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2/14/2013 10:30:00 AM
PUD's 2012 budget finishes $5M ahead of estimates
From Steve Lachowich
PUD Communications Director

Chelan County PUD ended 2012 about $5 million ahead of budget, keeping it on track to meet financial policies in the coming five years and to generate the results needed to meet customer priorities.

Chief Financial/Risk Officer Kelly Boyd Monday told PUD commissioners that several factors combined for the better-than-expected results that gave the PUD a gain in combined net assets of $77.9 million:

• The District's hedging program that locks in prices for "slices" and "blocks" of its power;
• Increased hydro production from Columbia River flows that were 128 percent of average;
• Increased revenue from a new real-time power sales agreement;
• Continued focus on cost control that kept expenses below budget even with the recent storm damage.
Year-end cash reserves are strong, and debt was reduced by $82 million.

Gregg Carrington, Energy Resources managing director, said higher flows and the hedging program helped offset lower-than-forecast market price conditions. The new real-time agreement with Powerex of Vancouver, B.C., also added to overall net wholesale revenue that was $5.6 million more than expected. Revenue from long-term sales contracts with Alcoa and Puget Sound Energy matched budget.

Looking ahead, Boyd said forecasts are for combined bottom line positive results of $80 million to $90 million a year through 2016, which are needed to meet customer-owner priorities for keeping electric rates affordable and keeping potential increases modest and predictable; saving for a rainy day; continuing to pay down debt; and keeping dams, power lines and equipment in good shape for reliable service.

In other business Monday, commissioners:

• Heard the timeline from Mike Coleman, Fiber and Telecom managing director, for rebuilding the fiber system on the south shore of Lake Wenatchee after it was destroyed in December storms. The bid process to secure fiber repair materials and a contractor to do the work has started and will take up to seven weeks, with another week or two for evaluation and awarding of contracts. Rebuilding the system will take another 10-12 weeks to complete, Coleman said. The information was also shared with about 100 Lake Wenatchee area residents who attended a Jan. 26 community meeting to discuss fiber and electric system repairs. Coleman also announced fiber crews will start March 18 on connecting the first of up to 600 new services this year as outlined in fiber's 2013 budget.

• Received the news from Internal Auditor Stacey Jagla that the PUD's 2011 financial results earned a clean bill of health from state auditors.

• Learned the PUD will begin offering rebates for energy-efficient appliances this year as part of continuing conservation efforts. Andrew Grassell, Energy Development and Conservation manager, reported 2012 energy savings of 1.75 average megawatts (aMW) were slightly ahead of target.

Other new programs planned to help the District reach its 2013 target of 1.85 aMW are aimed at commercial and industrial refrigeration and manufactured home duct sealing. Staff will also look at weatherization opportunities for apartments and other multi-family dwellings.

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