Public Utility District #1 of Ferry County Budget. December 17, 2018

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1 Public Utility District #1 of Ferry County 2019 Budget December 17, 2018 The Approved Budget for 2019 reflects an overall reduction of approximately 3.2 percent from the 2018 Budget. The District is predicting a slight reduction to energy sales and has reduced its anticipated uses to $7.18 Million to correlate with this change. Reductions to cost of purchased power, public utility taxes, and state privilege taxes related to the reduction in sales help to achieve this. The cost of purchased power from Bonneville Power Administration will remain the largest use of operating funds; it is expected that approximately 2.9 million dollars will be spent for this in Labor and benefit costs are also a large portion of the uses reflected in the budget. The district is anticipating 19.5 FTE employees with the hiring of an entry level mechanic to replace the opening left when the Superintendent and General Manager s positions were filled internally during Labor dollars and benefits are reflected within each operating budget category based on work trends over the most recent years. A major assumption for this budget is that the utility s retail rates during 2019 will remain the same. The 2019 Preliminary Budget for capital expenditures reflects a 7% increase from the 2018 capital budget. Capital items needed to maintain the integrity of the system are included. The significant expenditures for this year include: $80,000 for the cost of poles $35,000 for the cost of conductor (Overhead and Underground) $52,000 for replacement transformers and meters $40,000 for misc system materials; cross arms, insulators, cut outs, etc. $40,000 for general plant maintenance at the District Office and Shop $60,000 for fleet upgrade and replacements

2 The Methodology for the Preliminary Budget for 2019 is based on a methodology often used by municipal agencies; zero-based budgeting. It begins with the assumption that all items for the budget begin with a zero base. In other words, there are no carry-overs from prior years. Each budget item is analyzed by reviewing historical trends and adjusting for future expectations for the ensuing year. In effect, the annual budget is built from the ground up. Sources of Funds for 2019 presume a continued reduction to retail sales, based on historical trends. Several commercial consumers changed rate classes and so there are some large fluctuations in the individual figures, however, there is only about a 3% reduction overall. The District has realized an increase in the number of seasonal consumers, so the respective source anticipates an increase in this area. As always, extreme weather conditions could affect sources of funds; however, they are not factored into the sales predictions since they are an unknown factor at this time. The Total Uses for the Operating Section of 2019 have been reduced from the previous year to equal the anticipated sources for the year. The largest factor is the anticipated reduction to cost of purchased power to the District with the above noted reduction in sales. The increasing cost to maintain employee benefits and market based wages is reflected as increases to several operations categories of the budget. Rising medical premiums and other rising employer costs due to new state requirements for mandated sick leave and family medical leave, as well as rising rates for the Utility s defined contribution retirement plan are all factors. Cost shifts between types of funds, reflected as increases and decreases from the previous year s budget, are mainly due to the labor cost allocations based on historical work trends as previously mentioned. The Budget for Financing Activities The District anticipates the annual $35,460 repayment of its zero-percent CERB loan that began in January This will be the final payment of the only long-term debt service that the District holds. The Budget for Capital Expenditures has increased slightly for The Capital section of the Budget contemplates the replacement of aging poles, the purchase of overhead and underground conductor, replacement transformers and meters, and other needed materials during day to day operations and for some residential construction projects. This year s budget reflects $60,000 for fleet upgrades and replacements. It also projects upgrades to office computers, equipment, and software that are needed to keep up with changing technology. General plant maintenance is a continual need at the district shop and office consisting of painting, fencing, and building repairs.

3 Presentation of the Budget is in several sections: The Operating Budget o Sources of Funds Sales of Electricity Other sources o Uses of Funds Purchased Power Distribution Operations and Maintenance Customer Service General & Administrative Industry Memberships General Maintenance Taxes o Financing Activities CERB Repayment Capital Expenditures The 2019 Budget Time Line was as follows: September 17th October 1st October 15th November 19th December 17th Budget Workshop with Commissioners, scheduling of Budget Hearing, and Publishing of Preliminary Budget Publish Notice of Hearing Budget Hearing Board Discussion Board Discussion - Approval of the 2019 Budget

4 PUD No. 1 of Ferry County Preliminary Budget 2019 Operating Budget Acct # Sources Budget Budget % Change ENERGY SALES-RESIDENTIAL 3,227,200 3,012, % ENERGY SALES-RESIDENTIAL REPUBLIC 706, , % ENERGY SALES-RESIDENTIAL SEASONAL 305, , % ENERGY SALES-IRRIGATION 74,800 65, % ENERGY SALES-COMMERCIAL 634, , % COMMERCIAL-REPUBLIC 489, , % LARGE POWER 530, , % LARGE POWER-REPUBLIC 370, , % ENERGY SALES-INDUSTRIAL 197, , % INDUSTRIAL 321, , % INDUSTRIAL 115 Kv 216, % ENERGY SALES-PUBLIC STREET LIGHTING REPUBLIC 7,200 7, % FORFEITED DISCOUNTS-LATE PAYMENT CHGS 1, % MISCELLANEOUS SERVICE REVENUES 36,100 49, % SERVICE REVENUES-NEW CONNECTS 1,000 1, % RENT-ELECTRIC PROPERTY 55,400 60, % OTHER ELECTRIC REVENUE 15,000 16, % INTEREST & DIVIDEND INCOME 55,700 68, % MISC NON-OPERATING INCOME 172, , % Total Sources 7,418,700 7,183, % Operating Budget Uses Budget Budget % Change Purchased Power COST OF PURCHASED POWER BPA 3,358,600 2,914, % Distribution Operations and Maintenance MAINT OF STATION EQUIPMENT - TRANSMISSION - 4, % MAINT OF OVERHEAD LINES-TRANSMISSION 5, % SUPERVISION AND ENGINEERING-OPERATIONS 220, , % STATION EXPENSES-OPERATIONS 100 1, % OVERHEAD LINE EXPENSE-OPERATIONS % UNDERGROUND LINE EXPENSE-OPERATIONS 13,600 13, % METER EXPENSE-OPERATIONS 81,300 87, % PUMP CONNECTS & DISCONNECTS 1, %

5 MISCELLANEOUS DISTRIBUTION EXP-OPERATIONS 284, , % RENT AND LEASE EXPENSE % SUPERVISION AND ENGINEERING-MAINTENANCE 2,100 1, % SOLAR-MAINTENANCE 4,800 2, % STATION EQUIPMENT-MAINTENANCE 15,600 51, % OVERHEAD LINE EXPENSE-MAINTENANCE 417, , % POLE TESTING-MAINTENANCE 25,000 45, % CHEMICAL VEGETATION TREATMENT-MAINTENANCE 2,900 3, % BRUSH CLEARING-MAINTENANCE 30,000 30, % OUTAGE OH LINE EXPENSE - MAINTENANCE 94,000 93, % CONTRACT TREE TRIMMING - MAINTENANCE 232, , % UNDERGROUND LINE EXPENSE-MAINTENANCE 22,200 14, % OUTAGE UG LINE EXPENSE - MAINTENANCE 9,900 7, % LINE TRANSFORMERS-MAINTENANCE 12,900 14, % PCB PROGRAM MAINTENANCE 400 1, % STREET LIGHTING-MAINTENANCE % METERS-MAINTENANCE 3,000 1, % SECURITY LIGHTS-MAINTENANCE 5,800 8, % Total Distribution Operations and Maintenance 1,487,200 1,566, % Customer Service SUPERVISION CONSUMER ACCOUNTING % METER READING EXPENSE 172, , % CONSUMER RECORDS AND COLLECTION EXPENSE 332, , % CREDIT CARD EXPENSE 15,900 24, % UNCOLLECTIBLE ACCOUNTS EXPENSE 12,000 12, % ENERGY CONSERVATION EXPENSE 4,800 3, % SOLAR-GRANT % MODULAR HOMES & BUILDINGS-ENERGY STAR % HOT WATER TANKS - ENERGY STAR % APPLIANCE & WINDOWS-ENERGY STAR % WATERWISE-STEAM GENERATION-SOLAR EDUCATION % LIGHTING RETROFITS % CONSERVATION ADMINISTRATION % INFORMATION AND INSTRUCTION ADVERTISING % MISC CUSTOMER SERVICE AND INFORMATION EXPENSE 3,500 3, % ECONOMIC DEVELOPMENT % Total Customer Service 540, , % General and Administrative

6 ADMINISTRATIVE AND GENERAL SALARIES 575, , % OFFICE SUPPLIES AND EXPENSE 85,400 75, % OUTSIDE SERVICES EMPLOYED 22,500 37, % PROPERTY INSURANCE EXPENSE 30,900 31, % INJURIES AND DAMAGES 100, , % EMPLOYEE PENSIONS AND BENEFITS % STATE AUDIT EXPENSE - 25, % DUPLICATE CHARGES PUD ELECTRIC USAGE-CREDIT (9,000) (9,000) 0.00% GENERAL ADVERTISING EXPENSE 7,200 6, % MISCELLANEOUS GENERAL EXPENSE 15,300 4, % COMMISSIONERS EXPENSE 173, , % Total General and Administrative 1,001,700 1,078, % Industry Memberships MISCELLANEOUS-INDUSTRY FEES % CWPU-INDUSTRY FEES 7,000 12, % NWPPA-INDUSTRY FEES 7,500 5, % NWW&H-INDUSTRY FEES % PPC-INDUSTRY FEES 4,200 4, % TEDD-INDUSTRY FEES 1,500 1, % WPUDA-INDUSTRY FEES 11,600 11, % NRU-INDUSTRY FEES 6,700 6, % Total Industry Memberships 39,400 43, % General Maintenance MAINTENANCE OF GENERAL PLANT 37,800 39, % Total General Maintenance 37,800 39, % Taxes TAXES-STATE PUD PRIVILEGE 163, , % TAXES-STATE UNEMPLOYMENT % TAXES-STATE BUSINESS & OCCUPATION TAX % TAXES-STATE UTILITY TAX 279, , % LEASEHOLD TAX % Total Taxes 442, , % Interest Expense INTEREST ON DEBT SERVICES % Total Uses 6,908,500 6,640, % Net Operating Budget 510, ,200

7 Budget Budget % Change CERB Repayment 35,500 35, % Principal Payments on Long-Term Debt Services SEMI-ANNUAL PRINCIPAL PAYMENTS % MONTHLY PRINCIPAL PAYMENTS % ADDITIONAL PRINCIPAL PAYMENTS % Total Principal Payments % Net Operating Budget and Debt Principal Repayment 474, , Capital Expenditures Budget Budget % Change Poles 80,000 80, % OH & URD Conductor 35,000 35, % Transformers, pad mount 20,000 20, % Transformers, line 20,000 20, % Meters 12,000 20, % 10 Mile Access Trail 20,000 20, % Non-Itemized Capital Materials 40,000 40, % Capitalized Labor 182, , % Equipment - Fleet Budget - 60, % Utility Snow Machine 22, % Building Maintenance Shop 20,000 20, % Main Office 20,000 20, % Office Equipment Mobile Mapper - 5, % Computer Replacements 2,500 8, % EMV Readers - 4, % Total Capital Purchases, Additions, and Replacements 474, , % TOTAL BUDGET 7,418,700 7,183, % NET TOTAL BUDGET 0 0