Commission Summary 3-8-2022: Budgeted expenses, revenues up for overall gain in 2021
Budgeted expenses, revenues up for overall gain in 2021
Year-end financial results for 2021 show increases in both expenditures and revenues, while key financial indicators remain strong.
Preliminary results show total expenditures of $417.2 million through December, up from the $380.6 million in the budget as originally approved. The total includes $165.5 million in operations and maintenance expenditures, up from the originally budgeted $143.6 million.
With large improvement projects underway at Priest Rapids Dam and on the electric system, capital expenditures total $157.2 million, up from 143.4 million.
Revenue, including strong results for energy sales to long-term power purchasers, wholesale power sales, and contributions from some customers for electric-system upgrades, offset total budgeted expenditures, reducing them to $289.1 million through December.
Better-than-expected revenue from retail energy sales totaled $231.7 million through December contributed to budget results ending the year with $73.9 million, up from the originally budgeted $47.7 million.
The preliminary results show Grant PUD outperforming most all its key financial metrics, including electric system liquidity, days cash on hand, consolidated debt-service coverage, and debt-to-plant ratio. Profitability metrics continue to miss targets through 2026.
Grant PUD was managing $459.8 million in cash and investments through December 2021, including $170.8 million in liquid cash and investments. Liquid investments are more easily converted to cash. Interest income contributed $3.6 million to the 2021 budget, through December.
Forecast scenarios show prolonged drought years, as well as inflation, could have major impacts on key metrics. Forecast scenarios show these impacts, and the need to begin borrowing to finance capital projects beginning next year could create a need for electric-rate increases in coming years.
Commissioner Terry Pyle said if a rate increase is on the horizon, Grant PUD should begin to prepare for it now. Commissioner Tom Flint said any future increases should be small and gradual, in alignment with the utility's strategic plan.
--Learned about the key capital projects Grant PUD's Fish, Wildlife, and Water Quality Department will focus on during the upcoming year. Grant PUD Fish and Wildlife Manager, Tom Dresser, said the department's 2022 capital budget is $3.96 million for 2022. The largest capital project planned is the installation of domestic and production wells at the Carlton Acclimation Facility located in Okanogan County on the Methow River.
It is anticipated that the project will be ready for bid in the upcoming weeks with construction lasting into next year.
Dresser provided a general overview of the department's business challenges that the group will be addressing in 2022 and beyond to ensure Grant PUD is continuing to meet its stewardship responsibility while also balancing budgetary requirements. The main issues discussed include:
- Finalizing preventive maintenance plans for hatchery facilities
- Completing the 10-year hatchery monitoring and evaluation report.
- Planning for the Priest Rapids Hatchery siphon intake
- Succession planning within the department to ensure the appropriate knowledge transfer can occur
--Were provided the year-end summary of Grant PUD's strategic metrics – financial and performance indicators for 2021. The organization is meeting or improving on many of its metric goals. Goals consist of measuring outcomes throughout the organization including monitoring financial, organizational, and operational progress, as well as outstanding customer service.
A full list of the strategic metrics and the end-of-year status for each is available on pages 40-57 of the commission presentation materials. Hear the discussion beginning at 1:32:50 on the commission audio.
-- Heard Chief Dam Safety Engineer Brandon Little make a case to commissioners for a $3.9 million increase to an ongoing contract with MacKay and Sposito Inc. for continued construction inspection and testing support on the Priest Rapids Right Embankment Improvement Project.Grant PUD lacks the personnel to do all this work internally.
The change-order would bring the total contract not-to-exceed cost to $12.2 million. The contract with the company has been in place since 2011. The company's rates are competitive, Little said. Ongoing service has been excellent and the roster of inspectors are highly qualified and familiar with the work. Rebidding the contract would result in costly project delays. Commissioners are scheduled to vote on the change order at their next meeting, March 22.
--Heard from Manager of Cultural Resources Brett Lenz that plans are being made to reopen the Wanapum Heritage Center for visitors soon. Although no exact timetable has been established, he said the reopening will occur following the completion of some of the group's annual spring cultural activities.
Other items discussed during the presentation included:
- A spotlight of the Beverly Bridge, the only historic period resource that is in Grant PUD's boundary and listed on the National Register of Historic Places.
- Several traditional program activities of the Wanapum, including a canoe rehabilitation project scheduled to begin in late spring.
- Providing archeological monitors for the Priest Rapids Right Embankment Improvement Project.
View the full presentation on pages 58-70 of the commission presentation materials. Hear the discussion beginning at 2:05:30 of the commission audio.
-- Unanimously approved a resolution pre-qualifying contractors to perform electric work for Grant PUD on projects related to the distribution and transmission system substation construction and energized substation maintenance. For details see pages 10-24 of the commission packet. Hear the discussion at 2:40:45 on the commission audio.
-- Unanimously approved a $225,000 increase in a contract with Gannett Fleming, Inc. for a new contract total of $3.7 million for dam-safety-related tasks, including safety evaluations, analyses and design. For details see pages 24-29 of the commission packet. Hear the discussion at 2:41:30 on the commission audio.
-- Unanimously approved a $1.2 million increase to a contract with Cornforth Consultants, Inc. for a new, not-to-exceed contract total of $5.3 million primarily for geotechnical-related engineering support for dam safety. For details see pages 29-33 of the commission packet. Hear the discussion at 2:46:45 on the commission audio.