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Preparation continues for strategic decisions on June 11

Chelan County PUD
News Release
6/4/2007

PUD commissioners Monday discussed the options available as they prepare for policy decisions  June 11 that will determine the District’s financial direction through 2012. 

 General Manager Rich Riazzi recapped the 10-month process which resulted in his recommendation last week that commissioners increase revenue by raising rates 9 percent a year for electric, water and sewer customers for multiple years, and slow the pace of the fiber-optic network. He suggested a balanced approach that helps close the gaps between expenses and revenues for utility services and lessens dependence on volatile wholesale power revenues. 

“Time is not on our side,” Riazzi said. “We now have (financial) challenges facing us in a few years.” 

Riazzi emphasized that the PUD has taken steps to reduce its operating costs. The 2007 budget contained staff reductions equal to 19 full-time positions. More reductions occurred in a recent staff reorganization and positions vacated by retirees are not always being filled. Operating expenses for 2007 were held to a 4.5 percent increase, compared with 7 percent the last few years.

The PUD last increased electric rates in 2000. Commissioners were given a chart showing inflation has risen 17 percent since 2000. The rise is forecast to hit 40 percent by 2012. A 9-percent rate increase each year from 2008-2011 would raise electric rates a total of 41 percent. Riazzi recommended annual increases through 2010, possibly 2011.

Customer Bill Stokes, Wenatchee, said that spending and paying down debt must be addressed, as well as increasing revenue.

“We need a debt reduction schedule to be set and enforced by the commission,” Stokes said.

Commissioner President Norm Gutzwiler noted the impact load growth will have on surplus power sales as more of the power is needed to meet Chelan County needs. Load growth of 4-5 percent is forecast for this year, and 3 percent a year through 2012.

PUD Commissioner Werner Janssen was concerned that customer-owners are just now grasping the impact of proposed rate increases and that more time might be needed before decisions are made.

Commissioner Dennis Bolz said perspective is important. He found customers concerned about the impact of a 9-percent annual rate increase, but more understanding when it was translated into actual cost – about one-third of a cent per kilowatt hour each year - from 2.9 cents up to 4.2 cents.

Commissioner Ann Congdon said even though water supplies turned out to be plentiful this year, analysis shows that the risk of low water and a big drop in wholesale revenue in coming years remains high, making it prudent to act now.

Commissioner Randy Smith said he’s heard from customers concerned that slowing the fiber build-out will end up being more expensive in the end as construction costs rise.

All commissioners and Riazzi made the point that the PUD’s financial situation will be revisited each year through 2012, during budgeting and rate-setting.

Customers need to know that, “If we commit to raising rates as we need them, we are equally committed to lowering them when we don’t need them,” said Bolz.

The fourth community strategic session is set for 5:30 p.m., Monday, June 11, at the Confluence Technology Center at Olds Station.

In other business, commissioners:

• Approved the purchase of a new system to handle sludge from the Peshastin sewer plant in a safer, more efficient and more sanitary manner. Workers now bag and handle the sludge several times before it is taken to a site and disposed of by spreading and working it into the soil. Centrisys Corp., Kenosha, Wis., will provide a new skid mounted centrifuge sludge dewatering system for $199,000. Commissioners also declared the old sludge dewatering equipment surplus and authorized its sale by auction.

***

PUD commissioners adjourned Monday’s meeting and will reconvene at 9 a.m. on Thursday, June 7, at the Confluence Technology Center, 285 Technology Way, Wenatchee, to discuss the board’s balanced scorecard.

The next regular meeting of the PUD commission is at 5:30 p.m. (note the evening starting time) on Monday, June 11, at the Confluence Technology Center, 285 Technology Way, Wenatchee. PUD commissioners are expected to make decisions setting the direction of the PUD for the next five years at the fourth in a series of community strategic planning sessions. Click here for more information.

Most PUD commission meetings are recorded, and a link to the audio is available on the PUD’s home page at www.chelanpud.org.

Kimberlee Craig
Public Information Officer
509-661-4320, direct line
509-679-6858, cell
kimc@chelanpud.org