Your PUD News Release
PUD on track to reduce debt
Chelan County PUD
News Release
4/18/2011
A combination of steps proposed by Treasurer Debbie Litchfield would help bring Chelan County PUD debt down about $171 million by 2015, dropping overall debt about $39 million lower than previously forecast. The steps, presented to PUD commissioners Monday, include refinancing a portion of existing PUD bond issues for better terms.
PUD commissioners will not be asked to take action on the recommendations until next Monday.
Goals of the financial plan are to maintain the PUD’s strong bond ratings and financial position, to reduce the complexities of the PUD’s financial portfolio and meet targets set in the latest Strategic Plan. In that plan, customers told the PUD they were focused on maintaining low and stable rates, reducing debt, setting money aside for a rainy day and maintaining the reliability of our systems as the utility remains financially healthy. PUD representatives visited bond rating agencies recently in New York and San Francisco and expect to hear results from those agencies next week. Continued high ratings are important to the PUD and its customers because they result in lower borrowing costs and help hold down pressure on rates.
PUD debt at the end of 2010 stood at $1.039 billion, largely related to construction of large hydro projects over time, ongoing upgrades and maintenance work that is shared with long-term power purchasers, improvement for fish protection and building the fiber-optic system. With this refinancing plan and payments of principal, debt is expected to drop to about $868 million in 2015. Additional steps being considered could take another $42 million off the debt total in 2011, which would further reduce the balance in 2015.
General Manager John Janney praised the creativity of the financial team that came up with the strategies and recommendations. “This reduces risks and reduces cost for customer-owners,” said Janney. “This is really a big step forward for us.”
Litchfield and Senior Analyst Nathan Townsend discussed with commissioners how refinancing about $200 million in bonds set to mature in 2032 to 2036 could save an estimated $21 million to $33 million for the PUD by amortizing payments over a shorter period at a better interest rate. She noted, however, that savings might be somewhat less if changes in financial transactions known as swaps are also made this year -- a step that is still being evaluated.
Commission President Randy Smith recalled the financial challenges faced a few years ago as the PUD’s Strategic Plan was being developed. “This is turning the corner,” he said of lowering the PUD debt. “It’s a huge success.”
Litchfield told commissioners the PUD does not anticipate selling any new bonds for additional debt in the next five years.
In other action:
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Janney updated commissioners on recent runoff forecasts that are predicting above-average snowpack and runoff for the first time since 2007 in the Lake Chelan Basin and in the Columbia River at the Dalles and Grand Coulee. He said he needed to temper the enthusiasm because it’s also the first time there has been so much new wind-powered generation in the region. If high runoff and high wind production come at the same time, it could cause problems with oversupply. Janney said wholesale prices are about $5 per megawatt lower than forecast, which means revenues won’t be as high. “We’re in uncharted territory,” said Janney.
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Commissioners said they would all be touring the Wenatchee Works Alcoa plant at 10 a.m. Wednesday to see the third pot line that has gone back into operation.
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The meeting was adjourned with plans to reconvene at 6 p.m. Monday at Visconti’s Restaurant for a quarterly meeting of the Mid-Columbia commissioners and managers.
The next regular commission meeting is at 1 p.m. on Monday, April 25, in the PUD 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.
Steve Lachowicz
Communications director
509-661-4639, direct line
509-679-0148, cell
steve.lachowicz@chelanpud.org