Your PUD News Release
Board reviews preliminary 2009 budget
Chelan County PUD
News Release
11/3/2008
PUD commissioners Monday reviewed a preliminary budget for 2009 which keeps growth in controllable operations and maintenance spending to 3 percent, well below an original 6-percent target, and provides flexibility to handle impacts from turmoil in the financial markets.
General Manager Rich Riazzi outlined the unusual situation surrounding preparation of the 2009 spending plan including:
- Potential difficulty in selling long-term bonds to pay for big construction projects
- Volatility in wholesale power prices and a downward trend in power sales revenue (See item below)
- A dry weather forecast for the next 90 days
- Growing probability that if a surcharge is necessary, it would be higher than the 14-percent limit identified during strategic planning
“The theme this year is flexibility, flexibility, flexibility with contingency plan after contingency plan,” Riazzi told commissioners. “2009 (operations and maintenance spending) is coming in barely above 2008, and that’s taken quite a bit of work.”
He emphasized that much of the work deferred from the 2009 budget still must be done.
“It is not sustainable to operate at these levels long-term,” Riazzi said.
The preliminary 2009 budget puts controllable operations and maintenance spending at $135.7 million and includes a portion of an overall increase of 2.5 percent in electric revenues, 6.9 percent for water revenue and 6.5 percent for sewer, based on a new rate structure effective in April.
Capital spending for 2009 is forecast at $92.5 million, which is also below an original target of $106.3 million.
Wholesale power sales revenue of $50.5 million is expected for 2009. The PUD is expected to end 2008 with wholesale power sales revenue of about $48.5 million, down significantly from the 2007 total of $63.9 million.
Commissioners thanked Riazzi and staff for keeping them informed of the fast-changing financial picture.
“What we’re doing is trying to outline what our needs are - making sure our power is being produced - and we’re looking to the future, “ said commission President Norm Gutzwiler.
Commissioners will discuss the 2009 budget again on Nov. 24 and will hold a public budget hearing at 1 p.m. on Dec. 1 in the boardroom. Staff will ask for approval of the final 2009 budget on Dec. 15.
Update on third-quarter 2008 financial results
A cooler-than-normal spring which delayed mountain snow runoff and a drop in power prices have contributed to reduced wholesale power sales revenue so far in 2008. Through September, revenue is about $12 million less than budgeted, reported Janet Jaspers, Energy Planning and Trading manager. Columbia River runoff has been 93 percent of average. The average power price has been $59.30 a megawatt hour (MWh), while the budget was based on a forecast of $62.11 per MWh.
The PUD expects to end the year with wholesale revenue of about $49 million compared with the budgeted amount of $62 million for 2008, Jaspers said.
The average rate of return on PUD investments was 4.13 percent on an invested balance of $358.3 million, reported Brian Bjorklund, PUD treasury analyst. The quarterly results compare with an average rate of return of 4.22 percent for the second quarter of 2008.
PUD considers PURPA standards
As required by the federal Public Utilities Regulatory Policies Act (PURPA), PUD commissioners held a hearing Monday to review standards for so-called “smart grid” investments and for providing information to customers gathered by a smart grid.
Andrew Wendell of the PUD’s Technology, Engineering and Project Management division, explained smart grid as a system with two-way communication which uses computer systems to share information across the electric system to “improve efficiency, reliability, safety and delivery.” The PUD already has some components of a smart grid in place.
Customer Service Director John Stoll reviewed the PURPA process and the timeline for commission action. After considering the standards, PUD commissioners decided not to adopt them, but directed staff to continue to evaluate possibilities for the future.
In other business, commissioners:
- Received an update on state efficiency rules for small water systems including Ollala Canyon, Dryden, Chelan Ridge and Chelan Falls which are operated by the PUD. Ron Slabaugh, water resource manager, reviewed steps being taken to reduce water loss through leaks to less than 20 percent and other conservation measures. A hearing on system goals required by the rules was set for Nov. 24.
***
PUD commissioners canceled the Nov. 10 commission meeting. The next regular commission meeting will begin at 11 a.m., Monday, Nov. 17, 2008, in the boardroom at PUD Headquarters, 327 N. Wenatchee Ave.
They will hold a special meeting with the Peshastin-Dryden Customer Partnership Group at noon on Nov. 12 at the Icicle Ridge Winery in Peshastin. They will hold a special meeting at noon on Nov. 18 with local state legislators in the PUD boardroom to discuss the upcoming legislative session.
A special meeting scheduled Dec. 10 was changed to noon on Dec. 17 to meet with the Leavenworth Customer Partnership Group at the Best Western Icicle Inn in Leavenworth. A special meeting was set for noon on Dec. 10 to meet with the Entiat Customer Partnership Group at the Entiat Library Building.
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
509-661-4320, direct line
509-679-6858, cell
kimberlee.craig@chelanpud.org