October Snohomish County Public Utility District

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1 October 2017 Snohomish County Public Utility District

2 2 Disclaimer The information within this presentation is limited in scope. The presentation does not constitute an offer to sell or a solicitation of an offer to buy Snohomish County PUD s bonds. The presentation is dated October 4, 2017, and speaks only to information known as of that date. As a result, the documents may not contain all information material to investors and may contain material misstatements or omissions because of the passage of time or the occurrence of subsequent events. The PUD does not undertake to update, and expressly disclaims any duty to update, the recipient of this presentation. If and when included in these documents, the words plan, expect, forecast, estimate, budget, project, intends, anticipates and similar words are intended to identify forward-looking statements, and any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others, general economic and business conditions, changes in political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, litigation and various other events, conditions and circumstances, many of which are beyond the control of the PUD. Any forward-looking statements speak only as of the date they were prepared.

3 Presentation Team Glenn McPherson Assistant General Manager, Finance and Treasurer 425-783-8356 gsmcpherson@snopud.com Mr.

His responsibilities at the PUD include accounting and financial reporting, cash and debt management, risk management, budget and financial planning and procurement and materials management.

Glenn holds a bachelor of science degree in business administration with an emphasis in accounting from California State University at Long Beach. He is a certified public accountant.

3 3 Presentation Team Glenn McPherson Assistant General Manager, Finance and Treasurer Mr. McPherson has served Snohomish County PUD for 26 years and was appointed Assistant General Manager, Finance and Treasurer in His responsibilities at the PUD include accounting and financial reporting, cash and debt management, risk management, budget and financial planning and procurement and materials management. Before joining the PUD, Glenn spent nearly eight years serving public and private companies as a senior manager with KPMG Peat Marwick. Glenn holds a bachelor of science degree in business administration with an emphasis in accounting from California State University at Long Beach. He is a certified public accountant. Tom DeBoer Assistant General Manager, Generation, Power, Rates & Transmission Mgmt tadeboer@snopud.com Mr. DeBoer joined Snohomish County PUD in May 2016, bringing over 18 years of experience in the electric and natural gas utility industry in the Pacific Northwest. Tom s areas of responsibility include power scheduling, short-term and long-term resource planning, resource development, power and transmission contracts, rates, energy risk management, load forecasting, and federal energy compliance activities. Before joining the PUD, Tom was employed at Puget Sound Energy for 12 years where he led various departments, including power and natural gas supply, federal and state rates and regulation, and compliance. Tom also previously worked as an attorney in private practice on a variety of utility issues. Tom holds a juris doctorate degree, from Gonzaga University School of Law as well as a Bachelor of Arts degree in geology from the University of Montana and a Master of Science degree in geology from Western Washington University. Jessica Matlock Director, Government & External Affairs jdmatlock@snopud.com Ms. Matlock joined Snohomish County PUD in August 2006 as the Director of Government & External Affairs. Jessica also leads the PUD s efforts to develop and operate solar energy, electrification of transportation, and demand response programs. She previously worked as an energy and natural resources fellow for U.S. Senator Larry E. Craig (Idaho). Prior to that, she held a number of positions with the Bonneville Power Administration, including that of power marketing specialist (in Washington, DC), constituent account executive for the State of Idaho, and fish and wildlife project manager. Jessica serves and has served on various boards/councils related to hydropower, energy efficiency/conservation, cybersecurity, and fish and wildlife. Jessica holds an MPA from Portland State University and a bachelor's of science degree in chemical oceanography from the University of Washington. She also served in the United States Coast Guard.

Snohomish PUD Overview 4 Snohomish PUD is a municipal corporation of the State of Washington established in 1936, independent of Snohomish County It is organized through three systems: Electric,

Each system is separately financed with separate books and records It is the second largest publicly owned utility in the Pacific Northwest and the 12th largest in the nation in terms of customers

4 Snohomish PUD Overview 4 Snohomish PUD is a municipal corporation of the State of Washington established in 1936, independent of Snohomish County It is organized through three systems: Electric, Generation, and Water. Each system is separately financed with separate books and records It is the second largest publicly owned utility in the Pacific Northwest and the 12th largest in the nation in terms of customers served Snohomish County is part of the expanded Puget Sound economy, just north of Seattle Electric System Consists of Snohomish PUD s transmission lines, substations, distribution lines, transformers, meters, and general plant Obligated to purchase the power produced by the Generation System on a take-or-pay basis. Generation System debt service treated as an Electric System operating expense Generation System Generation System includes the Jackson Hydroelectric Project, Youngs Creek Hydroelectric Project, and the Woods Creek Hydroelectric Project Two additional low-impact hydroelectric projects Hancock Creek and Calligan Creek are anticipated to be commissioned and in service in early 2018 Electric Generation Outstanding Revenue Bonds ($ 000 s) $ 346,590 $ 159,625 Credit Ratings Fitch AA-, Stable AA-, Stable Moody's AA-, Stable AA-, Stable S&P Aa3, Stable Aa3, Stable

5 Snohomish County Economy 5 Population Growth Median Household Income 2.5% 2.0% Snohomish County Washington United States $ 80,000 70,000 60,000 Snohomish County Washington United States 1.5% 1.0% 50,000 40,000 30, % 20,000 10, % Unemployment Top Ten Largest Customers (2016) 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% Snohomish County Washington United States Rank Customer Name Percentage of Retail kwh Sales 1 The Boeing Company 5.79% 2 Fred Meyer Inc. (QFC/Kroger).77% 3 Providence Medical Center.77% 4 Tulalip Tribes.73% 5 Safeway Stores.70% 6 U.S. Navy.69% 7 City of Everett.67% 8 King County.59% 9 Snohomish County.51% 10 State of Washington.50% Sources: Washington State Department of Employment Security, US Department of Commerce, US Bureau of Economic Analysis and Census, Snohomish PUD

6 Customer Consumption & Growth 345,000 340,000 335,000 Average Number of Customers 1.4% 1.4% 1.2% 4,000,000 3,500,000 3,000,000 Customer Consumption (MWh) 330,000 325,000.

0% 2,500,000 2,000,000 320,000 1,500,000 315,000 1,000,000 310,000 500,000 305,000 300,000 2010 2011 2012 2013 2014 2015 2016-2010 2011 2012 2013 2014 2015 2016 12 mos -

6 6 Customer Consumption & Growth 345, , ,000 Average Number of Customers 1.4% 1.4% 1.2% 4,000,000 3,500,000 3,000,000 Customer Consumption (MWh) 330, ,000.6%.6%.7% 1.0% 2,500,000 2,000, ,000 1,500, ,000 1,000, , , , , mos - Jun17 Residential Commercial Industrial Other The average number of customers has increased steadily; new service connections totaled 4,510 in 2016 Snohomish PUD has experienced a minor amount of load decline over the past several years as growth in number of customers has been offset by lower power consumption per customer

7 7 Rate Setting Process Residential Rates (cents per kwh) 2.9% 1.9% 1.6% 2.3% 4.6% 2.9% 2.7% 3.5% General Rate Increase 2.9% 0.9% BPA Pass-Through Increase The PUD s electric rates and charges are controlled locally by the PUD s three member Board of Commissioners and not subject to any other jurisdiction or oversight The Board of Commissioners implements rate increases as follows: The Board adopts general rate increases to offset the effects of growth, inflation, infrastructure needs and legislative mandates The Board has a policy that requires a review of its rates whenever wholesale energy rates charged by the Bonneville Power Administration are adjusted, resulting in a BPA pass-through increase

Monthly Electric Bills - Average 8 Residential Typical Bill Comparison (900 kwh) $120.00 $111 $100.00 $80.00 $81 $82 $85 $88 $92 $94 $98 $60.00 $40.00 $20.

8 Monthly Electric Bills - Average 8 Residential Typical Bill Comparison (900 kwh) $ $111 $ $80.00 $81 $82 $85 $88 $92 $94 $98 $60.00 $40.00 $20.00 $- Avista Cowlitz County PUD Clark Public Utilities Tacoma Power Snohomish County PUD Puget Sound Energy Seattle City Light Portland General Electric 2015 EIA Rates Report (1) Average Price (cents/kwh) Overview of Local Service Areas Snohomish County PUD 8.73 Washington State Average 7.48 Large Utilities Average (2) 8.93 Major I-5 Corridor Utilities Average (3) 9.19 (1) (2) 100,000 customers or more (3) City of Seattle, City of Tacoma, Clark PUD, Portland General Electric, Puget Sound Energy, Snohomish County PUD SnoPUD City of Seattle Puget Sound Energy City of Tacoma Tacoma

9 Power Resources The graph at left illustrates 2016 generation and power resource costs Snohomish PUD IRP details how the utility will meet future load growth under a variety of scenarios.

9 9 Power Resources The graph at left illustrates 2016 generation and power resource costs Snohomish PUD IRP details how the utility will meet future load growth under a variety of scenarios. Energy Efficiency Programs are the resource of choice for meeting load growth. For any load growth not met by Energy Efficiency, Snohomish PUD will pursue cost-effective, low carbon resources Snohomish PUD has a long-term contract with BPA for the Block and Slice products. The Block product provides a specified amount of power for all hours in each month, while the Slice product provides the utility with a varying amount of energy produced from the Federal Columbia River Power System based on hydro conditions Snohomish PUD has virtually no carbon footprint

10 Electric System Operating Results 10 Retail energy sales have steadily improved as a result of a series of modest rate increases Wholesale energy sales represent the sale of surplus power and vary based on regional hydro conditions and wholesale power prices Purchased power expenses increased by $27 million in 2016, reflecting a sizable increase in BPA wholesale power and transmission costs in October 2015 Electric debt service coverage has remained strong and has averaged 2.8x over the last 5 years Operating Revenues Retail Energy Sales $ 521,032 $ 538,573 $ 544,762 $ 549,343 $ 574,455 Wholesale Energy Sales 49,178 48,758 59,257 36,770 37,076 Other Operating Revenues 20,800 21,672 24,563 21,186 28,100 Total Operating Revenues 591, , , , ,631 Operating Expenses Purchased Power and Generation (1) $ 317,301 $ 323,572 $ 332,375 $ 320,515 $ 347,494 Operations and Maintenance 176, , , , ,695 Depreciation 43,854 45,968 48,336 49,042 51,460 T axes 31,517 32,582 33,149 35,417 35,448 Total Operating Expenses 569, , , , ,097 Net Operating Income (Loss) $ 21,498 $ 23,926 $ 16,006 $ (5,351) $ (3,466) Interest and Other Income and Expense Other Income and Expense 17,251 10,269 2,313 17,833 12,825 Interest Charges, net (17,111) (15,507) (14,191) (13,553) (14,154) Capital Contributions 11,434 14,424 18,287 16,512 20,094 Net Income $ 33,072 $ 33,112 $ 22,415 $ 15,441 $ 15,299 Balance available for Debt Service Coverage (2) 92,326 92,446 87,941 75,308 76,156 Electric System Debt Service 32,850 30,667 30,643 29,550 26,855 Electric Debt Service Coverage 2.8x 3.0x 2.9x 2.5x 2.8x Electric & Generation Bonds Outstanding $ 556,448 $ 521,465 $ 484,670 $ 538,910 $ 506,215 (1) Includes Generation Sy stem debt serv ice. Electric System Historic Revenues, Expense and Debt Service Coverage ($000's) (2) Balance Av ailable For Electric Sy stem Debt Serv ice Cov erage assumes debt serv ice on Generation Sy stem Bonds is paid as an Electric Sy stem Operating Ex pense.

11 Reserve Policy 11 The Board of Commissioners financial reserve policy includes: An Electric System operating reserve equal to 90 days of non-power budgeted expenses A $171 million power market volatility reserve, which includes a $115 million rate stabilization fund Self-insurance reserve to address retention and deductibles on the PUD s property and liability insurance Snohomish PUD Cash Reserves Ongoing, Long-Term Reserves Electric Generation Total Operating $ 100 $ 15 $ 115 Power Market Volatility/Rate Stabilization Self-Insurance Project Specific Reserves 2016 Reserve Balances ($ Millions) Resource Reinvestment Jackson License 9 9 A resource reinvestment reserve utilized to fund capital investments in replacement or new assets As of December 31, 2016 Snohomish PUD had 238 days cash in nondesignated reserves Designated Reserves Series 2015 Bond Proceeds Bond Reserves OPEB Other Total Cash Reserves $ 456 $ 58 $ 514

12 12 Summary Stable Service Area Experienced Management Carbon Free Power Supply Effective Rate Setting Stable Finances and Robust Liquidity Snohomish PUD s service area is diverse with above average economic indicators Population growth is above state and national averages Median Income was 31% higher than the national average in 2015 Unemployment is substantially lower than state and national averages at 3.8% Knowledgeable, experienced, and strategic-thinking Board and senior management team BPA contract provides low-cost virtually carbon free power for 85% of power resources Average power supply cost of $36/MWh with almost no carbon Existing and committed resources are expected to meet forecasted load for several years Consistently implemented periodic general rate increases and BPA rate adjustment pass-through rate increases based on utility needs Rates are competitive with other Northwest utilities, and below those of other large utilities in the region Aa3/AA-/AA- ratings Solid, consistent operating results and debt service coverage Electric system debt service coverage (5-year average): 2.8x Formal, Board-approved reserve policies and strong reserve levels Days cash on hand (2016): 238 days

13 13 Where to Find New Information Snohomish PUD s Finance and Investor Relations webpage has access to the latest financials, budget reports and investor presentations SNOPUD.COM/ INVESTORS

PUBLIC UTILITY DISTRICT # 1 of Jefferson County 230 Chimacum Road Port Hadlock, WA July 16, 2008 SPECIAL MEETING MINUTES

PUBLIC UTILITY DISTRICT # 1 of Jefferson County 230 Chimacum Road Port Hadlock, WA July 16, 2008 SPECIAL MEETING MINUTES CALL TO ORDER The Special Meeting of the Public Utility District No.1 of Jefferson