Contract proceeds will boost forecasted revenue for 2019-2030
Chelan County PUD commissioners Monday heard the good news that two new power sales contracts will boost forecasted PUD revenue by $40 million starting in 2019. Each sale is for a 5-percent “slice” of power generated at Rocky Reach and Rock Island dams.
Gregg Carrington, Energy Resources managing director, said the sales are for five years to Avangrid Renewables LLC of Portland, Ore., starting in 2019 and for 10 years to Avista Corp., based in Spokane, starting in 2021. The sales extend the PUD’s successful hedging strategy that returns value to customer-owners by locking in revenue, reducing risk from price swings in the wholesale market, variable streamflow and from operations, which help keep electric rates stable.
“This is good news for customers and for continued financial strength for the District,” Carrington said.
The report came as Energy Planning and Trading updated board members on second-quarter results. So far for 2017 net wholesale revenue and other energy-related revenue is forecast to end the year at $124.2 million, which is $ 2.3 million ahead of budget.
In addition, overall financial results exceeded budget through June. Forecasts call for the PUD to end 2017 with bottom-line results nearly $10 million better than budget and meeting or exceeding all fiscal targets. Debt to equity is forecasted to end the year at 37.8 percent, exceeding this year’s target and nearing the goal of less than 35 percent by 2019. Long-term, District financial policies are on track for managing declining bottom-line forecasts due to anticipated lower market prices through 2021.
Revenue so far is higher due to below-average winter temperatures and the cost-plus long-term power contracts, while operating costs have been lower. Finance staff recommended staying the course on strategic priorities of investing in key assets and employees, paying down debt ($52 million in 2017) and continuing the Public Power Benefit program.
In other business Monday, commissioners:
- Reviewed the results of detailed evaluation to determine if parts of original generating units B1-B4 at Rock Island Dam can be reused as the units are modernized. Based on component conditions, Brett Bickford, Engineering and Project Management director, said staff recommended using the contract option with Andritz Hydro to replace rather than reuse rotor poles, wicket gates (on three units) and generator shafts to reduce delays in completing the upgrades and for the financial benefit of longer unit life. Board members agreed and revised the project budget by $5.75 million to $70.05 million.
- Reviewed details of a proposed agreement with the state Department of Ecology that, if approved, could allow Ecology and Chelan County to move ahead on long-standing water permit applications for the Lake Chelan Water Basin. The proposed agreement between Chelan PUD and Ecology would maintain Chelan PUD’s commitment to provide 65,000 acre-feet of water per year from Lake Chelan - as administered by Ecology. It also protects the PUD’s hydropower water right for the Lake Chelan Hydro Project, said Marcie Clement, Water Resources manager. The agreement would establish an estimated number for the remaining amount available for water rights. In addition, it establishes an annual accounting by Ecology of remaining water, based on the agreed-to estimated amount available. Board action on the proposed amendment to a 1992 agreement is set for Sept. 5.
- Reviewed and approved final contract documents for replacing the aging lagoon system at the Lake Wenatchee Wastewater Treatment. Finished in July the project included replacing lagoons and baffles and installing new electrical controls and monitoring systems. Gary Rice, project manager, said the successful work ensures the plant meets state water quality standards. The revised contract price is $763,227.
- Congratulated Maura Gillin, Generation Asset Management senior analyst, and Katie Marshall, Pole Attachment manager, on being named among the 30 Under 35 community leaders honored by The Wenatchee World for business
- Changed the start time for the Aug. 21 board study session to 9 a.m. with plans to immediately go into executive session.
- Aug. 14 –PUD Kids Eclipse Workshop, 5:30 p.m., Walla Walla Point Park Shelter 1
- Aug. 21 – Board meeting, 9 a.m.
- Sept. 4 – Labor Day holiday
- Sept. 5 – Board meeting, 10 a.m. (rescheduled due to the holiday)