Grant PUD reduces budgeted spending, increases income

EPHRATA — An unexpected contract to sell a portion of its dam-generated power and the need to clarify details on capital projects resulted in adjustments to the Grant County Public Utility District’s budget by about $55.6 million. 

Grant PUD Public Information Officer Christine Pratt said about $9.7 million of the reduction comes from capital projects tentatively scheduled for 2025 that might or might not be done next year. The rest, about $46 million, comes from a contract with Brookfield Renewable Trading and Marketing to buy some of the electricity generated by Priest Rapids and Wanapum dams, increasing revenue for the district. 

Angelina Johnson, senior manager of treasury and financial planning, told PUD commissioners Nov. 26 that the status of proposed capital projects which comprise the $9.7 million figure is still to be determined. Questions need to be answered relating to some of the associated proposals. 

“(Deferred proposals included) things that we didn’t see being feasible for us to complete in a year, or that we didn’t find value in completing,” she said. “Projects that were proposed that we didn’t have enough information (about) to come up with a benefit to the district. We had them sent back for deferment to a later date, or maybe not (approved) at all.” 

In answer to a question from Commissioner Larry Schaapman, Johnson said the decision to delay – or cancel – a capital project takes more than the cost into account. 

“(First) making sure that we have enough people and the correct resources to do the work. Secondly, is it a safety concern or is it a compliance issue,” she said. “There are projects that are just, I guess, too green in their state to move past the planning.”  

Schaapman said deferring projects can lead to increased costs and asked if the budget includes an allowance for a capital project that may be ready to go by midyear.  

Johnson said there is an allowance for projects that could be ready, but anything that looks like it will take more than a year to prepare was dropped.  

Brookfield bought 10% of the Wanapum and Priest Rapids generation, a sale called a slice contract. It is expected to run for three years. The PUD had a similar contract with Avangrid Energy that expires at the end of 2024. 

Johnson said the preliminary budget didn’t include any revenue from a potential slice contract, since one hadn’t been signed.  

“Slice sales have proven to be a successful strategy to reduce risk while maximizing the value of Grant PUD’s hydro system,” he wrote.  

In a slice contract, the PUD sells its share of the two dams’ generation to outside parties, who then provide electricity to meet the PUD’s needs up to a previously established threshold. A slice contract can be for the PUD’s whole share, or it can be sold in increments. Brookfield purchased a 10% slice.  

The slice contract reduces the possibility that rates might have to be raised as a result of a potentially bad water year. The contracts also provide predictable revenue and protection for the PUD in the case of a year with low river flows. 

The PUD has been selling slice contracts for years, and John Mertlich, chief commercial officer, wrote in a memo to commissioners that there are benefits. 

Mertlich said Brookfield will share in the risk that comes with the possibility of low water flows or other operational limitations. In addition, the contract provides more value than the PUD could get selling power on its own since it only has limited participation in that market, he said.