PUD operating expenses are projected to be approximately $121.8 million, a 3.7-percent increase over the 2012 budget. In addition, capital spending is expected to be at or below the budget target of $48 million.
Among major capital projects anticipated are substation upgrades and transmission line improvements, continued work on upgrading the Cashmere electrical system, improving control systems at Rock Island and Rocky Reach dams, and purchasing a mobile substation.
Placeholders are included in the budget for possible rate increases of 6 percent for the PUD’s 5,000 water customers and 15 percent for its 450 wastewater customers, possibly beginning in April, but any rate increases would first need to go through a public hearing and be considered by the Board of Commissioners before taking effect. Rate increases are part of the long-term strategic planning effort to have individual utility services rates cover the costs of providing the service, in line with preferences expressed by a majority of PUD customers in recent years.
Total PUD debt is projected to decrease by another $95 million over the course of the year and reach approximately $850 million by year-end, with no anticipated new bond issues or debt refinancing in the works for 2013, but staff will continue to monitor for refinancing savings opportunities.
An anticipated pay increase for salaried workers, excluding promotions and other structural adjustments, is projected within the range of 2.8 percent to 3 percent of base salaries, which is at or below the forecasted national average.
Financial staff told commissioners the preliminary budget achieves 2013 targets according to the PUD’s Strategic Plan and continues to meet the PUD’s long-term targets for financial planning.
Commissioners and the public will have an opportunity to ask further questions at a second budget hearing on Nov. 19, with final board approval requested at the Dec. 3 meeting.
In other items Monday:
- Energy Resources staff at the PUD reported the amount of energy produced by the PUD so far this year is about 111 percent of what was forecast at the start of the year, but power prices have been somewhat lower, leaving the PUD just slightly ahead (103 percent) on the revenue received so far. Revenues are projected to end the year right on the $116 million forecast in the budget.
- Gregg Carrington, managing director of Energy Resources, also reported that the Federal Energy Regulatory Commission has given its OK for the PUD to implement a new contract with Powerex of Vancouver, B.C., Canada, for real-time scheduling services for the next five years. The PUD expects to receive at least $5 million more per year in revenues from Powerex as a result of the new agreement, all while maintaining reliability of serving the local power needs of PUD customer-owners. General Manager John Janney applauded Carrington and his Energy Resources group for all the work they have accomplished the past few years on new hedging strategies for selling slices of the PUD’s energy output and for the new real-time agreement.
- Commissioners heard a report on financial results for the third quarter of 2012 (July-August-September) that showed better results than budgeted for that period. Costs were down, and net wholesale energy revenues were up. However fourth-quarter expectations are for dry conditions and low energy prices, which are expected to leave the District a bit shy of budget by the end of the year. The PUD’s five-year outlook continues to be strong, and it is anticipated that all financial targets will be met over that period.