PUD is Debt-Free After Final Bond Payment
Deer Island, OR – December 3, 2020 – For the first time in its 36-year history, Columbia River PUD is debt-free. On December 1, the PUD made its final bond payment to US Bank in the amount of $853,356.67.
“Since 1984, the people of this district have been investing in our electric distribution system. Paying off that long-standing debt is a big achievement. We are excited for all of our customers to finally reach this break-even point,” said PUD General Manager Michael Sykes.
Historically, the PUD has only taken on debt to purchase facilities from Portland General Electric (PGE). The PUD issued a $17 million bond in 1984 to purchase the original electric system from PGE so the PUD could begin providing electric service. In 2000, a $15 million bond was approved for the PUD to purchase additional service area from PGE to serve more customers in St. Helens, Scappoose, and Columbia City.
The PUD has refinanced its bonds several times to take advantage of lower interest rates. The PUD last refinanced its debt in 2015. Since then, the PUD has made average annual payments of $1.22 million to become debt-free.
The utility’s long-range planning allowed it to factor these savings into its 2019 Cost of Service Analysis. Knowing the bond payments would be finalized allowed the PUD to keep rates low when instituting a 2019 rate change.
While some utilities use long-term debt to fund system improvement and maintenance projects, CRPUD’s Board of Directors has developed a philosophy where long-term borrowing is only acceptable to:
- Expand the PUD’s service area
- Fund large capital projects like power generation
- Refund existing obligations to reduce debt service
The PUD uses cash to fund capital projects like the construction of new substations. This helps keep rates down for all customers by avoiding interest and financing fees.