Your PUD News Release

Final 2007 budget presented to PUD commissioners

Chelan County PUD
News Release
12/4/2006

PUD staff reviewed the proposed 2007 budget for commissioners Monday. The spending plan holds operating and maintenance expense increases to 4.5 percent for next year and reflects about $27 million in operating and capital expense cuts.

Early water supply forecasts also put runoff at 84 percent of average, which means wholesale power sales revenue may drop from about $58 million this year to about $36 million in 2007.

Last week PUD commissioners gave staff the go-ahead to start planning for a possible electric rate surcharge to increase revenue next year if the low-water year forecast holds true.

Overall the 2007 combined capital and operations budget of $307 million is up about 10 percent from this year.

Diane Cooper, accounting director, and Randy Lowe, Power Management director, recapped the challenges faced in planning for next year including:

• Costs of putting the new Lake Chelan Hydro license into place, plus the new license for Rocky Reach expected to be approved next year
• Repairs needed for aging electric and water systems, hatcheries, parks and equipment at the dams
•  Increases in healthcare and pension benefits. Increases in the cost of fuel, steel and copper
• The impact of fewer contractors bidding on projects
• Wholesale revenue volatility

The District is expected to end 2007 with $162.2 million in cash reserves compared with $190.2 million this year.

PUD commissioners asked about load growth projected at 5.7 percent for 2007 after years of averaging about 1 percent and about the need for the new position of chief risk officer/risk manager.

General Manger Rich Riazzi said he proposed the new position because the District must get better at managing risk. “We need to model it, manage it and mitigate it,” Riazzi said.

Commissioners continued Monday’s budget hearing to 1 p.m. on Dec. 11, when they will vote on the 2007 spending plan.
 
In other business, PUD commissioners:

• Approved a two-year contract for general excavating with Rayfield Brothers Excavation of Peshastin. Rayfield submitted the lowest qualified bid of five received. While the exact amount will depend on how much work the PUD requests, the contract is valued at $1.76 million.
• Heard that construction of the 8.5-mile, high-voltage Burch Mountain Transmission Line was finished within less than 1 percent of the contract price. Project Manager George Velasquez recapped construction of the line last summer that included hand digging for three of the steel structures in rugged terrain between Rocky Reach Dam and the Andrew York/Monitor Switchyard on Easy Street west of Wenatchee. With construction of the $4 million line finished, work will continue next year and into 2008 to install electrical equipment at the two switchyards, connect it to the line and test it. The line, which will provide a third key connection into the PUD’s internal transmission system, will be energized in late 2008.

***

 PUD commissioners adjourned and continued Monday’s meeting to noon on Tuesday, Dec. 5, to attend the Key Accounts lunch in the Wenatchee PUD Auditorium.
They also canceled the Dec. 26 board meeting.
The next regular meeting of the PUD commission is at 1 p.m. on Monday, Dec. 11, 2006, in the boardroom at 327 N. Wenatchee Ave.
Most PUD commission meetings are recorded, and a link to the audio is available on the PUD’s home page at www.chelanpud.org.

Kimberlee Craig
Public Information Officer
661-4320, direct line
679-6858, cell
kimc@chelanpud.org