PUD's financial status exceeds expectations

EPHRATA — The 2005 year-end financial report for the Grant County Public Utility District and its individual operating systems shows the utility topping financial expectations set during the year's budget process.

District Treasurer-Controller Nick Gerde passed the report's findings on to the district's board of commissioners Monday.

During the 2005 budgeting process, the commission committed the district to building $35 million in working capital, which allows for short-term flexibility, and directing $70 million into a reserve fund, ensuring longer-term stability during periods of low flows on the Columbia River and unexpected power pricing environments.

Gerde said the district made significant progress toward meeting both commission goals.

"Our budget plan reflects reaching these goals in 2006," Gerde said in a news release.

The report detailing the district's financial health follows a recent proposal by Commissioner Tom Flint to reduce electric rates across the board by up to 4 percent starting this summer. Flint said the report's findings support his proposal.

The district's financial health "is a lot better than even I thought," Flint said today. "I think it also opens the door for a fiber (optic system) build out."

Commissioner Bill Bjork attributes the district's financial health to excess power sales from the Priest Rapids Hydroelectric Project. Additionally, he said the district's senior management staff contributed by focusing on improving the financial health of the utility.

"I think our number one goal should be to get this utility up to financial par," Bjork said. "I think this last 12-month period has made a significant difference."

Commissioner Greg Hansen said the district exceeded its goal of $35 million in working capital, reaching $50 million. He said that amount will go down during the year and will need to level out at the commission's established goal.

The reserve fund has risen to $30 million, he said.

The district benefited, Hansen said, from above average river flows.

Other factors included the district under spending the 2005 budget by nearly $42 million, according to the report. The variance is partially due to the district's delay of electric system capital projects and lower than expected costs to obtain a second long-term operating license for the district's two hydroelectric dams.

District officials said the electric system capital projects for substations, building improvements and distribution were delayed until this year. That work depends on customer needs and may be completed beyond 2006, depending on requirements.

The relicensing expenses were also pushed out until 2006.

A large portion of the 2005 variance is due to power supply purchases being about $12 million less than expected due to increased power generation at Priest Rapids and Wanapum Dams along with favorable seasonal energy prices, Gerde said.

"Power purchases vary annually based on the amount of power generation produced at the Priest Rapids Project in comparison to district load requirements," he said.