Commission Recap: Sept. 11, 2018

Wheeling-fees conversation continues with irrigators, Bureau

The issue of fees charged to the Federal Bureau of Reclamation for wheeling services was back as a topic of discussion during Tuesday's meeting. Commissioners heard directly from both PUD staff and the Quincy-Basin Irrigation District regarding a proposed new contract that would establish the wheeling rate.

If approved, the contract would replace the existing memorandum of understanding — an interim agreement — between Grant PUD and the Bureau. Both parties entered the agreement last summer. The agreement governs the delivery of federal power, using Grant PUD's power lines, to local irrigation districts. The agreement runs through the end of this year.

Grant PUD purchased transmission lines from Bonneville Power Administration decades ago, but agreed not to charge wheeling fees for 40 years. That original 40-year agreement expired June 30, 2017. Since that time, both parties have been operating under the interim agreement.

During their presentation to the commission, Grant PUD staff said that rates in the proposed contract are based on the PUD's cost of service analysis. The rate is designed to recover all of the transmission and distribution costs incurred by Grant PUD to deliver power to the local irrigation districts.

It is estimated that the new wheeling fee would be around $800,000 a year. The Bureau proportionately passes this fee onto each irrigation district based on their use of the wheeled power.

During Tuesday's public comment period, Darvin Fales, manager of the Quincy-Columbia Basin Irrigation District asked the commissioners not to sign the proposed contract, which is scheduled for action during the Sept. 25 meeting, and extend the current interim agreement.

Fales agreed that eventually a contract is the right thing to do, but he would like to allow more time for the irrigation district and the PUD to continue working through differing opinions of how to apply the cost-of-service model for this wheeling rate.

According to Fales, the Quincy Irrigation District's share of the new wheeling rate could be as much as $650,000.

The Bureau and Grant PUD have been working on a new contract since last year. Most all of the public discussion has been with the irrigators, not Bureau decision makers.

"Somewhere along the way we need to get the Bureau to weigh in," said Commissioner Larry Schaapman. He encouraged a representative of the Bureau to provide input on the proposed contract to the commission.

Commissioners plan more discussion and a potential vote on a new contract, potentially as soon as their next meeting, Sept. 25. (Pages 23- 56 of the commission packet)

Crescent Bar leaseholders hear good feedback on longer water/sewer payback

Commissioners spoke mostly favorably Tuesday about a proposal that would more than double the time Crescent Bar Island leaseholders have to repay Grant PUD for the leaseholders' portion of $13 million in PUD-funded water-and-sewer improvements on the Columbia River island. (Discussion begins at 3:00:15 of the commission audio)

They plan to vote on the proposal at their Sept. 25 commission meeting.

The island's homeowners' associations in July proposed spreading payments for their approximately $7.9 million portion over 25 years, rather than the agreed-upon 10 years.

The extra time, they say, is needed because the final cost for the projects is far higher than was anticipated at the time of the initial agreement, when the leaseholders' portion was expected to be about $2 million.

A staff analysis of the proposal shows the proposed 25-year payback, with interest, is "economically neutral to slightly positive" to Grant PUD.

"We understand our obligation," Gary Wirta, president of one of the island's three homeowners associations, told commissioners Tuesday. "The 10-year program will be very much a hardship on our residents. Only 10 percent of them live here year-round."

Repayments would begin Jan. 15, 2019, with interest based on the prime rate throughout the 25-year payback period. Every five years one-quarter percent would be added to the interest rate.

Commissioner Bob Bernd contrasted the amicable nature of the current proposal with the years of contention and litigation over the future of private residences on the Grant PUD-owned island.

The dispute ended in eventual settlement, with the leaseholders of island RV homes and condos getting new market-rate leases in exchange for their agreement to pay their share of needed upgrades to the water/sewer system.

"It feels good to me that we have reached this point when maybe we do have a win-win situation and maybe we could work together to resolve our differences," Bernd said of the proposal.

Commissioner Tom Flint agreed, "We've got a win-win thing going here. This proposal would be beneficial for you and, in the long run, would be beneficial to ratepayers of the District," he said. "I would certainly support it."

Commissioner Larry Schaapman agreed with the longer payback period, given that the actual cost of the water/sewer systems was much higher than originally thought.

"In my estimation, this is the right thing to do. I would support it," he said.

Commissioner Dale Walker disagreed with the proposal, saying he believed it was based on an unchanging, 5-percent prime rate. His fellow commissioners countered that the proposal's interest-rate adders increase the rate every five years.

Commissioner President Terry Brewer was away on Grant PUD business Tuesday. (Pages 16-22 of the commission packet)

Commissioners also:

— Unanimously approved increasing the amount of a contract with consultant Jack R. Benjamin Associates of Menlo Park, California for continued seismic analysis of the left embankment at Wanapum Dam. The contract will increase by a total of $375,000 to a new total of $900,000. (Pages 11-15 of the commission packet)

The project will define how susceptible the left bank would be to a breach in the event of a strong earthquake. Data from the study will provide Grant PUD with greater insight into what, if any, remedial measures might be necessary to increase the seismic stability of the left bank. (Discussion begins at 3:24:05 of the commission audio)

— Heard that Grant PUD is on track to hit most of the financial, safety, customer service, operational and fiber-optic targets set in the 2018 Strategic Plan. Estimates will become more complete as Grant PUD's 2019 budget discussion continues over the coming weeks. (Pages 1-7 of staff presentation materials) / Presentation begins at 1:48:35 of the commission audio)

— Heard from Manager of Cultural Resources Brett Lenz, who expects the department to end the year under budget. Department officials continue to work with the Wanapum to protect and preserve archeological sites along the Wanapum and Priest Rapids reservoirs. (Pages 25-32 of staff presentation materials) / (Presentation begins at 4:06:45 of the commission audio)

— Learned that the Grant PUD Fish and Wildlife Department expects to end the year nearly $534,000 over budget, driven mostly by capital overruns for hatchery upgrades, removal of predators that feed on young salmon and outstanding costs for acoustic tags for fish-survival studies.

The department's achievements for the year include:

  • Achieved survival standards for juvenile steelhead, yearling Chinook, sockeye and coho.
  • Reached long-term agreement with the Yakama Nation and agencies on survival standards for these same fish species.
  • Reached a 10-year agreement to achieve "no net impact" for Pacific Lamprey passage.
  • Successfully lobbied for a new state law that allows the Wanapum to fish for sturgeon for food and ceremonial purposes.

Fish and Wildlife Manager Tom Dresser attributed much of the success to the good relationship Grant PUD has nurtured with the state, federal, local agencies and tribes that provide oversight to PUD efforts to mitigate for impacts to fish and wildlife from Priest Rapids and Wanapum dams. (Pages 8-24 of staff presentation materials) / (Presentation begins at 2:10:50 of the commission audio)

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