Okanogan County PUD commissioners reviewed an equity management plan (EMP) and draft of the 2020 PUD budget at a regular meeting Oct. 7.
The proposed budget reflects revenues of about $57.2 million, expenditures of $48.3 million and debt service of $3.6 million. Capital outlay amounts to $13.3 million, funded by operations, reserves and debt issuance.
The district had developed a 10-year capital projects plan, which considered condition of the infrastructure, load requirements and overall reliability risk. If the overall plan were to be implemented, it would require additional capital funding, potentially a 4 percent rate increase. Staff recommended deferring 25 percent of that plan to later years to propose a lower rate increase of 3 percent. Staff presented the draft budget to commissioners for the first time at the Oct. 7 meeting.
General Manager Steve Taylor said much of the capital includes catching up on replacing and upgrading equipment on more than 1,700 miles of distribution lines, such as poles (there are about 29,000 poles in the system). The district spends about $2 million per year in regular replacements, upgrades and maintenance, but needs an additional $4 million per year to fund depreciation, which would allow the district to borrow less and help catch up on aging infrastructure.
The capital budget also includes large multiyear projects throughout the county, including rebuilding the Tonasket substation and the Okanogan-to-Brewster and Loup transmission lines, and about $7 million for Enloe dam safety work.
The equity management plan, presented by Sergey Tarasov of FCS Group, showed that in order to keep its financial targets (cash on hand, debt ratios, etc.) that the district needs to balance how much it pays in cash and how much borrowing is done. Some bond issues will drop off in 2022, allowing for more debt capacity.
The big question was if the district deferred more capital projects, what would be the risk to customer reliability and would it really save money? The capital plan is about “building for reliability,” so that outages are prevented or restored faster.
Stretching out the plan for replacements and upgrades would reduce next year’s need for funding, but add cost in the long run, as costs continue to rise and only doing portions of a project can mean paying for mobilization, bidding and risk evaluations multiple times.
Commissioners will continue to review the details of the draft budget before the next meeting. The budget hearing remains open, and will include the regular 3 p.m. board meetings as well as 6 p.m. special meetings to discuss areas of the budget Oct. 21, Nov. 4 and Nov. 18. The budget is draft only until its approval by commissioners in December.
In other business, the board heard both a power sales and telecom report from Director of Power Resources and Broadband Services Ron Gadeberg. Wholesale power sales were a bit better than budgeted for September, but August retail sales were under the expected amount. That leaves power sales revenue total for the year at about $3.5 million under budget with overall mild weather, and brutal cold snaps in February and March. Telecom, however, continues to add customers and grow its revenue.