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SHELTON, WA 98584

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Mason PUD News

Commission Report for May 11, 2010

Meeting Highlights

PUD 3’s Budget and Treasurer’s Report
Concern over loss of electrical output from aging hydroelectric turbines at Columbia River dams
PUD 3 gets another clean audit: bond rating upgrades, financial management and reporting are praised

Consent Agenda

Mason County PUD No. 3 commissioners approved the consent agenda, which included payment of $971,153 in vouchers.

Comments from the Public

Shelton resident Louis Cofoni expressed his concern regarding the tone of the debate over a proposed Shelton area wood-fired power plant. Cofoni also provided commissioners with information about the “Cape Wind” project off the Massachusetts coast. He pointed out the employment and electricity benefits, as well as the opposition that has arisen over environmental and aesthetic issues.

Harstine Island resident Terry Hogan questioned staff regarding the proposed Johns Prairie water line for PUD 3’s operations center. Wyla Wood, PUD manager, stated that the engineer’s estimate for the project is $1.2 million (not including sales tax); would most likely be funded as part of a bond sale; and including the PUD’s proportionate share of the project, would be paid off by latecomers’ agreements which would be in effect for 20 years.

Staff Reports

PUD 3 Finance Manager Annette Creekpaum reported on the status of the budget, ending April 30, 2010. April expenditures were $4.6 million. Expenditures for the first four months of the year were $20 million, or 36 percent of the 2010 budget. Revenue for April was $5 million. Revenue for the first four months of the year was $21.2 million, which is 38 percent of the 2010 budget.

Treasurer Sherry Speaks said that the PUD ended the month of April 2010 with a reserve balance of $26 million. Total investments were $29.1 million.

Jay Himlie, power supply manager, reported that staff had been receiving a number of inquiries from PUD 3 customers as well as citizens from outside the PUD’s service territory about the proposed Shelton-area ADAGE biomass plant. Himlie noted that the renewable energy initiative (Initiative 937) approved by Washington State voters in 2006 included biomass as a qualifying renewable resource, but excluded hydroelectricity. He also pointed out that if the merchant power plant is built, federal law would require the PUD to allow ADAGE to use the local power lines to get its output onto the regional transmission grid. Although the PUD signed a non-binding expression of interest in the project, Himlie pointed out that the PUD's main interests are to protect the local energy infrastructure and try to avoid additional federal or state requirements that may be triggered by a third party’s use of the system.

Wyla Wood, PUD 3 manager, stated that at a recent meeting of the Public Power Council it was reported that upgrades to hydroelectric turbines at federal dams on the Columbia River have improved electrical output for those sites. However, she said that older-generation turbines have seen declining output due to mechanical degradation. She said that the degradation appears to be occurring at a faster pace than efficiency gains from the upgrades. This may reduce the overall amount of energy available for allocation to public power utilities from the Bonneville Power Administration. If so, this could result in higher wholesale power costs.

Commission Reports

Linda Gott, commission president reported that this week PUD staff had participated in an exit conference with personnel from the Washington State Auditor’s Office. Gott stated that the PUD received a clean audit with no findings. In fact, the state officials commended the PUD on the recent bond rating upgrade and five consecutive awards of excellence from the International Government Finance Officers’ Association for financial reporting. PUD 3 has a string of over three decades without an audit finding.

Tom Farmer, commission treasurer, noted that Olympia Federal Savings is building a new office in Belfair which will be constructed to Leadership in Energy & Engineering Design (LEED) standards. Farmer said that Oly Fed is showing the local community its commitment to environmental stewardship by its work to qualify the new Belfair office for LEED certification.

Next Meeting

The next PUD 3 commission meeting takes place May 18, 2010 at 10:00 AM in the PUD auditorium at 307 West Cota Street in Shelton.