Decision time

By Rich Riazzi, General Manager

5/30/2007

We’re reaching decision time on an important part of strategic planning for the PUD. After 10 months of researching, analyzing and discussing, it’s time for the Board of Commissioners to make policy decisions about the services we provide and the methods of financially supporting them. We in management have an obligation to provide informed recommendations – after thoroughly evaluating all the data.

You can view the entire presentation that was made to the Board of Commissioners on May 29 by clicking here. It shows you all our recommendations. Elsewhere on the “Strategic Planning” page, you can review charts and graphs and detailed financial data that was presented during the past 10 months. It paints a picture of a utility that needs to change its financial approach for the long term.

Here is what management recommends at this time:

Guiding principles

• We can best serve our customers by providing multiple utility services and utility infrastructure improvements
• We should implement annual financial plans to achieve a positive bottom line
• As a whole, we should manage rates to cover operating costs as measured by an acceptable operating ratio
• Each service should manage rates to cover operating costs over time
• A surcharge is an appropriate way to manage risk and volatility and may be needed on occasion
• Cash reserves should be available to fund the capital needs of any District service
• Cost control and efficiencies should be part of annual PUD financial plans
• We should manage debt within established guidelines

Management recommendations

• Proceed with the extended build-out of fiber optics (reaches 76% of the county by 2012 instead of 95%)
• Use a balanced financial strategy and proceed with the Water business line
• Use a balanced financial strategy and proceed with the Wastewater business while pursuing potential collaborative options with others
• Use a balanced financial strategy for the electrical distribution service

Rate increases

• Electric: 9 percent per year through 2010 (possibly 2011); taking the average residential bill from $52 per month to a potential high of $74 per month
• Water: 9 percent per year through 2012; taking the average residential bill from $53 per month to $82 per month
• Wastewater: 9 percent per year through 2012; taking the average residential bill from $64 per month to $98 per month
• Evaluate rate options annually and consider adjustments depending upon our overall financial performance and risk tolerance