Commissioners discuss revenue

Submitted by sheilac on Mon, 09/21/2020 - 09:58
Date

 

Okanogan County PUD commissioners decided to tap into the rate stabilization fund to cover $622,455 in revenue shortfall after canceling the 2020 revenue increase, but funding 2021 budgets for infrastructure replacement will require additional sources.

As the electric grid is aging, the district has had to plan for higher capital funding. Now with the Cold Springs wildfire (see related story), the need is even greater to fund capital projects that will restore and strengthen the system.

General Manager Steve Taylor said the district had considered about $20 million in bonds to pay for capital projects, but with more than $7 million (and counting) in wildfire costs and other upcoming needs, he asked for the board’s approval to pursue up to $40 million in bonds.

The district will need to raise revenue to cover the additional annual cost of paying back those bonds and fire damage costs. This is the third multi-million dollar wildfire in six years.

Chief Engineer Dan Simpson shared some background on customer rates, which are among the lowest in the state. Some of the lowest rates in the nation are in Douglas, Chelan and Grant counties – Okanogan’s neighbors.

Simpson gave a summary of rate increases over the past decade, including an explanation of rate design. He shared examples of customers with different monthly usage levels. From 2014 through 2020, the district’s rate increases have been about the same as the rate of inflation.

When dealing with increases, talking percentages can be difficult, Simpson said. There are always different usage levels where the numbers look skewed. However, the district continues to move toward a more fair rate structure, where everyone pays their fair share, based on actual system costs.

The 2019 equity management plan showed the need for small revenue increases annually to keep up with inflation and meet the growing capital cost requirements.

The district will continue its 2021 budget discussions, including any customer rate impacts that might be coming next year, at their regular meetings. They will also have at least three evening meetings in October and November.

In other business, the board:

  • Approved a grant application to the Public Works board to fund a project proposed by the Methow Broadband Action Team that would connect residents in the Carlton area to fiber services. The application requests up to $5 million toward an approximate $5.7 million total project cost. Services could be provided to 343 households, 14 businesses and a handful of other customers.

Commissioners also heard from Roni Holder-Diefenbach, representing the Okanogan County Broadband Action Team. This group, which focuses on the Okanogan Valley and Colville Reservation, has identified 18 areas of focus for broadband expansion. They hope to have a study done soon and could come ask for grant applications as well.

  • Heard from Director of Power Resources and Broadband Services Ron Gadeberg that wholesale power sales were better than budgeted in August, with $102,335 more than expected. However, retail sales were again below budget for July, more than $200,000 under. Total power sales are $1.4 million below budget year-to-date, mostly due to mild weather and fluctuating power prices.
  • Also heard from Gadeberg that broadband again set a billing record at $284,000. The system now has 2,980 wireless and 531 fiber end users. Customer work will be on-hold until post-fire restoration is complete.