Commission Recap 8-11-2020: 2020 budget’s on target through June
Grant PUD's 2020 budget is on target through June, with total expenditures of $269.5 million now forecast through year end, $1.3 million over budget pushed by higher-than-forecast capital expenditures.
Capital expenditures are forecast to end the year at $109.9 million, 4% above budget, based on increased confidence in the amount of projected work that will be complete this year. This projection will become more precise as the year goes on, John Mertlich, senior manager of Financial Planning and Analysis, told commissioners.
Expenditures through year-end for both labor and operations and maintenance are projected to come in slightly under budget at $76.2 million and $53.9 million.
As of the end of June, Grant PUD has spent $6.8 million in labor costs related to the COVID-19 response.
"Considering everything that's going on, it looks like we're in a pretty good spot," Commission President Tom Flint said.
No rate increases planned in the preliminary 2021 budget
Budget forecast for 2021 are still preliminary, but no electric rate increases are expected to be part of it, commissioners heard Tuesday.
Total expenditures are currently forecast at $265.1 million, but this will likely change as revenue and expenditure figures are refined in the coming weeks.
Commissioners will get a look at the proposed 2021 budget in mid-September. Three hearings to present the budget to the public and gather public feedback, will happen in October. Firm dates will be announced as they become available. The hearings' format could be via virtual meeting, depending on the status of the COVID-19 pandemic.
Final commission review of the budget is planned for late October, with a vote expected Nov. 11.
State lawmakers, Vantage businessman seek to keep marina
State Rep. Tom Dent and State Senator Judy Warnick appealed to Grant PUD commissioners Tuesday to continue negotiations with a Vantage businessman to preserve the marina he has owned and operated on the Columba River since 1991.
The marina is built over Grant PUD property and found to be out of compliance with the utility's current federal license to operate Priest Rapids and Wanapum dams. Marina owner Brian Stockdale, state lawmakers and Kittitas County Commissioner Cory Wright asked commissioners to delay the Aug. 15 deadline for Stockdale to remove the marina.
A Kittitas County sheriff's deputy and a Tacoma resident whose family often recreates at the marina and nearby beach also spoke in favor of preserving the marina.
"I'm certainly sensitive to Brian Stockdale and everything that's going on there," Commission President Tom Flint said, pointing to long negotiations with other shoreline communities to bring Grant PUD shoreline land use into compliance with the utility's federal license to operate Priest Rapids and Wanapum dams. "In the world we are in today we have huge scrutiny on the license and everything we do."
Commissioner Flint said the commission would take the public comment under advisement and get back to Mr. Stockdale as soon as possible.
Listen to the discussion beginning at 2:26:25 on the commission audio.
Lease negotiation to continue over orchard land near Mattawa
Grant PUD will continue negotiations with a Mattawa orchardist to phase out a 23-acre orchard from the utility's shoreline lands along the Columbia River.
The orchardist is one of three who lease Grant PUD project lands to grow fruit. The other two have agreed to utility officials' request to phase out their orchards.
Grant PUD General Counsel Mitch Delabarre told commissioners he will seek the commission's approval to begin condemnation proceedings against the orchardist if further negotiations are unsuccessful.
Listen to the discussion at 4:29:00 on the commission audio.
-Heard about the efforts and accomplishments of Grant PUD's Enterprise Technology group's response to COVID-19 as Chief Technology Officer, Derin Bluhm highlighted the many technological solutions the IT department coordinated and implemented as part of the utility's efforts to seamlessly continue operations.
"I can't say enough about the folks in this organization and their response to minimize the financial impacts and to maximize the availability of our services to our customers and to our stakeholders throughout the business and community," said Bluhm
Efforts involved leveraging existing efforts that allowed many throughout the organization the opportunity to work remotely, including customer service call-center capabilities.
General Manager/CEO Kevin Nordt echoed Bluhm's praise for the IT staff saying the group has done a "heck of job" supporting the organization's ability to keep functioning through the COVID-19 pandemic.
In addition to the department's response to COVID-19, Bluhm also updated the commission regarding the status of key projects including:
- Firewall replacement efforts
- Increasing access to data management and data modeling information
- Migration of district data to Office 365 and the SharePoint Cloud platform
- Upgrading core network gear
- Utilization of a new cloud-based contract management system
- Deployment and migration status of a new customer care and billing system
- Transitioning existing design tools and GIS programs with an ESRI based system
See the presentation on pages 28-47 of the presentation materials and listen to the discussion starting at 3:12:15 of the commission audio
-Learned about the current rulemaking process for the State's Clean Energy Transformation Act during the quarterly legislative update. The act, signed into law by Governor Inslee in 2019, commits Washington's electricity supply to be free of greenhouse gas emissions by 2045. Currently the Department of Commerce is working with a variety of stakeholders, including utilities, to develop rules and other reporting procedures.
Senior Manager of External Affairs, Andrew Munro said his group is working in conjunction with other utilities to ensure the rules are flexible, allowing Grant PUD to meet the standard while at the same time providing reliable energy to its customers.
Commissioners also listened to updates regarding:
- COVID-19 proclamations and their impact to overall operations at the state government level
- Preparations for the 2021 Washington state legislative session
- Efforts to secure state and federal fiber funding
- Tax and hydro related legislation concepts
- Potential state and/or federal Covid-19 funding for utilities
See the presentation on pages 48-59 of the presentation materials and listen to the discussion starting at 04:00:50 of the commission audio
-Commissioners heard about the efforts of the Construction and Maintenance department to keep the utility's critical electrical and fiber-optics services operational for customers during the pandemic. To reduce the potential exposure to COVID-19, field crews have been split into two groups, with each group working opposite days to prevent any wide-spread contamination of the virus amongst personnel.
Supervisors throughout the department shared updates to key projects and essential tasks within their respective groups. Efforts include responding to outages, fulfilling customer service work orders, maintaining substation equipment, fiber system upgrades, updating the district's phone system, testing wood poles to ensure they structurally sound and other duties.
Line Crew Supervisor, Chris Heimbigner shared an update on the district's pole fire mitigation efforts that will decrease the number of pole fires in the county. Approximately 963 poles have had new components replaced. These new components are made of polymer/plastic and reduce the likelihood of a pole fire occurring.
Pole fires can occur when excess dust and debris on poles becomes electrically charged. This can heat up the components on the wood pole and potentially lead to a fire. To-date any poles that have received the new style of components have not had any pole fire damage.
See the presentation on pages 17-27 of the presentation materials and listen to the discussion starting at 1:41:35 of the commission audio
— Commissioners unanimously authorized Grant PUD to issue Electric System Revenue and Refunding Bonds in the aggregate principal amount not to exceed $175 million.
Of the total request, $100 million would be used to refinance at a lower interest rate two series of bonds coming due this year. The refinancing transaction is made up of two, separate $50 million bond series. One series will be at a fixed rate for five years. The other at an adjustable rate for three years. Interest rates are at an unprecedented low and could decline even more before the bonds would be issued. The short-term debt is intended to protect Grant PUD from any potential rate shock. The total request would give the Treasury team ability to issue through year's end an additional $75 million in new debt, if needed, to help cover capital spending.
"This is a good opportunity and we ought to take advantage of it," Commissioner Judy Wilson said before the vote of the chance to refinance debt to a lower interest rate.
See pages 26 through 95 ( pages 94-95 for explanation) of the commission packet for more information.
— Commissioners unanimously approved a contract with WEG Transformers USA to supply power transformers for the utility for a not-to-exceed contract price of $28,276,871. The contract with provide the utility with an alternative source for procuring power transformers to mitigate risks associated with having only one source.The district requested and received five different bids from four different bidders for the contract. Over the course of the five-year contract, the District is obligated to purchase at minimum three power transformers which will cost $2.6 million. There is an option, but not a requirement to purchase additional transformers within the not-to-exceed price.
See pages 9 to 21 of the commission packet for more information.
— Commissioners Unanimously approved a contract with Hancock Sand Blast and Coating for $5,554,796 for turbine and generator rehabilitation lead abatements and coating for Priest Rapids Dam. Applying the lessons learned from the first three renovated units at Priest Rapids, the contract work will allow for a more abrasive and resistant coating inside the scroll case and consolidate all painting service into one contract and start with the renovation work on the dam's next unit set for renovation.
See pages 22 to 25 of the commission packet for more information