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Third Year in the Black for the PUD by Dave Wilkins The Daily World, December 6, 2005

It's now or never for the Columbia Falls aluminum plant.

The Grays Harbor PUD is now projecting it will finish 2005 with approximately $1.6 million in profits, the third straight year the utility has posted a positive outcome.

"We budgeted 2005 for a $4 million loss, and made our (expense) numbers fit that," said General Manager Rick Lovely on Monday. "But we're actually coming out more than $1.5 million ahead, which represents a swing of more than $5 million."

Such extremely pessimistic budgeting has been the key to the string of years in the black, Lovely said.

"By taking the same very conservative approach, if we get the same economic conditions we saw this year, we should do even better next year," he added.

Lovely and Chief Financial Officer Doug Streeter have narrowed down their range of possible 2006 budget scenarios from half a dozen a few weeks ago to just two. In the "absolute" worst case, the utility is projecting a $6 million loss in 2006, but if market conditions and other factors stay the same as in 2005, that loss drops to $1.6 million.

Either way, as in 2005, PUD officials say they don't foresee any rate increases in 2006.

"We're comfortable enough with the numbers now that any further changes will be small, on the order of thousands of dollars," said Streeter.

One big factor will be the new rate case from the Bonneville Power Administration, which is due in October 2006. Bonneville is proposing an initial $32 per megawatt-hour rate, a slight increase in their current structure.

The PUD, which gets more than 60 percent of its power from Bonneville, is currently budgeting for a $34.50 rate, and officials say the utility will be able to absorb a Bonneville rate increase to that level without raising rates.

However, the PUD is also a member of the Northwest Coalition for Affordable Power, a lobbying group composed of utilities, government entities, and businesses. The Coalition is currently lobbying BPA to drop its wholesale rate from the current $31 to $27, and Lovely said that would make rate relief for customers immediate.

"A $30 rate would just be what we have now," Lovely said. "If BPA went down to $27, that would be $4.5 million a year less we'd have to pay them, and we would be able to lower our rates about 3 percent."

The commissioners will be working on the budget again at a workshop before next Monday regular meeting. The final document must be passed by the commission's last meeting of the year on Dec. 26.

"We're comfortable with the numbers now," said Commissioner Tom Casey. "Now it's just a matter of perfecting (the budget) as a planning document."