Baker offers PUD fiscal management
MOSES LAKE — As a longtime resident of Grant County, and a person who has been involved with development of the local economy, I am concerned with our Grant County Public Utility District budgeting policies.
MOSES LAKE - As a longtime resident of Grant County, and a person who has been involved with development of the local economy, I am concerned with our Grant County Public Utility District budgeting policies.
The PUD is undoubtedly the county's greatest asset for continued economic development with the ability to offer safe reliable electrical power, at a low cost to the citizens and business rate payers of the county. While Grant County can offer many other benefits, low cost power is the carrot that attracts new industry and business to look at and consider locating in Grant County. Several local groups are active in promoting our area as a great place to live and do business with good success.
The Grant County agricultural community is, and has been, the mainstay of the local economy. It has it's fluctuations year-to-year, some bad, some good, driven by forces outside of the county that we have no control over.
In the early 1980s, local people were concerned about the effects of Mt. St. Helens, U&I Sugar Company and Country Gardens closing and jobs lost, plus the loss of the sugar beet growers. Our community leaders became proactive in developing a second economy not affected by the farm economy. They formed the Grant County Industrial Council to promote Grant County and market our assets. The group was renamed later and became the Grant County Economic Development Council. The Grant County Economic Development Council has been a tremendous success in promoting our county and assisting business to locate in the county. The Grant County PUD has been a key player in this effort. Once again, safe reliable low-cost power made it all possible.
Now with the new FERC license in place, the PUD will continue to operate our two dams for an additional 44 years. Along with the new license, come many obligations requiring about $800 million in projects and services. The PUD has also at this time about $800 million of debt. The annual budget, including debt service operation and maintenance, administration, taxes, new capital projects, requiring an annual budget of about $500 million.
Citizens, this big business requires top-notch management. PUD commissioners must have in-depth experiences to manage the PUD.
The PUD has a five member commission who are elected. Two positions are currently open for new commissioners. The elected commission sets policies effecting how the PUD will be run, it also adopts an annual budget. The general manager runs the day-to-day operations with his staff of 700 employees, up from 400 employees in 2005.
To continue successful operation of the PUD several things must happen. First, the PUD must be a good steward of the project in meeting the requirements of the FERC license. Second, the project must generate electrical power and sell it to Grant County users. The PUD also sells our surplus power to wholesalers in the open market. At certain times local demands are greater than PUD produced power, power is then purchased from outside sources, such as BPA and open market. Generally, this is at prices higher than our cost to produce power.
My concern for the PUD is management policies and budget oversight. Recently, the manager announced a $15 million shortfall of the budget. This occurred in just five months (January to May) into the approved 2010 annual budget. Two budget reviews were held in June 2010, and staff presented data about the budget and tried to explain to the commissioners how serious the problem was. After six hours of review, the staff recommended a 7.5 percent rate increase for four consecutive years beginning in the 2011 budget, this is on top of a 4 percent increase in April of this year. At later meetings the commission talked about a 4 percent increase with an added surcharge, when needed, to increase revenues to maintain budget projections.
The commissioners needed to decrease capital expenses by $28 million to make the current budget work. It was also necessary to use some of the reserve funds. All of this process to develop a budget requires estimating revenues and projecting expenses, it is very complex, nevertheless the staff can do it. However, they follow the policy set down by the commissioners. At present, I believe the policy used for the budget estimations are "high risk." I also believe a conservative budget will result in better management of the PUD assets.
It's fairly simple. Don't spend what you do not have. Reduce expenses. The PUD commission can develop a prioritized capital projects list. When funds are actually in hand, then fund the projects or bond for them, but keep the debt service payment within the annual revenues. This matter of budget policies, "high risk" versus "conservative," is critical to the rates everyone pays. As the rates go up, it will affect everyone's budget.
When elected I'll bring high technical expertise and experience to the commission with a knowledge of the PUD. I would serve all rate payer classes to keep rates as low as possible by using a conservative approach to the budget.