Commission recap 6/09/2020: Commissioners to explore new ways to help customers hardest hit by Covid

Grant PUD commissioners will continue to explore additional ways to help those customers hardest-hit financially by the COVID-19 pandemic but lacked support Tuesday for a proposal that would have given "core" customers a temporary, 4% discount on a portion of their monthly power bills.

Commissioner Dale Walker proposed the 4% discount May 28. The discount would be figured not on the total bill, but on the fixed, "basic charge" portion of bill for residential customers, commercial businesses and irrigators (Rate Schedules 1,2, 3 and 7). It would be in effect through Dec. 31, 2020.

The discount would reduce the average $100 monthly power bill by about $4 and reduce Grant PUD electric-rate revenue about $2.1 million this year, according to data provided commissioners by the Grant PUD financial team. The discount would not negatively affect Grant PUD's financial targets this year, the data showed.

Commissioners' further discussion Tuesday with General Manager/CEO Kevin Nordt and Chief Financial Officer Jeff Bishop raised concerns that the proposal wouldn't provide much relief to customers and wouldn't all go to those most in need. The proposal could also have the potential to reduce Grant PUD's credit rating, increasing interest rates on future borrowing.

"I think it's necessary that we give our ratepayers a chance to sigh, take a deep breath and maybe cover some of their expenses," Walker said of his proposal. "The big thing is whether it would hurt the financial picture, and it does not do that."

Commissioners Nelson Cox and Judy Wilson initially expressed guarded support for Walker's proposal.

Commission President Tom Flint and Commissioner Larry Schaapman opposed.

"I hate to be the one to bring a wet blanket, Dale," Commissioner Schaapman said. "I understand your heart. I'm not sure what we're doing has been thought through completely."

Commissioner Schaapman said residential customers have been hardest hit by business closures and work restrictions imposed by the state Governor's Office to combat the COVID pandemic. The proposal, he said, would also benefit Rate 7 customers — larger companies, including big-box retailers and supermarkets, who are less in need and would neither benefit much nor pass the savings on to their customers.

"I don't know if we really need to join in this parade," Commissioner Schaapman said, pointing to Grant PUD's existing Share the Warmth and other programs that could provide more help to customers in need than the proposed temporary rate reduction. Grant PUD suspended late fees and power disconnects for core customers even before those measures were mandated by the Governor's Office.

"It's admirable what's at the heart of the issue, but the net that's being cast is going way beyond where it needs to be cast," Commissioner Schaapman said.

"I kind of agree with Larry on the fairness issue," Commissioner Flint said. "You need to push the resources to the people who are hurting and I don't see a blanket way to do that as well as we want it to. We don't want to jeopardize our bond ratings. Having a good bond rating is good for our rate payers."

Commissioner Cox suggested possibly trying to avoid an across-the-board rate increase next year as a potentially better solution." Commissioner Wilson asked if Grant PUD could add more funding to Share the Warmth or other programs for customers most in need or consider changes the Grant PUD rate structure.

The proposal died prior to a vote when Commissioner Flint called for a fellow commissioner to second the proposal, but none did. Grant PUD staff will explore other ways the utility can help its hardest-hit customers and be back at the June 23 commission meeting with more suggestions.

Listen to the full discussion at 2:51:15 on the commission audio.

Strategic Plan performance indicators on track

Financial metrics are still strong, despite a changing forecast, commissioners heard Tuesday. Highlights of key performance indicators include:

— Cash reserves by year-end of $163 million (456 days of cash on hand). The target is $105 million or greater.

— Debt-to-plant ratio is projected to end the year at 52%, outperforming the target of 60% or lower. This is driven by debt pay-down and refinancing transactions in January and March and a $51 million increase in net plant assets. The proportion of debt to the value of plant assets

— Consolidated debt-service coverage. Higher is better. The amount of net income Grant PUD has to cover its debt service is 2.2 times greater than the debt service, itself, outperforming the target of 1.8 times or greater. This metric has been increasing almost constantly since 2018.

— Retail operating ratio projected at 108% by year end continues to outperform the target of 112% or less. This is a measurement of how fully retail electric-rate revenue covers cost to provide retail electric service to Grant County homes, businesses, farms and industry. This metric continues to improve.

— Grant PUD's credit rating remains strong and stable at Aa3, AA+ or AA, depending on the credit-rating agency. A high credit rating saves Grant PUD money through lower-cost financing for capital projects.

— Average power-outage time is forecast to end the year at 131 minutes, underperforming the target of 110 minutes or less. The top three known causes of outage duration so far this year were equipment damage, equipment failure and vehicle accidents. Numbers are improving.

See the full presentation here, pages 23-40. Listen to the discussion beginning at 1:16:22 on the commission audio.

Commissioners also:

— Heard from Grant PUD Fish and Wildlife Manager, Tom Dresser as he highlighted the fact that the Grant PUD's hatchery programs are considered essential functions during the Covid pandemic, as juvenile fish were on station during the outbreak.Dresser called out the efforts of all operators at the hatcheries but did focus on the efforts at the Priest Rapids Hatchery. The Priest Rapids Hatchery, which is owned by Grant PUD and operated by Washington State Department of Fish and Wildlife, saw crews implement the appropriate safety protocols that allowed them to continue the production, tagging and release of nearly 7 million fall Chinook salmon from that facility.

Efforts also continue to provide a redundant water supply at Grant PUD's Carlton fish-acclimation facility in Okanogan County. Dresser told commissioners that two separate wells will be needed as the Methow River is migrating away from the water intake. One well will support fish production, while the other, a domestic well will provide a domestic water source for an eye wash station and safety shower.

It is anticipated that a contract for the project work will be awarded in mid-July with a target completion of October 2020. Although Dresser said a portion of the project could rollover into the first quarter of 2021. The project cost is anticipated to be $670,000

Other activities highlighted during Tuesday's departmental report included:

• Efforts on developing a joint operating plan with other stakeholders to implement the Hanford Reach Fall Chinook Protection agreement.
• Continued financial analysis and evaluation of future operational and maintenance activities performed at the Priest Rapids Hatchery. Washington Department of Fish and Wildlife is currently operating the facility for Grant PUD. The Fish and Wildlife Department is in the process of analyzing various operation models that could be implemented in the future.
• The rehabilitation of three wells at Priest Rapids Hatchery is complete. The wells had become inoperable when the Priest Rapids Reservoir was operated at a lower elevation back in 2018 to accommodate work on the spillway of Priest Rapids Dam.
• Efforts to reduce avian predators throughout the Columbia River Basin

See the full presentation here, pages 1-14. Listen to the discussion beginning at 30:00 on the first commission audio.

— Heard from Manager of Cultural Resource, Brett Lenz who reported that the department has completed the Memorandum of Agreement with stakeholders for the Priest Rapids Right Embankment Project. The group has also initiated discussions with the Wanapum related to potential effects the embankment project may have on the residents of the Wanapum Indian Village. Throughout the assessment the department will work directly with the Wanapum residents to address issues such as the impact of noise and the abatement of dust because of construction.

Lenz also shared that the department:

• Submitted the first annual report to the Cultural Resources Working group.
• Will continue discussions with tribal, federal and state stakeholders on mitigation efforts on archeological sites to determine future activities may entail.
• Added three safety monitors to help respond to the Right Embankment Project.

See the full presentation here, pages 15-22. Listen to the discussion at 1:06:05 on the first commission audio.

— Heard about several unique community engagement opportunities Grant PUD has organized during the COVID-19 pandemic.

Senior Manager of External Affairs Andrew Munro and Public Affairs Supervisor Chuck Allen updated commissioners about the utility's partnership with the Washington State Broadband Office to provide free public Wi-Fi internet hot spots in Grant County.

Munro said 13 hot spot locations have been set up in communities throughout the county at a time when many people need internet access more than ever, to help with school and work projects and to keep connected.

The Wi-Fi signals reach approximately 750 feet allowing for a "drive-in" type of experience for users.

Grant PUD has also partnered with the Columbia Basin Foundation to support local food banks through Grant PUD's Pay-It-Forward Program.

Funding for the program is supported by generous donations from Grant PUD's industrial customers who deferred conservation rebate payments to support community-benefit programs, administered by the Columbia Basin Foundation, said Allen.

To-date a total of $11,000 has been shared with eight food banks in Grant County.

Commissioners also heard updates on:

• Adjustment to educational outreach efforts with schools and the library program during COVID-19.
• Fiber marketing efforts that have contributed to recently achieving a 60 percent system-wide take rate.
• $15,000 in grant funding from Microsoft to help in the development of an artificial intelligence based tool to support fish counting efforts.
• Recent customer outreach initiatives keeping customers informed of the utility's response to the pandemic.

See the full presentation here, pages 41-58. Listen to the discussion beginning at 2:14:05 on the commission audio

— Unanimously approved Motion 3330, authorizing the general manager/CEO, on behalf of Grant PUD, to execute Change Order No. 2 to Contract 230-08636 with IMCO General Construction Inc., increasing the not-to-exceed contract amount by $661,685.40 for a new contract total of $34,044,427.40 and resetting the delegated authority levels to the authority granted to the General Manager/CEO per Resolution No. 8609 for charges incurred as a result of Change Order No. 2. The change was necessary due to an increased scope of work related to construction of a secondary, more seismic-resistant right embankment at Priest Rapids Dam. See pages 7-16 of the commission packet for more information.

— Unanimously approved Motion 3331, authorizing the general manager/CEO, on behalf of Grant PUD, to execute Change Order No. 13 to Contract 430-3207 with Washington State Department of Fish and Wildlife (WDFW), increasing the not-to-exceed contract amount by $1,076,843.00, for a new contract total of $9,560,520.67, extending the contract completion date to June 30, 2021 and resetting the delegated authority levels to the authority granted to the General Manager/CEO per Resolution No. 8609 for charges incurred as a result of Change Order No. 13. Grant PUD has a federal obligation to produce 5.6 million Fall Chinook salmon smolt for release into the mainstem Columbia River at Priest Rapids Hatchery. WDFW manages the Priest Rapids Hatchery and its Fall Chinook program for Grant PUD. See pages 16-24 of the commission packet for more information.

— Unanimously approved Motion 3332, authorizing the general manager/CEO, on behalf of Grant PUD, to execute Contract 430-09499A with PBS Engineering and Environmental Inc., in an amount not-to-exceed $2,000,000.00 and with a contract completion date of December 31, 2025. Grant PUD requires professional engineering services for various projects that exceed the District's staff resource levels or require specialized analytical tools that are not economical for the District to own. See pages 24-58 of the commission packet for more information.

— Unanimously approved Motion 3333, authorizing the general manager/CEO, on behalf of Grant PUD, to execute Contract 430-09499B with Erlandsen & Associates, Inc., for professional engineering services in an amount not-to-exceed $1,500,000.00 and with a contract completion date of December 31, 2025. See pages 59-92 of the commission packet for more information.