[env-trinity] Trinity Journal: Trinity PUD draws on reserves for budget

[Tom Stokely]

http://www.trinityjournal.com/news/local/article_c9ff86a4-3296-11e6-a972-5b7fa606985c.html


PUD draws on reserves for budget
   
   - By AMY GITTELSOHN The Trinity Journal
 - Jun 15, 2016
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The Trinity Public Utilities District Board adopted a budget for the coming fiscal year that includes taking another bite out of the district’s reserves.The reserves have been dropping steadily since 2014 as the price the TPUD pays for hydroelectric power has increased with the drought, TPUD General Manager Paul Hauser said at the board’s June 9 meeting.“We obviously can’t continue on that path until we run out of reserves,” he said, though he added that the district’s bond holders would force it to take action before that point.The 2016/17 budget does not include a rate increase for customers, but Hauser said in the next couple of years an increase will likely be needed.Operating receipts for the year ahead starting in July are estimated to be approximately $12.2 million, 3 percent more than last year’s, while operating expenses are forecast to be $10.5 million and capital expenditures $3.3 million. The district will make up the difference primarily from its reserves as well the county’s annual loan repayment of $150,000. The district’s reserves are projected to decrease from approximately $8.1 million to $6.7 million by the end of the fiscal year.Although it’s common for utilities to keep about six to eight months of operating expenses in reserves, with the price of hydroelectric power fluctuating greatly depending on rainfall, Hauser said the TPUD should have enough to cover a year’s worth of expenses.He noted that the current water year is normal and that will bring some relief in power costs from the federal Western Area Power Administration, but there is a time lag for the adjustment to be made by WAPA. The price reduction when it comes won’t be that big, Hauser said, noting that the Trinity reservoir is still low and yet the high “wet year” releases to the Trinity River will reduce power generation.The TPUD’s primary source of revenue is power sales. Although the number of customers has increased and receipts were up last year, when adjustments are made to account for the cold winter Hauser does not project sales to continue rising.Use of more efficient LED light bulbs and state conservation efforts have also played a part, Hauser believes.“When you add all those things together,” he said, “we’ll be lucky to have flat load.”With 22 employees — one less than when he joined the TPUD in late 2011 — if staff were to be cut it would be difficult to restore power after an outage, Hauser said. Fixed costs to maintain the system over a large area are high, he added.“You’re not just willy-nilly adding staff,” agreed board member Dick Morris, pointing out that there are no pay increases for any of the staff in the 2016/17 budget.Looking even farther into the future, Hauser noted that in 2023 the higher rates in Zone B, which is still paying off infrastructure acquisition costs, are to match those in Zone A, creating a million dollar hole in the budget.“So you really need to be looking to industrial development,” said board member Kelli Gant, and Hauser responded, “We need big loads.”Hauser presented figures showing TPUD bills for monthly use of 1,000 kilowatt hours in 2014/15 were well under Pacific Gas & Electric, Sacramento Municipal Utility District, Lassen Municipal Utility District, the city of Redding and city of Shasta Lake.With PG&E, for example, the cost for 1,000 kilowatt hours in the summer was $266.87 and in the winter was $264.65; whereas the TPUD charged $91.31 year round in Zone A and $114.68 in Zone B. The city of Shasta Lake came the closest at $169.59.“That’s what we’re providing people,” Morris said.“They don’t buy it,” board member Kelli Gant responded, but Hauser noted that there are PG&E customers in Southern Trinity who would “love to have (TPUD’s) rates.”Morris said there are many residents who have relatives living out of the area who appreciate the difference. “We need to take this and sell it and market it,” he said.The TPUD board voted unanimously to approve the 2016/17 budget and five-year financial forecast.   
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