Your PUD News Release

PUD discusses ways to reduce risk, stabilize wholesale revenues

Chelan County PUD
News Release
3/15/2010

Power managers and financial staff at Chelan County PUD presented their next steps in a plan to reduce risk and bring in more reliable wholesale revenues for the long-term. The plan presented to the Board of Commissioners on Monday continues efforts begun last year to stabilize revenue and make rate adjustments more predictable, partially mitigating the impact of volatile swings in wholesale electric prices and river flows.

Chief Financial Officer/Chief Risk Officer John Janney told PUD commissioners that extending the time period for forward sales of surplus power at market rates could help stabilize PUD revenues. Surplus power would be sold on a laddered basis so that only a portion of the PUD’s surplus sales would expire in any one year, thereby smoothing out the impact of price changes over time. Contracts could be as long as five years, an extension of the 35-month limit now in place. As one sale expires, it could be replaced by a new one, thereby extending the predictable revenue up to five more years.

“A more stable revenue stream would translate into more retail rate stability,” said Janney.

One tool being considered calls for the PUD to sell a “slice” of the power output from Rocky Reach or Rock Island dams to a third party purchaser at a market price. A “slice” means purchasers would receive a percentage of the output from the PUD’s hydropower dams rather than buying a specific number of megawatt hours. In return the PUD would receive a predictable, fixed payment, regardless of stream flows or future power prices, over the term of the contract.

A resolution for formal approval of the strategy will be considered by the board next Monday. The first contracts likely would not be offered until next year.

In other action, PUD commissioners:

• Heard a request from residents of the Whispering Pines development near Lake Wenatchee for faster build-out of the PUD fiber-optics network to serve their homes. The PUD has scaled back its countywide build-out due to tight finances. Staff told residents that Whispering Pines is in the PUD work plan and depends on crew availability. It has moved from priority in the top 50 projects to the top 20 as other work has been completed.
• Heard an update on the PUD’s sustainability programs. In specific highlights, District staff explained how a water conservation program at fish hatcheries is saving more than 80 percent of water previously used. Another new program has installed special batteries and computer gear in several PUD trucks to run heat, lights and related equipment off the truck batteries instead of keeping the engine idling. The equipment is saving money on fuel, reducing wear and tear on the trucks and reducing greenhouse gas emissions.
• Agreed to a moratorium on handling any further dock permits for PUD-owned lands at Lake Chelan until the District’s dock policy can be discussed again by commissioners at an upcoming study session. No docks already in the PUD application process would be affected.
• Canceled the board retreat scheduled Wednesday and rescheduled a portion of it to be held at 8:30 a.m. Monday, March 22, at the PUD boardroom to continue the evaluation of General Manager Rich Riazzi in executive session. Other items on the retreat agenda will be rescheduled. 
• Set 1 p.m. on April 5 in the PUD boardroom as the time and place for a public hearing on the possibility of an electric rate surcharge. The existing surcharge expires at the end of April, and if poor snowpack and low runoff forecasts continue, new PUD action may be recommended.

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The next regular commission meeting is at 8:30 a.m. on Monday, March 22, 2010, in the PUD boardroom at 327 N. Wenatchee Ave. for the purpose of continuing the evaluation of the general manager in executive session. The regular weekly business meeting will resume at 1 p.m. The meeting March 29 has been canceled.

Most PUD commission meetings are recorded, and a link to the audio is available on the PUD’s home page at www.chelanpud.org.

Steve Lachowicz
Communications director
509-661-4639, direct line
509-679-0148, cell
steve.lachowicz@chelanpud.org