PUD Board Proposes $33.6 Million Operating & Capital Budget for 2015; no rate increase planned
November 26, 2014 – At its November 18 meeting, the Columbia River People’s Utility District (PUD) Board of Directors reviewed a proposed $33.6 million Operating and Capital Budget for 2015. No changes to electric rates are included in the proposal. A public rate hearing will be held on Tuesday, December 16th at 6PM in the Community Room of the PUD’s Deer Island headquarters.
“Our 2015 Budget proposal keeps us focused on providing safe, reliable and affordable electric service for customers,” said General Manager Kevin Owens.
The proposed 2015 overall budget is 3.6% higher than the 2014 budget. Controllable expenses of $10.9 million are 2.3% higher than in 2014. This increase is due primarily to rising wholesale power costs, which will comprise 54.4% of the total budget.
Wholesale power costs will rise, electric rates projected to be stable
Wholesale power costs are projected at $18.3 million, a 5.2% increase over 2014 budgeted levels. The change is the result of a wholesale power and transmission rate increase that is anticipated in October 2015. The PUD is a wholesale power customer of the Bonneville Power Administration. BPA markets the electricity generated at 31 hydropower dams in the Columbia River Basin and one nuclear generating facility. BPA raised its wholesale power costs 9.3% in 2013 and has proposed an additional 6.7% wholesale power cost increase to take effect in October 2015.
The PUD is not currently planning to increase electric rates in 2015. A Cost of Service Analysis will be conducted during the summer of 2015 to identify revenue requirements for the next five years.
“With two new board members taking office in January and a Cost of Service Analysis planned this summer, we deferred the decision to increase rates,” said Owens. “For now, we plan to use rate stabilization funds to cover the expected increases in wholesale power costs.”
The PUD’s residential electricity rates are about 34% lower than those charged by Portland General Electric, which previously served customers in the area, and about 31% lower than the average residential electricity rates in Oregon. The PUD’s lower prices saved the average residential customer $474 in 2013. In total, residential customers have saved about $80 million since the PUD began operations in 1984.
Improvements planned at Rosehill Substation
The PUD’s largest capital project in 2015 will be the replacement of a 53-year old transformer at Rosehill Substation in St. Helens. This project is part of the PUD’s long-range substation improvement plan that was developed to ensure that the PUD would be able to accommodate growth in the area and provide reliable service to all customers.
No additional debt planned
The PUD will fund all 2015 operations through electric rates and cash reserves. The Board does not plan to issue any long-term debt during 2015; the PUD is on track to pay off its remaining $6.45 million in long-term debt by 2020.
Operating revenues will remain steady at $29.0 million
Overall operating revenues are projected to remain flat at $29.0 million for 2015 on estimated energy sales of 461,961 megawatt-hours. The PUD’s operating revenues peaked in 2008 at $29.0 million on sales of 513,700 megawatt-hours and then declined during the economic recession to a low of $26.2 million in 2010. Between 2011 and 2014, operating revenues slowly recovered, although energy sales are still lower due to the closure of several local businesses.
Year-end cash reserves projected at $8.2 million
The 2015 Budget includes a projected decrease of $1.9 million to cash reserves, to $8.2 million. The PUD uses cash reserves to provide contingency funds for long-term capital construction projects, customer deposits, short-term operating reserves, storm response, and strategic capital investments.