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Chelan County PUD Commissioners take next steps to stabilize fiber finances

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Chelan County PUD Commissioners take next steps to stabilize fiber finances

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May 23, 2012
(Wenatchee, WA) Monday took the next steps needed in a plan to stabilize fiber network finances by authorizing the write-off of $99 million in internal loans and setting financial policies for future operation.

The actions follow the board’s April 16 decision to continue operating the fiber-optic network and to take a broad range of steps to put it on more stable financial footing before considering further expansion to unserved areas. There is more work to be done to develop the remaining actions needed to carry out the Board’s policy direction.

The PUD has spent about $120 million to build the fiber system and cover operating gaps. Most of that money came from internal loans.

The measure approved by the board removes the expectation that the fiber system will repay the $99 million to the internal lenders. It does not impact any payments to bondholders or create any additional debt, said Chief Financial/Risk Officer Kelly Boyd. Nor does it impact electric system rates.

Commissioners also approved new financial policies to ensure the fiber system is operated as a self-sustaining business with no new cash or loans from other District sources. Included is a target to build reserves to a minimum of $1 million before there is any consideration of District-funded expansion of the network beyond the area served now, and then continue to build reserves to $4 million over five years to pay for planned upgrades. The reserves are recommended to ensure adequate funding for normal business needs, unexpected events and planned capital projects, Boyd added.

In other business Monday, commissioners:

  • Listened to an update on development of the 2012 Integrated Resource Plan (IRP), a 10-year look into the future to determine the mix of generation, conservation and efficiency gains needed to meet the PUD’s current and future load at the lowest reasonable cost and risk. Becky King, power resource analyst, outlined the factors to be considered and the timeline. Final results of the portfolio analysis and a draft plan will be presented in June. Commissioners will be asked to approve the 2012 IRP on July 2. Comments on the analysis and draft plan are welcome at board meetings and by email. More information is posted on the PUD website.
  • Approved spending up to $1.8 million for the District’s 2012-2013 insurance coverage to protect equipment, provide liability coverage and insure for possible property losses. The premiums came in 3.3 percent below target, despite 2011 being the worst year for natural disasters on record, said Ron Gibbs, PUD insurance and claims manager. He credited the PUD’s improving finances, another year with no claims, the District’s engineering prowess and its low-risk location for hurricanes, tornadoes and earthquakes for the favorable rates.

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