Grant PUD mulls 2009 budget

No rate increases planned

EPHRATA - Grant County PUD commissioners mulled over the utility's proposed $479 million budget this week during two public budget hearings.

Concerns about a 4 percent increase in the labor budget, industrial users' affects on electrical system costs and the lack of rate increases were discussed by commissioners during the first hearing on Monday.

There are no rate increases planned at this time in the 2009 budget.

The budget hearings are held so commissioners and staff can hear suggestions from residents. Then possible changes can be made to the draft before adoption. Last year's budget was approved in December.

Grant PUD General Manager Tim Culbertson told commissioners on Monday it's a new era for the utility with the renewed license for the Priest Rapids Hydroelectric Project.

The PUD is still experiencing significant load growth, he explained.

Future resource planning, as imposed by Initiative 1-937, is driven by growth, global warming and climate issues, Culbertson noted.

All hydro energy is renewable, he said.

There's increasing industrywide reliability mandates from the North American Electric Reliability Corporation (NERC) and the Western Electricity Coordinating Council (WECC), he said.

The PUD just went through its first series of audits with NERC and WECC, he said. The district thinks it mitigated any issues and doesn't expect fines to be as high as others' fines, he said.

Culbertson also spoke about the significant amount of work resulting from the new license, growth and government-mandated and industry standards.

Industrywide, utilities are facing the issue of an aging workforce and a smaller number of qualified applicants, he said. But retirement plans are changing internally because of the economy and employees experiencing 401K losses, Culbertson added.

The labor budget represents an increase of 45 full-time equivalents (FTEs) and a reduction of 26 non-FTE positions. The changes are mostly tied to license work and turbine and generator upgrades at the dams, he said. Some people working in a part-time capacity were also moved to the FTE category.

The hydro department represents the largest increase with 36.3 more proposed FTEs than last year.

Grant PUD Treasurer Jim Bunch said the proposed budget is $58 million less than projected due to delayed capital projects and actual purchased power costs being less than budgeted.

Three budgets - the Priest Rapids, Wanapum and electric system - make up the total budget, he said.

The entire budget is as follows: purchased power, $126.7 million, debt service, $72.8 million, taxes, $9.5 million, labor, $64.9 million, operations and maintenance, $90.7 million and capital, $114.3 million.

Bunch said the utility hasn't seen this much growth in years. Substations were previously built once every seven years, instead of the two to three substations now being constructed, he said.

But the PUD is spending cash faster than revenues, so the district is having to dip into the reserve and contingency fund, he stated.

Loads aren't coming in as high as projected, he added.

Culbertson said while there is no rate increase projected, the PUD can't absorb all the costs.

Commissioner Greg Hansen pointed out electrical system spending is 21 percent higher than last year and blamed industrial customers for driving up the costs.

The PUD needs to get a handle on industrial rates, he added

Hansen said he couldn't approve the budget if he was asked to do so today.

He noted staff told him rate increases are needed now and asked why the district is putting it off until 2010.

Hansen claimed industrial customers want to get in under the wire with their rates and let everyone else absorb the rest.

Commissioner Terry Brewer said the substations are serving areas not seeing industrial load growth and pointed out it was just growth in the system.

Brewer added that Hansen's statements weren't true.

Commissioner Tom Flint said it's his understanding there are restrictions in the system and talked about how system improvements weren't primarily industrial.

Grant PUD Customer Service Director Tony Webb said the majority of substation work involves system improvements and also mentioned feeder upgrades.

With distribution, the PUD is limited with the manpower, crews, equipment and on which lines need upgrades, he noted.

Commissioner Bob Bernd said he's not in favor of putting a fence around Grant County. The industrial customers are willing to help the PUD come up with a new rate structure, he added.

Culbertson said industrial customers aren't driving distribution, other than a carryover effect.

Brewer said he was still waiting for Hansen to say what items he wants cut from the budget.

Commissioner Randy Allred said he's concerned about labor costs and pointed out the PUD hired 200 new employees and full-time employees in four years.

"My concern is sustainability," he said.

Culbertson said the work isn't going away and added many employees transferred from temporary assignment to full-time.

The PUD is about to embark on generator work at Priest Rapids Dam, which should last about 15 years, he added.

The utility is trying to avoid using contracted labor except when it makes sense and is using fewer consultants, Culbertson noted."

"I think we've significantly reduced our overtime," he said.

Flint said he wasn't concerned about the distribution or transmission. He added he wants to make sure the PUD has a robust system throughout the county.

He also said he wants to make sure the PUD has set enough money aside for self-performance audits.

To access a public information packet about the proposed budget, go to www.gcpud.org.