PUD Approves 2012 Budget

December 21, 2011 – At its December 20, 2011 meeting, the Columbia River People’s Utility District (PUD) Board of Directors approved a $32.9 million Operating and Capital Budget for 2012 that holds rates steady for the year.

“This budget reflects the PUD Board’s philosophy of providing safe and reliable service while keeping rates affordable and stable,” said Board President Dave Baker.

Adoption of the 2012 budget was the culmination of a two-month process involving the PUD Board, staff, and a Budget Advisory Committee. The Committee included representatives from the PUD’s residential, commercial and industrial customer classes, along with low-income and senior advocates. They met twice in November to hear about the issues and challenges facing the PUD and gave input on the proposed budget and activities for the upcoming year.

“Getting that feedback from customers is a big part of our process,” said Baker. “It helps us make sure we stay focused on the right things.”

Encouraging customers to use less electricity during peak demand periods will be one of the PUD’s primary focuses in 2012. The PUD’s wholesale power provider, Bonneville Power Administration, changed its billing structure on October 1, 2011. Under the new structure, the PUD will pay more for electricity during times when regional demand for electricity is at its greatest. By encouraging customers to shift their electricity use away from peak times, the PUD can keep wholesale power costs lower, which keeps rates lower for everyone.

“When you use electricity is becoming just as important as how much you use,” said PUD General Manager Kevin Owens. “We’ll be educating customers about this issue and encouraging them shift usage away from 7-10 AM and 3-8 PM on weekdays, to other times of day or to the weekend.”

No rate increases planned

Raising rates in 2012 was not a part of the discussion. The PUD’s 4% rate increase in October 2011 was the first increase in a decade, and no additional rate increases are expected in 2012. The PUD’s residential rates are currently 38% lower than those charged by Portland General Electric, which previously served customers in the area. The PUD’s lower rate saves residential customers an average of $550 a year.

No additional debt planned

The PUD will fund all 2012 operations, including capital improvements, system maintenance, tree trimming, energy efficiency programs, and customer service functions, through electric rates and cash reserves. The Board does not plan to issue any long-term debt during 2012, and expects to pay off its existing $9.2 million in long-term debt by 2020.

“Our financial policy is fiscally conservative,” said Baker. “We had to borrow money to purchase the distribution system and begin serving customers, but we don’t borrow money for daily operations and system improvements. We save money first and then make improvements when we can afford to pay for them.”

Staffing levels to remain steady

The PUD, which employs 53 people, does not plan to add any new positions in 2012. Compared with the five other PUDs in Oregon, Columbia River PUD operates with significantly fewer employees per customer served. At Columbia River PUD, there are 351 customers served for every employee. Among all PUDs in Oregon, there is an average of 259 customers served for every employee.

“We are fortunate to have capable and hard working staff members who are always finding ways to do things better, more efficiently, and less expensively,” said Owens.

The PUD has also invested heavily in technology to help streamline operations and improve customer service. A recent move to virtual computing has helped to reduce hardware replacement costs and to improve performance of computer systems that the PUD relies on the read meters, bill customers and manage the electricity distribution system.

System improvements planned

The PUD plans to spend $2.9 million on capital improvements, equipment and construction in 2012. Preliminary development and site work for a new Fairgrounds Substation in St. Helens is the largest single item, accounting for $487,000 in capital costs. In addition, power line capacity and reliability upgrades are planned for a transmission line running from St. Helens to the Dyno Nobel plant in Columbia City, and for distribution lines on Hankey Road, Orr Road, Brooks Road, Lentz Road, Hutchinson Road, and Jack Falls Road along Highway 30. Overhead to underground conversion projects are planned for Rocky Point Road in Scappoose and from Fairview to Holbrook Road in Rainier.

Revenues, wholesale power cost increases projected

Overall operating revenues are projected to remain the same when compared with 2011 levels. Revenues declined in 2009 and 2010 as a result of the sluggish economy, followed by a slight rise in 2011.

Wholesale power costs, which comprise 50% of the PUD’s annual operating expenses, are expected to be higher in 2012 than in 2011, due to a 9.7% wholesale power cost increase that took effect in October 2011. Wholesale power costs have increased a total of 16.6% in since 2009.

Cash reserves projected at $10.0 million

The 2012 budget includes a projected decrease of $1.5 million to cash reserves. However, the projected 2012 year-end cash balance of $10.0 million is adequate to provide contingency funds for rate stability, long-term capital construction projects, storm response, and future power supply opportunities.