PUD bracing for another year of financial shortfall
Chelan County PUD - Financial results for Chelan County PUD turned out better than expected in 2009 but were still far short of where the PUD wanted to be, commissioners were told Monday afternoon. A negative early forecast for 2010 is beginning to overshadow the outlook this year as well.
John Janney, chief finance officer and chief risk officer for the PUD, told the Board of Commissioners Monday afternoon that the PUD came in about $15 million short -- instead of $19 million short -- on its net assets for Utility Services. The change in net assets is the bottom line for the PUD's retail services including electric, water, sewer and fiber optics.
Janney credited PUD employees with doing their best to hold off spending on anything that wasn't necessary in order to save as much as possible last year. Operating expenses were held $9 million below the already reduced contingency budget - which helped offset lower revenues.
Even though power prices are looking better than last year, low snowpack forecasts for the Columbia, for the Lake Chelan Basin and continued low earnings on the PUD's investment portfolio are pointing to what could be an even tougher year in 2010. One forecast of Columbia runoff is 81 percent of average. Another is for 70 percent of average. The first forecast at Lake Chelan is for 83 percent of average runoff.
Janney said it's too early to make recommendations on rate changes or surcharges because final runoff forecasts won't be done until April, but he cautioned, "2010 might be even tougher than we expected at budget time." The 2010 budget approved in December projected a drop of approximately $14 million in Utility Services net assets under normal weather and power prices at that time. Right now that forecast decline in net assets is approximately $25 million.
In 2011, the decline is forecast at $5 million under normal snowpack conditions, with a return to positive numbers of $52 million for the PUD in 2012.
Besides looking at new power sales strategies that could help even out the revenues from year to year, Janney said the PUD is also exploring what it might cost to have a standby line of credit ready in case it is needed in the next few years. PUD financial reserves are forecast to be at $200 million or above through this year under all conditions but the most extreme. But the minimum $200 million level recommended by Janney would not be met in 2011, even under average conditions.
PUD rates are second lowest in the nation, and a 9-percent surcharge imposed last May is scheduled to expire at the end of April. A new rate structure is scheduled to take effect the first of May, raising overall revenues by about 2.5 percent due partly to higher residential rates for those who use large amounts of power. Said Janney, "The PUD is committed to maintaining rates consistent with a financially healthy utility - today and into the future."
Janney also reminded commissioners that the PUD cannot continue to delay projects designed to upgrade the utility system without suffering a potential drop in its historically high reliability rating.
In other action, PUD commissioners:
* Rescheduled their annual board retreat for 8:30 a.m. March 17 at the North Central Regional Library service center on Columbia Street;
* Scheduled a special meeting at 1:30 p.m. March 23 at the Confluence Technology Center in Wenatchee to meet with commissioners from Chelan County and from the Port of Chelan County.
Due to the Presidents Day holiday, the next regular commission meeting is at 1 p.m. on Tuesday, Feb. 16, in the PUD boardroom at 327 N. Wenatchee Ave.
Most PUD commission meetings are recorded, and a link to the audio is available on the PUD's home page at www.chelanpud.org.