PUD Board Adopts Smaller 2014 Budget; Will Hold Rates Steady
December 18, 2013 – At its December 17 meeting, the Columbia River People’s Utility District (PUD) Board of Directors approved a $32.9 million Operating and Capital Budget for 2014. No changes to electric rates are expected.
The 2014 overall budget is 1% less than the 2013 budget. Controllable expenses of $10.3 million are 5.8% lower than in 2013.
“Our 2014 Budget is built around our primary goal of providing safe, reliable and affordable energy. I believe our 2014 Budget accomplishes this at a lower cost, despite notable increases in power and transmission expenses,” said General Manager Kevin Owens.
The PUD sets its annual operating budget through a process that involves the PUD Board, PUD staff, and a customer Budget Advisory Committee. The Committee, which met in October and November to provide input on the proposed budget and activities for the upcoming year, includes representatives from the PUD’s residential, commercial and industrial customer classes, along with low-income and senior advocates.
“Our Budget Committee’s input is essential to keeping us focused on meeting customer needs while accomplishing our core business responsibilities,” said PUD Board President Richard Simpson.
New substation will be energized
The PUD will complete the construction of and energize the new Fairgrounds Substation in St. Helens in 2014. The substation is part of an eight-year capital construction and improvement plan designed to increase system capacity and improve safety and reliability. The PUD is funding these improvements through cash reserves, rather than incurring additional debt, in order to keep costs down.
PUD headquarters will be remodeled
The largest capital expense for 2014 is the remodeling of the PUD headquarters building, budgeted at $710,000. The remodeling will add 1,825 square feet of office space, enhance the security system and add a fire suppression sprinkler system to the building. The headquarters building was originally built in 1989 for a staff of 30. The PUD now has 50 full-time and two part-time positions, and expects staffing levels to remain steady through 2014.
Wholesale power costs up, but electric rates stable
Wholesale power costs are projected at $17.4 million, a $732,000 or 4.4% increase over 2013 levels. The change is primarily the result of a wholesale power and transmission rate increase implemented in October 2013 by the Bonneville Power Administration, the PUD’s sole energy supplier. BPA has raised its wholesale power costs by 24.5% over the past four years, while transmission rates increased 9.3% in 2013.
The PUD does not plan to increase electric rates in 2014. The PUD raised electric rates 4.65% in October 2013, and now expects rates to stay the same until October 2015, when new BPA rates will take effect.
The PUD’s residential electricity rate is about 37% lower than those charged by Portland General Electric, which previously served customers in the area. The PUD’s lower prices save residential customers an average of $522 each per year, and have saved residential customers nearly $68 million since the PUD began operations in 1984.
No additional debt planned
The PUD will fund all 2014 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 2014, and the PUD is on track to pay off its remaining $7.4 million in long-term debt in 2020.
Operating revenues expected to rise 2.4% from 2013 levels
Overall operating revenues are projected at $29.0 million for 2014 on estimated energy sales of 470,600 mWh’s, an increase of $684,000 over 2013 levels. The PUD’s operating revenues peaked in 2008 at $29.0 million on sales of 513,700 mWh’s and then declined during 2009 and 2010 to a low of $26.2 million on sales of 452,000 mWh’s as a result of the economic recession and the closure of several local businesses. Since that time, revenues have recovered very slowly, but steadily.
Year-end cash reserves projected at $9.4 million
The 2014 Budget includes a projected decrease of $624,000 to cash reserves. However, the projected 2014 year-end cash balance of $9.4 million is well above the $8.5 million financial target set by the Board to provide contingency funds for long-term capital construction projects, customer deposits, short-term operating reserves, storm response, and strategic capital investments.