Quick action on debt work to save Grant PUD $158 million*
EPHRATA — Quick work and careful market watching by Grant PUD's Finance team resulted in debt-reduction and refinancing work that will save the utility just over $158 million in debt service through 2044.
"We were in a good position to act when interest rates began to steadily decline," Senior Manager of Treasury Bonnie Overfield said. "The District has policies in place to refund bonds when savings levels are met. Debt-service savings over time benefits our customers by helping reduce the need for electric-rate increases."
Bond refinancing transactions in January and March reduced the interest rate on a portion of Grant PUD's total $1.3 billion outstanding debt from 5% to between 2.6% and 3%, varying by the bond issue. The refinanced bonds reduce debt-service payments over time by a total of $52.7 million.
That savings combines with a partial debt pay-down in January that reduced overall debt service by $105.4 million. Savings across all transactions totals just over $158 million over the life of the bonds through 2044.
Grant PUD's debt policy advises the Financial team to consider debt reduction or refinancing if potential debt-service savings are greater than 3%. Years of careful, planning, budgeting and risk analysis contributed to the utility's ability to act quickly amid favorable market conditions.
Grant PUD uses debt to fund approximately 60% of needed upgrades to generating equipment, fish passage, electric system and recreational amenities to spread the cost of these long-lived assets over the generations of customers who'll benefit from them. This keeps rates lower for everyone, long term.
*Update: The new figures correct an error in the original news release. Budgeting and forecasting was done with the corrected numbers. Finances remain strong.