Higher electric revenue due to colder weather combined with lower costs than expected resulted in positive bottom line results that are $6.5 million better than budget for the first quarter of 2017, Chelan PUD commissioners heard Monday.
Based on first-quarter results, Kelly Boyd, chief financial/risk officer said the District is forecasting to finish the year with positive bottom line results of $93.5 million, about $8 million better than budget. That’s while it continues to invest in valuable assets such as modernizing hydro units and to reduce debt by an additional $52 million this year.
Looking ahead, the district is on track to achieve the debt ratio target of less than 35 percent by 2019, as well as all other financial objectives, Boyd reported. She noted, however, that long-term, bottom line results are forecast to decline to about $44 million a year by 2021 as market prices for power are moving lower. Reserves are forecasted to be lower, but still strong, as cash is used to reduce debt and to pay for major projects, she said.
Boyd recommended staying the course on the District’s strategic priorities of:
- Reinvesting in core assets and people
- Reducing debt
- Continuing the Public Power Benefit program as funds allow
PUD commissioners also reviewed the Public Power Benefit program that uses revenue that is already earned and available after all District financial metrics have been met for projects to enhance the quality of life in Chelan County. Based on 2016's strong financial results, staff recommends continuing the program with $4 million for 2018 projects, but not expanding it given forecasts for the long-term decline in the bottom line. Commissioners will be asked for a funding decision and direction on projects at the June 5 board meeting.
In other business Monday, commissioners:
- Reviewed the conversations held so far with customer-owners and the community on advanced two-way digital metering. Andrew Wendell, Customer Service director, said PUD staff has talked with more than 400 people at 18 meetings countywide to provide information and answer questions about potential use of the meters. Information also was mailed to more than 33,000 customer-owners and emailed to more than 32,000 customers. Response has been mostly supportive of the new technology. Wendell said. Customers see value in the ability to monitor their power use, faster response to power outages and reduce PUD operating costs and cutting its carbon footprint. During the community meetings, staff also heard from customers opposed to the technology citing health, data and network security and fire risk concerns. Wendell responded to the concerns, noting those customers strongly support an opt-out policy. Commissioners will be asked for a decision on proceeding with plans for the new meters at the June 5 meeting.
- Heard that staff continues to narrow the search for a new substation site on the north shore of Lake Chelan to areas near the load center and north of the Chelan-Wapato transmission line. For the Leavenworth location, endorsed making the preferred alternative a recently acquired property along Chumstick Highway.
- Celebrated the PUD’s fourth Outstanding Stewards of American Waters (OSAW) award in 10 years, this one for launching the Hydropower STEM Career Academy at Rocky Reach Dam with the Foundation for Water and Energy Education. Visitor Services Manager Debbie Gallaher accepted the award in Washington, D. C., on May 2. There’s still time for high school students to apply for this year’s academy running June 19-23 at Rocky Reach.
- Heard that net wholesale revenue from power sales is about $2 million ahead of budget. Janet Jaspers, Energy Planning and Trading manager, also reported the forecast for Columbia River flow through July is 128 percent of average.
- Rescinded outdated resolutions that are no longer needed and don’t reflect current practice for attachments on PUD power poles.