest challenges that we've had to do the right thing for our existing customers, hats off to the staff." he said.

(Hear the discussion beginning at 02:21:30 on the commission audio.)

— Heard that Grant PUD continues to explore grant opportunities for its fiber network. Efforts from last year's legislative session saw the creation of the State Broadband Office and funding for rural broadband projects. Current funding for the office is set at $23 million, of which approximately $6 million in grant funding will support projects throughout Washington state.

As part of the quarterly report, senior policy analyst Cliff Sears told commissioners that rule making regarding the programs continues to be defined. He anticipates the new Broadband Office will begin accepting grant applications sometime in early 2020.

Federal programs for rural broadband grants also exist. However, qualifications for federal grant funds are more stringent and have historically excluded PUDs from participating, Sears said. New options appear to be more promising and something Grant PUD will continue to explore.

As the 2020 state legislative session approaches, Grant PUD is working with PUD's and other industry members across the region to support lawmakers' efforts to put renewable hydropower on equal tax footing with other renewable resources.

(Hear Sears' presentation which begins at 03:44:20 of the commission audio. See the presentation on pages 35-43 of presentation materials for additional details regarding the quarterly legislative update)

— Reviewed and approved the 2020 Internal audit plan presented by Dmitriy Turchik, Grant PUD's Auditor. The 2020 plan includes eight internal audits.

As part of his semi-annual report to the commission, Turchik reported on the status of the 2019 audit plan. Including presenting summaries of three of this year's completed audit reports.

(The discussion begins at 01:42:55 of the commission audio. See details of the 2020 audit plan and 2019 audit reports on pages 01-12 here.)