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Commission recap: Sept. 25, 2018

Posted on September 27, 2018 by C Pratt

Note: This meeting was not recorded because it took place at Grant PUD's Hydro Office Building in Beverly


Grant PUD commissioners received a first look of the 2019 budget during their meeting at the Hydro Office Building near Wanapum Dam on Tuesday, Sept. 25. The presentation will be shown to customers during three budget hearings on Oct. 9 and 11. The presentation, given by Chief Financial Officer Jeff Bishop and Financial Planning Analyst Baxter Gillette, outlines how the utility plans to spend money and collect revenues in 2018.

Total expenses include the following:

  • Operations & Maintenance         $121.9 million
  • Debt Service                               $87.5 million
  • Priest Rapids Project Capital      $81.3 million
  • Electric System Capital               $50.7 million
  • Taxes                                         $17.2 million
                                             Total       $359.1 million

Of the $121.9 million for operations and maintenance 42 percent goes toward power production expenses, which include maintenance and operations Priest Rapids and Wanapum dams, fish and wildlife costs, engineering costs, lands and recreation expenses and cultural resources obligations.

Thirty-three percent of the $121.9 million operations-and-maintenance expense goes toward administration and general costs and 25 percent goes toward power delivery costs.

Of the debt service, Bishop pointed out that just a few years ago the financial forecast called for a debt service amount of $122.6 million in 2019.

“By restructuring our debt to take advantage of low rates and also by using cash reserves to finance a portion of our capital projects, we have seen the amount of money we need for debt service substantially reduced,” Bishop stated.

Bishop pointed out that the utility plans to present the results of an "Intergenerational Fairness" Study in the fourth quarter of this year. He defined intergenerational fairness as having those who benefit from a long-term capital asset pay for that asset through the life of the asset rather than putting the burden of asset payment on current customers through significant rate increases. The commissioners urged Bishop to have more information about this topic for customers during the public hearings in October.

The $81.3 million in Priest Rapids Project capital expenses include money for the Priest Rapids Dam turbine upgrade, ugrades to generators at Wanapum and Priest Rapids dams, improvements to the Priest Rapids Dam embankment and Priest Rapids Dam spillway improvements.

The $50.7 million electric system capital projects include substation expansions with a portion of the costs prepaid by industrial customers looking to expand operations, fiber connections for customers, enterprise technology, replacement of aging line trucks, and expanding distribution lines for customers.

Grant PUD is planning a total of $301.46 million in revenues along with $73.35 million in depreciation and amortization to offset the $359.1 million in expenses.

The bulk of the revenues come from the $211.3 million in retail power sales the utility plans to collect from its customers in Grant County in 2019. The budget calls for maintaining Grant PUD’s current rate trajectory of a 2 percent average revenue increase. Bishop said that the utility is positioning itself with its current financial strategy that it will likely only need a 1 percent overall increase in 2020 and even lower increases going forward.

Bishop said that the utility is positioning itself with its current financial strategy that it will likely only need a 1 percent overall increase in 2020 and even lower increases going forward.


Click here to view budget presentation
 

Upcoming public hearings on the proposed 2019 budget:



October 9, 2018 – 2:00 p.m.
Ephrata Headquarters Commission Room
30 C Street SW, Ephrata, WA

October 9, 2018 – 6:00 p.m.
Moses Lake Fire Hall Multi-Purpose Room
701 E 3rd Avenue, Moses Lake, WA

October 11, 2018 – 6:00 p.m.
Quincy Community Center
115 F Street SW, Quincy, WA

In other business:

The commissioners heard a request from Don Fortier, of Grant County Fire District No. 3 for a letter of support to help the district secure a grant to help them construct a fire station at Trinidad to serve Trinidad and Crescent Bar. Fortier also asked if Grant PUD would be willing to supply a free power hookup to the station’s construction site. Commissioner Tom Flint said he would be encourage the letter of support, but would not approve of a free power connection to the construction site because it would set a precedent that could create a question of fairness.

The commissioners also decided to further review the Crescent Bar proposal to amend the lease and repayment term associated with the payment of Crescent Bar’s share of the water/wastewater system costs. The board will review the amendment proposal during its Oct. 9 meeting.

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