Staying the course set by the last round of strategic planning is keeping Chelan PUD finances on track to achieve long-term stability and meet its financial targets, Kelly Boyd, chief financial/risk officer, told PUD commissioners Monday.
Preliminary positive bottom line results for 2013 of $91 million helped the District pay down an additional $69 million in debt, lowering the balance by $27 million more than budgeted and reaching the end-of-2015 target for debt ratio two years ahead of schedule. Results are considered preliminary until verified by outside auditors, Boyd noted.
She said factors contributing to the better-than-expected results in 2013 included:
· Expenses below budget (even with storm repairs at Lake Wenatchee and large unit repairs at Rocky Reach)
· Revenue slightly ahead of budget
· 2013 was the first full year of new long-term “cost-plus” contracts for Rock Island and Rocky Reach power
· Continued debt reduction that lowered interest expense
Looking ahead, Boyd said forecasts are for positive bottom line results of $80 million to $90 million per year through 2018. Those results are needed to continue to meet customer priorities to keep electric rates affordable and potential increases modest and predictable; save for a rainy day; pay down debt (at a pace of about $50 million a year); and maintain dams, power lines and equipment in good shape for reliable service.
In other business Monday, commissioners:
· Invited PUD water and wastewater customers to community meetings to discuss rate changes tonight at 5:30 in Wenatchee in the PUD Auditorium and at 1:30 p.m. on Saturday, Feb. 8, at the PUD’s Leavenworth office, 222 Chumstick Hwy. The proposal for water customers would raise the average residential bill by about $2.50 a month (for 7,500 gallons) and the wastewater proposal would raise the average monthly residential customer bill by $5.70. On Feb. 18, commissioners will hold a hearing on the rate changes and will be asked to take action.
· Were updated on plans for surveys to get feedback from customers and stakeholders. Two immediate surveys include a baseline benchmark of how well the District is meeting the needs of its residential electric customers. The intent is to conduct this survey at least biannually – perhaps annually – and not only assess what our customers are saying about their satisfaction with the District, but also how we compare to other similar utilities. The second survey also establishes a baseline that will be measured over time to take a look at how well stakeholders of the District view our stewardship management on public waterways, said General Manager Steve Wright. There will be other survey efforts by the District this year, including a survey about the use of District parks. Not only will the surveys provide some specific service information for the District, they also will be used in the overall strategic planning process and the District’s outreach and engagement efforts.
· Continued discussion on a revised draft resolution that would allow Energy Resources staff to sell up to 10 percent of power that is surplus to District needs through slice contracts for periods of up to 15 years. Those sales are now limited to five years. The resolution would also allow for a portion of the energy to be reserved for sale to public power utilities in up to 25 average megawatt blocks. Market and cost of production considerations were added to the resolution. Commissioners will be asked to take action at the Feb. 18 meeting.
· Began discussion of restructuring wholesale fiber and telecom rates. Mike Coleman, Fiber and Telecom managing director, provided an overview of rate pricing considerations and analysis of possible options. In 2012, commissioners set a new financial direction for the fiber system. Restructuring fiber system rates was among the recommendations in the plan endorsed by commissioners. The PUD’s 2014 budget forecast the need for fiber rate changes to increase revenue by 5 percent. Commissioners will continue to discuss the proposal and gather feedback from the wholesale and retail service providers that purchase PUD fiber and telecom services. Plans are to request board action on the fiber rate restructuring on March 17 to be effective May 1.
Listened as PUD energy planners provided expected operating ranges for Lake Chelan based on drier-than-average runoff conditions. Scott Buehn, power resource engineer, said snowpack measurements and runoff forecast are changing daily. Runoff forecasts are at the lowest point since October. Today’s runoff estimate from the Northwest River Forecast Center for the Lake Chelan Basin is 57 percent of average. Buehn said Energy Trading and Planning staff will continue to keep a close eye on conditions and what effect they may have on lake level this spring and summer. Runoff forecasts for the Columbia River remain much closer to average.