Commission recap 08/13/2019, Wheeling agreement with irrigators extended for another year

Grant County irrigators who draw their water from the federal Columbia Basin Project irrigation system will pay the same "wheeling" fee for one more year to transport over Grant PUD power lines the federal electricity they need to power their water pumps.

Grant County PUD commissioners unanimously approved the extension of an existing agreement with the federal Bureau of Reclamation — supplier of the federal Columbia River water — while analysis continues on a longer-term wheeling rate Grant PUD will eventually charge.

The Bureau and irrigators, who ultimately pay the wheeling fee, have objected that Grant PUD's cost-of-service-based fee — both the current one of about $800,000 per year under the existing agreement and a proposed new fee that would about double the current amount — is too burdensome for the county's farmers.

Commissioner Tom Flint has said he feels Grant County irrigators on the federal system should receive a unique wheeling fee, that contemplates cost of service, but also takes into account the irrigators' heritage as core customers of Grant PUD.

Tuesday's unanimous vote followed comments by Rob Skordas, deputy regional director of the federal Bureau of Reclamation.

Skordas told commissioners the proposed fee would be a "significant impact to the farming community of Grant County." He added that Bureau officials think that wheeling federal power to pump federal water to farms is deserving of special treatment.

Roger Sonnichsen of the Quincy Irrigation District, the county's largest, seconded Skordas' comments.

The Bureau and irrigators say they need time to study some of the latest figures in Grant PUD's latest fee proposal before the irrigation districts begin their budgeting process in preparation for next year.

The Bonneville Power Administration charged Grant County farmers no wheeling — transportation fee — for electricity it delivered over its transmission line.

Grant PUD purchased Bonneville's transmission line decades ago, but agreed not to charge wheeling for 40 years. That agreement ended June 20, 2017. Since then, Grant PUD, the Bureau and irrigators have been operating under yearly wheeling agreements.

(Hear the discussion beginning at 02:51:15 of the commission audio and commission approval discussion beginning at 03:08:00)

Spending expected to come in under budget in 2019

Grant PUD appears on track to end the year about 7% under its 2019 operations, maintenance and capital budget of $268.23 million, with most the underspend coming from the revised timing of capital spending.

The utility budgeted nearly $117 million for the year's major capital projects and expects to end the year nearly $18.2 million — nearly 16 percent — shy of the total, due mostly to changes in project timing and payments, Nolan said.

For example, $15.3 million was budgeted for expansion of the Grant PUD fiber-optic network this year. The year-end spending projection is $1.93 million below budget, because crews won't be able to complete all the expected work by year end.

Grant PUD defines "capital projects' as work on an asset valued at $10,000 or more that has benefit beyond the present year and a useful life of 5 years or more. These most often include new equipment or upgrades/expansion of existing equipment, such as electric system components s and turbine/generator units at the dams.

On the maintenance and operations side, utility officials expect to end the year about $1.4 million below budget, the underspend driven, in part, by a lower-than-expected number of employees on staff to be able to complete the planned work.

The overall full-time-regular head count at Grant PUD was 616 at the end of June, five positions below expected, driven by challenges to fill the right posts with the right people. Seasonal employment is up to 76 employees from the budgeted 52 employees.

"It's not about choosing not to hire folks," General Manager Kevin Nordt told commissioners. "It's about trying to find the right folks, and it's a tight market at the moment. We're trying to grow our own (promote from within) to shield ourselves from the market."

Total overtime pay budgeted at $5.52 million is expected to end the year up 21% at $6.71 million, due to response to events, such as recovery from wildfire damage, and to compensate for the below-expected full-time-regular employment while still needing to complete critical work, Nolan said.

(Hear the entire presentation beginning at 01:03:30 of the commission audio. See the presentation to the commission on pages 1 to 8 of commission presentation materials)

Commissioners also:

— Heard about the many construction and maintenance projects needed to keep the Grant PUD electric system reliable revealed a system that is growing faster than the number of personnel needed to preserve and improve it.

Across all categories of electric system work projects, from substation upgrades to repair and rebuilding lines and equipment to hooking up customers, to fiber-optic network expansion crews are struggling to keep up with their workload, Will Coe, Power Delivery construction and maintenance engineer told commissioners.

Line crews are currently down by five full-time regular employees due to retirement, promotion and employees heading for jobs closer to hometowns, Coe said. Workloads are requiring overtime to address critical issues.

Grant PUD has been actively working to fill vacancies on staff, General Manager Kevin Nordt told commissioners.

The employment market is tight at the moment, as California's Pacific Gas & Electric has hired aggressively in the wake of the destructive California wildfires.

At Grant PUD:

  • Six apprentices have been hired.
  • Commissioners Tuesday approved a $16.6 million contract with Potelco Inc. of Sumner, WA, to provide a line crew to help Grant PUD crews in the field. Potelco was the lowest of four bidders on the contract.
  • Jobs are being advertised, but the challenge has been to find the right people.
  • The transition from paper to digital job handling will allow crews in the field to receive assignments more efficiently. Crews are learning the new system now.
  • Crews have switched to installing fiberglass crossarms on power poles instead of wood ones. The fiberglass arms are lighter, don't attract nesting birds, don't decay, reduce likelihood of pole fires and are about the same cost as wood.

(Hear the entire presentation beginning at 02:16:25 of the commission audio. See the presentation to the commission on pages 24 to 36 of commission presentation materials)

— Heard that Grant PUD's Information Technology group's data optimization project has officially rolled out to the entire organization. The initiative enables the automation of time sheet processing and provides detailed expense data capture and reporting.

During his quarterly report to the commission, Chief Technology Officer Derin Bluhm, told commissioners that along with saving staff time when processing timesheets, the project will allow more data driven view of which projects and tasks employees are working on. This data will in turn help with budgeting decisions for the utility in the future.

Additionally, the IT group has had several other significant accomplishments in 2019. A project to upgrade the customer care and billing system officially kicked off this month and the software human capital management system project began in July. Both projects are slated for completion in 2020.

(Hear the entire presentation beginning at 01:31:05 of the commission audio. See the presentation to the commission on pages 9 to 23 of commission presentation materials)

— Learned that staff is preparing for Washington state's 2020 legislative session. During their quarterly update, the government affairs team said that as they prepare for next year's session, they will be looking at opportunities to expand rural broadband funding as well as identify grant opportunities for Grant PUD's fiber network.

The team will also be looking at ways to help support costs associated with the turbine modernization at Priest Rapids dam through PUD sales tax parity which could save the utility in tax costs throughout the course of that project.

(Hear the entire presentation beginning at 03:13:55 of the commission audio. See the presentation to the commission on pages 37 to 44 of commission presentation materials)

— Unanimously approved a contract with Potelco Inc. for providing a temporary line crew support for Grant PUD. The contract provides dock crew service through 2021 for a total cost of $16.6 million. The contract allows the Potelco crew to perform various projects associated with line work and help alleviate the backlog of projects and ensuring the service needs of customers are being met.(Hear the discussion beginning at 03:03:50 of the commission audio. For complete details, see pages 12 to 16 of the commission packet.)

— Unanimously approved a resolution implementing Senate Bill 5418 which increased the requirement for competitive bidding for the purchase of any item or times of the same kind of materials, equipment or supplies to greater than $30,000. The prior requirement was greater than $15,000. It also increased the use of the alternate bid procedure specified in RCW 39.04.190 to an amount exceeding $30,000 per calendar month, but less than $120,000 per calendar month. The prior requirement was an amount exceeding $15,000 per calendar month, but less than $60,000 per calendar month (For complete details, see pages 7 to 9 of the commission packet.)

— Unanimously approved a resolution implementing Senate Bill 5418 to revised small works limits. The Senate Bill revised RCW 39.04.155, increased the threshold of small works contracts to those with an estimated cost of $350,000 or less. The prior requirement was $300,000 or less. (For complete details, see pages 10 to 11 of the commission packet.)

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