Grant PUD is forecasting that its net income will be approximately $10.9 million less than budgeted, according to a first-quarter financial report given to commissioners during their meeting on May 23.
Even with the change in net income, Grant PUD is projecting that it will achieve its financial metrics for liquidity, days cash on hand, debt service coverage and debt-to-plant ratio by the end of 2022.
The utility is projecting that there will be about $6.3 million in increased operating expenses over budget by the end of 2022. However, some of the items contributing to $10.9 million variance are the result of unrealized losses due to changes in the market value of Grant PUD's investments. These unrealized losses do not have an impact on cash flow.
The non-cash impacts are the result of changes in investment markets affecting the valuation of Grant PUD's investment portfolio. These valuation changes mean that Grant PUD experienced a market value adjustment of $14.4 million in the first quarter of 2022. While the market adjustment affects the 2022 net income projection, it is an unrealized loss, as the utility has no plans to sell off its investments before they mature, explained Mark Buchta, Senior Financial Analyst. When those investments mature, the PUD will purchase other investments that have a higher market value, he added.
The increase in expenses and market adjustments are partially offset by forecasted favorable results in sales to wholesale power purchasers of $7.4 million and an increase in retail power sales at $1.4 million. (Presentation begins at 1:20 in recording. See page 19 of presentation materials packet.)
Enterprise Portfolio Management is overseeing 38 projects
Grant PUD's Enterprise Portfolio Management Office is now managing 38 total projects, said Julie Pyper, Senior Manager of the Project Management Office. Thirty-one of the projects involve construction and upgrades to physical facilities and seven are for technological upgrades. Pyper said the purpose of the department is to help the business owners of the projects stay focused on running their part of the utility while the project management staff helps to coordinate the projects. (Presentation begins at 1:20 in recording. See page 56 of presentation materials packet.)
Safety metrics show improvement
Grant PUD's continued emphasis on safety is showing up on some key indicators, said John Price, Senior Safety Coordinator, as he gave a safety update to commissioners. While the utility hasn't yet reached the ultimate goal of zero recordable injuries, the district did see the recordable injury rate drop from 2.3 to 1.9 over the first four months of 2022. Safety meeting attendance continues to be above 90 percent and close calls in April were all reported on time. (Presentation begins at 2:50 in recording. See page 1 of presentation materials packet.)
In other business:
Commissioners appointed Angelina Johnson, Manager of Treasury Operations, as Grant PUD's Deputy Treasurer, to assist Treasurer Bonnie Overfield.
Commissioners also approved an update to the Strategic Plan. The update addresses recent staffing changes within Grant PUD's senior executive team.
Commissioners approved a change order of $2.627 million in the contract with IMCO General Construction for work on the Priest Rapids Right Embankment Improvement Project. The new not-to-exceed amount is now $23.976 million.