GUEST EDITORIAL: Concerns about Grant PUD rates, budget

MOSES LAKE - With the up coming 2012 Grant County PUD budget some observations of the PUD should be made. Grant County is very fortunate for the foresight that a handful of people had back in the 1950's that formed and created the PUD we have today. To keep the PUD as it was originally intended, to serve the people with low cost power and be responsive to the needs of the citizens requires much effort and perseverance on the part of the commission.

Somewhere along the way, the attitudes of PUD staff and commissioners changed from a conservative mind set that held spending on capital projects, salaries and expenses to a minimum with a narrow focus on producing low cost power to a mind set of loose spending and lax management on the part of staff and oversight by the commission. The job of the commission is to set policy to be carried out by staff but the opposite seems to be the case. Staff seems to advise to the commissioners the course to be followed with very little critical thinking or direction on the part of most of the commissioners.

Ever increasing budgets are backed up by overly optimistic financial forecasts and water conditions. Much capital spending in the electric system is being driven by the district's rock bottom industrial rates resulting in building expensive infrastructure for heavy industry moving into the area. Federal re-licensing requirements, I feel, have been liberally interpreted, taking the more costly safe route in satisfying the Federal Energy Regulatory Commission (FERC) requirements. A good example is the purchase of Getty's Cove for $1.5 million that will cost the ratepayers $ 50,000 to $ 100,000 per year to keep it open to the public. Also the agreement with the Yakima Indian Tribe, which basically was to get them off our back during the re-licensing process, will cost hundreds of millions of dollars over the life of the new license. The building and maintaining of a $20 million cultural center for the Wanapum Indian Tribe and the liberal interpretation of FERC archaeological requirements will have a big impact on future budgets.

In 2005 the commission asked Jerry Rupke, a former treasurer/controller and past manager of the PUD, to analyze the financial condition and parameters of the PUD. In his report, he states, "The traditional and historical intent of keeping the budgeting and projection of surplus sales revenues conservative, as intended in Resolution No. 5555, has eroded over the last few years." Mr. Rupke further states, " there appears to be a developing trend, if not addressed, could become a significant problem in the near future. The retail revenue stream is not keeping pace with the operating and maintenance expenses." Mr. Rupke's warning is now a reality with three years or more of almost double digit rate increases planned for the future. Although a portion of the rate increases can be attributable to the debt service on bonds for the rehab of turbines and generators at the hydro project but much of the rate increases are due to an ever expanding budget. For years the PUD has relied on surplus sales (power excess to the needs of the district sold to other utilities) to subsidize the power rates. Water and the power market conditions have greatly reduced this source of income.

To put it in simple terms, The PUD has been living beyond it's means. This is not to say that there should never be rate increases, some increases are inevitable due to rising cost. Conservative long term planning by staff and commission has been lost. In some ways the PUD is a microcosm of our federal government's spending fever. Several areas of poor planning is the "must have " fiber project which has cost several hundred million dollars with no possibility of breaking even, the ambitious facilities capital project which could be pushed out over a longer time period with more modest plans. Another area that must be addressed is the ever increasing employee and salary levels which have reached an all time high. Employees, with already the highest salaries in the county, expect yearly wage increases at a time when the economy is poor with high unemployment. It also must be said the reluctance of the commission to raise industrial rates to an appropriate level has made the PUD more dependent on declining surplus sales and bigger rate increases . The industrial boom in the county has brought us to the end of our portion of our project power requiring higher priced market power in the future and has increased the PUD's state mandated requirement to build more expensive renewable energy resources. The low industrial rates over the years have become a profit center for the large industrial companies carried on the backs of the ratepayers. Also some feel that since Grant County's power cost is much lower then the national average there's room to raise the rates and still be under the national average thus giving the PUD a windfall and proclaim to the ratepayer, "see we're still well off compared to the rest of the country."

The safety net for the PUD is to fall back on rate increases to the public. Much more needs to be done by staff and commissioners and get back to a conservative mind set, develop more equality in the rate classes, make drastic budget cuts and re-think priorities for the future.