Balancing the Budget
By Rodger Nichols
The beginning of the new calendar year is also the beginning of the fiscal year for Northern Wasco County PUD. Chief Financial Officer Harvey Hall handles the utility’s budgeting process.
Creating a budget with the responsibility to serve 25,000 people and businesses around the clock and around the year takes careful planning. The PUD has developed a process that befits its mandate as a customer-owned utility. That process starts in May.
“I’ll be working on major assumptions for our operations and maintenance budget,” Harvey says.
On a parallel track, he consults with Principal Engineer and Chief Information Officer Paul Titus about needed capital expenditures. Harvey says those are “any time you’re going to purchase or produce an asset that has a useful life of more than one year.”
That could be anything from buying a new utility truck to replacing power poles to upgrading a substation.
Work on capital costs continues through June and is presented to the PUD board in early July. Once approved by the board, “the O&M budget takes off from there,” Harvey says.
That includes calculating labor costs for both the capital and O&M expenditures at a detailed level through August. That is consolidated into what Harvey calls a detailed top-to-bottom by-department and by-account budget, which is reviewed by the executive management team.
Many factors enter into budget development. Is the Bonneville Power Administration raising rates? Do any departments need to add new employees to meet their workload? Are any trucks in need of repair or replacement? How many power poles need to be upgraded? What is the rate of inflation?
“Once we get to a point where we’re about 95% solid, we will shoot that budget off to our rates consultant, who will then use that as a basis to determine whether or not our rates are sufficient to cover that revenue requirement,” Harvey says. “If it’s not, we need a rate change. If it’s more than sufficient, then he’ll propose no new rates.”
That preliminary budget is presented to the board in October. Harvey says this is an important time for feedback from the public, when they can see the budget and the effective rate, and see it in context compared to prior years.
“Input is really critical because we want to avoid just hearing from the same 10 people,” Harvey says. “It’s important for people if they cannot attend a board meeting to talk to their director on the board. Or they can talk to me directly if they’ve got a question. We keep that public so that everybody knows we want to be completely transparent.”
At the November board meeting, staff covers any questions or concerns about the budget. The rates consultant presents a detailed cost-of-service rates analysis, broken out by rate class, comparing current and proposed rates, and answering any questions.
The final budget is adopted in December, along with any rate changes.
“The reason we take that long to do it is when you rush a very complex process like that, you’re going to miss stuff,” Harvey says. “If you start missing stuff in your budget, it affects your rates.”
Sometimes, unexpected conditions can affect the budget. In 2020, the pandemic affected results in three areas: training, the energy conservation program, and computer expense.
Staff had more training than in previous years, but it was at a lower cost because training was online and there were no travel expenses. The energy conservation program was affected because staff was not able to complete home inspections. Computer costs were up to supply most staff with appropriate equipment and bandwidth to work from home.
The PUD also decided to postpone a 2020 planned rate increase that will now be in 2021.
Rate Changes for 2021
The Bonneville Power Administration, which supplies most of Northern Wasco County PUD’s power, announced a 3.6% average transmission rate increase effective October 1, 2019.
The PUD planned to compensate for the increased power expense by instituting its own rate increase in 2020. But when the impact of the pandemic became apparent, the board postponed the rate increase for a year and used reserve funds to compensate for the increased cost.
May 1, there will be a 3.8% increase in basic power costs for residential and commercial customers. An average home uses about 1,000 kilowatt-hours a month at $74.90. After the increase, that will be $77.71.
Northern Wasco County PUD has the second-lowest rates of all electrical utilities in Oregon. Even after the increase, the PUD’s rates will be the third-lowest in the state.
Facility Rate Comparisons
- Columbia River PUD: $15.00
- Northern Wasco County PUD (Current): $20.00
- Eugene Water & Electric Board: $20.50
- Northern Wasco County PUD (Proposed): $21.00
- Clatskanie PUD: $23.00
- Central Lincoln PUD: $24.00
- Tillamook PUD: $29.00
- Emerald PUD: $31.00