$3 million loan for PUD fiber approved

Money to come from electric-system revenues; rate increase not expected

The Grant County PUD's fiber system saw two shots in its financial arm yesterday.

But not everyone agrees that the money should have gone to the Zipp network.

Commissioners approved two actions yesterday, one authorizing a loan totaling $3 million from electric-system revenues to the fiber system and the second a release of a total of $1.3 million of sequestered telecommunications funds for 2004.

Both actions were requested, according to telecommunications staff, for the struggling Zipp network to maintain its operations throughout the duration of 2004.

Each action passed by a split vote, with commissioners Tom Flint, Mike Conley and Vera Claussen choosing yes and Bill Bjork and Randy Allred voting no.

According to the resolution, the $3 million loan will be diverted into the telecommunications account at a rate of 3.16 percent interest in four monthly payments beginning Sept. 1.

The telecommunications system will make two payments a year back on the loan, beginning in 2005 and finishing in 2007.

In response to a 2003 state auditor's report of the misspending of fiber funds, commissioners voted to sequester all money within the telecommunications fund and release it only upon commission approval.

According to a memo from Telecommunications Director Larry Jones, the release of $925,000 in capital funds and $399,521 in operations and maintenance allows the PUD to meet new-subscriber expectations, Department of Labor and Industries regulations and maintain daily telecommunications operations.

Flint, the commission president, said in an interview after the meeting that the fiber system needs the funds to finish out 2004. With the change in management (Jones was hired this year as fiber director, and General Manager Tim Culbertson is in his first year of the job), Flint said the commission should give the funds necessary to do their jobs.

The fiber system "has been micro-managed for a year now, and it's time to move on," Flint said.

Bjork said he voted no on both actions because he fears the telecommunications system will not be able to pay back its debt.

"They have not reduced the overhead of the system," he said, adding that the fiber system is "headed for failure" if it can't bring its costs down.

Flint said it's always a possibility that the fiber system will be late or not pay back the loan, but that's not the goal.

"It's the best intent that it will pay back" the loan, he said.

Bjork added that no electrical-system rate increase will occur this year because of the loan, but he worries that one might come down the road if more loans are needed.

In 2004, the Zipp network has spent $3.1 million total, with an expectation to spend $3.3 million.