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making connections.making connections.making connections.
2013
Com
preh
ensiv
e An
nual
Finan
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Fisc
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Dece
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r 31,
2013
MASON COUNTYPUBLIC UTILITY DISTRICT NO. 3
Shelton, Mason County, Washington
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Com
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Fina
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Mason County Public Utility District No. 3Shelton, Mason County, Washington
For the fiscal year ended December 31, 2013Prepared by the Finance, Administration and Public Information/Government Relations Departments
2013 Finance Staff Clockwise from bottom: Brian Taylor (CFE), Jenifer Sliva, Emily Gott, Dani Leboki, Karissa Byrne, Sherry Speaks (CPA), and Dawn Thompson (CPA, CFE).
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Table of Contents
Introductory Section Message from the Commission President and Manager ..................................................................................... 2 Fast Facts .............................................................................................................................................................. 4 CertificateofAchievementforExcellenceinFinancialReporting ....................................................................... 5 LetterofTransmittal ........................................................................................................................................ 6-10 OrganizationalChart ..................................................................................................................................... 11-12 Board of Commissioners ............................................................................................................................... 13-14
Financial Section IndependentAuditor’sReport ...................................................................................................................... 15-16 Management’sDiscussionandAnalysis ........................................................................................................ 17-21 BasicFinancialStatements: StatementofNetPosition-ProprietaryFund ...................................................................................... 22 StatementofRevenues,ExpensesandChangesinNetPosition-ProprietaryFund ........................... 23 StatementofCashFlow-ProprietaryFund ......................................................................................... 24 StatementofNetPosition-FiduciaryFunds ........................................................................................ 25 StatementofChangesinFiduciaryNetPosition .................................................................................. 26 NotestoFinancialStatements ........................................................................................................ 29-50 RequiredSupplementaryInformation ............................................................................................................... 51
Statistical Section StatementofRevenues,ExpensesandChangesinNetPosition ....................................................................... 54 NetPosition ........................................................................................................................................................ 54 RevenuesandConsumptionbyCustomerClass ................................................................................................ 55 RetailRates ......................................................................................................................................................... 56 District’sPrincipalRatepayers ............................................................................................................................ 57 ComparativeTaxCosts ....................................................................................................................................... 58 DebtServiceCoverage ....................................................................................................................................... 59 DebtMarginInformation ................................................................................................................................... 59 RatiosofOutstandingDebt ................................................................................................................................ 60 DemographicStatistics ....................................................................................................................................... 61 PrincipalEmployersinMasonCounty ............................................................................................................... 62 OperatingIndicators ...................................................................................................................................... 63-64
Mason County Public Utility District No. 3Shelton, Mason County, Washington
For the fiscal year ended December 31, 2013
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Intro
duct
ory
Sect
ion
“Making connections starts from within. PUD 3 employees work collaboratively and creatively to form teams from various fields and departments. These efforts help us make efficient and cost effective decisions for the PUD and our customers.”
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Message from theCommission President and Manager
TomFarmerCommission President
AnnetteCreekpaum,CPAManager
Makingconnectionsisimportantforanyorganization,especiallypublicutilities.ForMasonPUD3,itisavitalpartofourculture.Itrepresentsafiberofcommunicationswovenintothetapestryofouruniquebusiness.Weservenearly33,000customerswholiveinadiverseeconomic,culturalandgeographicarea.Itisabeautifulregion,tiedtogetherbyPUD3’spowerlinesandfiberopticnetworkcables.
Makingconnectionsstartsfromwithin.PUD3employeesworkcollaborativelyandcreativelytoformteamsfromvariousfieldsanddepartments.TheseeffortshelpusmakeefficientandcosteffectivedecisionsforthePUDandourcustomers.
Ourfiberopticnetworkisanexcellentexampleofthisteamworkandgooddecision-making.2013sawacontinuedbuildoutofthePUD’sinfrastructuretobringhigh-speed,openaccessbroadbandservicetoourruralcommunity.Ourworkenhancedsecurityforourfacilities;connectedclassroomstotheworld;bolsteredpublicsafety;andbroughtworld-classservicetolocalbusinessessotheycanbettercompeteforbusinessinourcommunityandaroundtheworld.
Specifically,ourpartnershipwiththeNorthwestOpenAccessNetwork(aconsortiumofpublicutilitiespassionateaboutruralbroadbandconnections)(NoaNet),andWashingtonState’sK-20schoolnetworkbrought100MbpsbroadbandservicetotheHoodCanalSchool,whichislocatedintheSkokomishTribalNation’sreservation.Localconnectionsarepersonifiedbytheexpansionofreliable,high-speedcellulartelephoneservicethankstoNoaNet’scontractswithmajorwirelesscarriers.NoaNetcontractedwithPUD3toconstructfiberopticconnectionstosevencellsites.Theprojectprovidesforbettercallservice,datanetworks,andpublicsafety.
Throughourmissionandourpersonalcommitment,makingconnectionswithourcustomersiskeytothePUD’sservicetothecommunity.We’veworkedhardtomaintainastronglinktothoseweserve.In2013weofferedcustomersmoreflexiblepaymentoptions,especiallythroughpaperlessbilling.Wehelpedcustomerssavehundredsofdollarsonheatingbillsthroughthepromotionofductlessheatpumpsandotherconservationmethods.Weupdatedthelayoutofournewslettertomakeiteasiertoread.WeareleadersintheeffectiveuseofFacebook,Twitterandmobilewebsitedesigntocommunicateimportantissuestothepublic.We’reworkingonwaystoputthepowerintothehandsofourcustomerssotheycanmanagetheirownaccounts;reportoutages,dangertrees,andstreetlightissuesonline.
Ourinnovativeapproachtoproblemsolvinghasstrengthenedconnectionswithotherpublicagencies.WeworkedcloselywiththeWashingtonStateDepartmentofTransportationinthedesignofsafetycorridorimprovementinBelfaironHighwayThree.Thestatehelpedusfindlocationsforourpowerpoles,whichneededtomovetomakeroomfortheroadwork.OurengineeringandoperationsstaffrelocatedthreeoffourtransmissionpolesinNovember.Theyweremovedwhilepowerlineswereenergized.Thisinnovativeapproachavoidedtheneedforseverallarge,plannedoutages.Employeesshowedagreatdealoftrustandrespectincarryingoutthistask.We’veworkedwiththecityofSheltontotestenergyefficientandlonglastinglight-emittingdiode(LED)streetlights.Theprojectwillenhancesecurity,improvesafetyforpedestriansandmotorists,saveenergy,andcutmaintenancecosts.Asweprovethebenefits,wehopetoexpandtheuseofLEDlightstootherareas.
Asourcommunitygrowsandstrengthens,PUD3willbethere,helpingtoweavetogetherthecommonthreadsthatmakeMasonCountysuchawonderfulplacetoliveanddobusiness.
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“The PUD 3 telecommunications department continued to expand its community connections in 2013. Our fiber optic network supports security
at our facilities throughout Mason County. The extra capacity on our network provides high-
speed connections for public safety, education, and economic development.”
- Dale KnutsonTelecommunications Manager
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Fast Facts As of December 31, 2013
13,894average annual use,
residential in kWh
$0.0839average kWh costfor residential use
170,156maximum system
peak demand in kW
656,362,8972013 electricity sales in kWh
overhead primary line miles
11number of substations
79,790average load in kW
422fiber optic
line miles within system
$59,086,8762013 Budget
1,078underground primary
line miles
690
32,498number of customers
fiber opticend user active connections
584number of employees
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June23,2014
To the Board of Commissioners and Customers of Public Utility District No. 3 of Mason County, Washington
TheComprehensiveAnnualFinancialReport(CAFR)oftheMasonCountyPublicUtilityDistrictNo.3(District)fortheyearendedDecember31,2013,isherebysubmitted.ThereportisdesignedtoassesstheDistrict’sfinancialcondition,educatereadersabouttheDistrict’sservices,examinecurrentchallengesfacingtheDistrict,andfulfilllegalreportingrequirements.
WashingtonStatelawrequiresthateverylocalgovernmentsubmitfinancialreportstotheStateAuditorwithin150daysafterthecloseofeachfiscalyear.TheDistrict’sbondcovenantsrequirefinancialinformationtobeprovidedtoeachnationallyrecognizedmunicipalsecuritiesinformationrepositoryinaccordancewithSection(b)(5)ofSecuritiesandExchangeCommissionRule15c2-12undertheSecuritiesandExchangeActof1934.ThisreportispublishedtofulfillbothrequirementsforthefiscalyearendedDecember31,2013.
Managementassumesfullresponsibilityforthecompletenessandreliabilityoftheinformationcontainedinthisreport,baseduponacomprehensiveframeworkofinternalcontrolsthatareestablishedforthispurpose.Becausethecostofinternalcontrolsshouldnotoutweightheirbenefits,theDistrict’ssystemofinternalcontrolshasbeendesignedtoprovidereasonableratherthanabsoluteassurancethatthefinancialstatementswillbefreefrommaterialmisstatement.Asmanagementweassertthat,tothebestofourknowledgeandbeliefthisfinancialreportiscompleteandreliableinallmaterialrespects.
TheWashingtonStateAuditor’sOfficehasissuedanunmodified(“clean”)opinionontheDistrict’sfinancialstatementsfortheyearendedDecember31,2013.Managementhasmadeavailabletotheauditorallfinancialrecordsandrelateddatanecessarytocompletetheaudit.Managementconsidersandtakesappropriateactiononauditrecommendationsconcerninginternalcontrolprocedures,financialmattersandlegalcompliance.Theindependentauditor’sreportislocatedatthefrontofthefinancialsectionofthisreport.
Management’sdiscussionandanalysis(MD&A)immediatelyfollowstheindependentauditor’sreportandprovidesanarrativeintroduction,overview,andanalysisofthebasicfinancialstatements.TheDistrict’sMD&Acomplementsthistransmittalletterandshouldbereadinconjunctionwithit.
Profile of the DistrictMasonCountyPublicUtilityDistrictNo.3wasestablishedbyvotein1934andbeganoperationsin1939.Understatelaw,theDistrictisauthorizedtoprovideelectric,waterandtelecommunicationservices,andifapprovedbyvote,sewerservices.TheDistrictengagesinthepurchase,distributionandsaleofelectricenergy,aswellaswholesaletelecommunicationservices.TheDistrict’sheadquartersareinShelton,Washington,approximately22milesnorthwestofOlympia,thecapitalofWashingtonState.Itsserviceareaencompasses567squaremiles,mostofwhichisinMasonCounty.However,electricserviceisprovidedtofivesquaremilesinsouthernKitsapCounty,18squaremilesineasternGraysHarborCounty,and0.00156squaremilesinsouthwesternPierceCounty.TheDistricthasasatelliteofficeinBelfair,Washington,whichisinnorthernMasonCounty.
Sinceitsestablishmentin1934,MasonCountyPublicUtilityDistrictNo.3hasbeenunderthedirectionofthreeelectedcommissioners.Commissionmembersservesix-yearterms,withonememberelectedeverytwoyears.TheBoardofCommissionersappointstheDistrict’smanager,auditorandtreasurer.AsthechiefadministrativeofficeroftheDistrict,themanagerisresponsibleforalladministrativefunctionsincludingpreparationofanannualbudgetandthehiringanddischargeofemployeesunderherdirection.
TheDistrictisafullrequirementscustomeroftheBonnevillePowerAdministration(BPA)meaningthatBPAprovidesalloftheDistrict’spowerrequirementsatcost-basedrates.TheDistricttakesdeliveryoftheBPApower
COMMISSIONERSThomasJ.FarmerLindaR.GottBruceE.JorgensonMANAGERAnnetteS.Creekpaum
P.O.Box2148•Shelton,WA98584•(Bus)360-426-8255•(Fax)360-426-8547www.masonpud3.org
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atelevensubstations,tenofwhichareownedbytheutility.Ithas1,768milesofprimarylinesandownsandoperates29.80milesof115kVtransmissionlines.AsofDecember31,2013,thevalueoftheDistrict’snetplanttotaled$136.5millionanditserved32,498customers.Loaddatafortheyearincludedkilowatt-hour(kWh)salestoretailcustomersof656,362,897kWh.
TheDistrictprovideswholesalefiberopticservicestosixserviceproviderswhointurnprovideretailservicesto584connectionsover422milesoffiberopticlinewithinMasonCounty.TheDistrictisalsoamajorhubforhighcapacitydatalinesthroughoutwesternWashington.Itsstrategiclocationprovidesredundantservicecapabilitiesthroughtwomajorinternetroutes.
TheDistrictrecordsfinancialtransactionswithinasingleproprietaryfund,otherthanthoseinitstwofiduciaryfundscomprisedofaVoluntaryEmployees’BeneficiaryAssociation(VEBA)trustestablishedinMayof2004andtheOtherPostemploymentBenefits(OPEB)trustestablishedin2008.TheDistricthasnogovernmentalfundswithlegallyadoptedbudgetsthatcarrytheforceoflaw.Accordingly,theDistrict’sbudgetisnotcontainedwithinthisreport.However,theDistrictadoptsanannualbudgetforpurposesofplanningandmanagementcontrol.ThebudgetprocessinvolvespreparationofaproposedoperatingandcapitalbudgetbyDistrictstafffortheensuingyearthatispresentedtotheBoardofCommissioners.Duringworkshopsessionsthatareopentothepublic,thestaffandboardreviewandrevisetheproposedbudget.Apublichearingisconductedtoobtainratepayercomments.Whenapprovedbyboardresolution,thebudgetbecomesthebasisforoperationsfortheensuingcalendaryear.
Local EconomyTheeconomyofMasonCountyhashistoricallycenteredonitswealthofnaturalresourcesandscenicbeauty.Overthepastthreedecades,thecommunityhasstrivedtodiversifyitseconomicbasethroughthewiseuseofitsforestsandwaterassets,aswellastheattractionofnewbusinessinterests.Theprimarysectorsthatsupportthecounty’seconomyare:forestproducts,includinglumberprocessingandmanufacturing;aquaculture,includingshellfishharvestingandprocessing;specialtyforestproductsandfloralgreens;retailtradeandthehospitalityindustry;government,schoolsandmedicalfacilities.
Theincreasinglydiversifiedeconomicbasehasresultedinrelativelystableemploymentforaresourcedependentcounty.Duringthepasttenyears,theunemploymentratewas6.7percentin2004toadecadehighof11.3percentin2009.Thecurrentrateofunemploymentisninepercent(December2013).
SelectedprojectsandeventsofcommunityinterestwithintheDistrict’sserviceterritory:
• TheDistrictbeganmonitoringactivityinvolvingastudyoftheColumbiaRiverTreatybytheU.S.ArmyCorpsofEngineersandtheBonnevillePowerAdministration.TheagreementwithCanadaisdesignedtomanagetheriverforpowergenerationandfloodcontrolasitflowsfromBritishColumbiaintotheUnitedStates.TheDistrictisamemberofthe“ColumbiaRiverTreatyPowerGroup,”whichwasformedtoensureafairandequitableoutcomefortheestimated6.4millionPacificNorthwestelectriccustomersitserves.
• TheDistrictsolditsformerdowntownSheltonengineeringbuildingtoNorthwestResourcesII.Itincludedtheengineeringbuilding,anadjacentpark/gardenarea,andaccesstoon-sitebackupelectricitygeneration.ThefacilityisusedforNorthwestResources’counselingservices.TheDistrict’sengineeringandadministrationbuildingsbecamesurplusafterthecompletionoftheJohnsPrairieoperationscenterin 2012.
• “ProjectShare”enteredits30thyearofcontinuousoperation,helpinglow-incomeMasonCountyfamilieswiththeirelectricitybills.TheprogramisajointeffortoftheDistrict,theCommunityActionCouncil,churches,interestedcitizens,andDistrictcustomers.
• TheDistrictparticipatedinthehighlysuccessfulCleanHydrocampaign,tore-introducePacificNorthwestresidentstothevalueofhydroelectricityandthevariousbenefitsthatdamsintheColumbiaRiverBasinprovidetotheregion.NorthwestRiverPartnerscoordinatedthecampaign.
• TheDistrictconductedacampaigntoincreasethenumberofcustomerswhousetheDistrict’sonlinebillingoffering,especiallypaperlessbilling.Duringthepromotion1,940customerssignedup,resultinginanannualsavingsof$13,483.Thenetsavingsforthefullfirstyear,lesspromotionalcostsis$10,136.JustovertenpercentofalltheDistrict’scustomers(3,431)usethepaperlessbillingprogram.Nearly17percentoftheDistrict’scustomershaveonlineaccesstomanagetheiraccounts.
• TheDistrictcelebrated“PublicPowerWeek”withaspecialeducationprogramforover600MasonCountyfifth-gradestudents,openhousesforcustomers,andaspecialShelton-MasonCountyChamberOf
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Commerceafter-hoursevent.• BonnevillePowerAdministrationadoptedaninepercentaveragewholesalepowerrateincreaseand
an11percentaveragetransmissionrateincreasefortheDistrictandotherpublicutilitiesinthePacificNorthwest.Thenewratessupportimprovementstoensuretheregion’sfederalhydropowerandtransmissionsystemscancontinuetoreliablydelivercarbon-free,affordablepowertoNorthwesthomesandbusinesses.
• OneofthelargestsolararraysinwesternWashingtonquietlydeliversoff-gridelectricitytotheDistrict’sJohnsPrairieoperationscenternearShelton.A225kilowattphotovoltaicsystematthefacilitycoversabout22,000squarefeetononeofthevehiclestoragebuildings.Itgeneratednearly243,000kWhofelectricityinitsfirstfullyearofoperation,oranannualaverageofabout25percentoftheoperationscenter’senergyneeds.ThealternativepowerproductionwillreducetheDistrict’scarbonfootprintbyabout13tonsperyear.
AswithanyothercommunityinWashingtonState,MasonCountyhasfaceditstrialsduringtherecession.However,itschoicesindevelopinginfrastructure,diversifyingitseconomicbase,andsupportingexistingbusinessesmakethecommunityconfidentitwillemergestrongerthanbefore.
Long-Term Financial PlanningTheDistrict’sfive-yearforecastiscontinuallyupdatedtofollowprojectionsandchangesaffectingtheDistrict.Theforecastincludesbothoperatingandcapitalactivitywithafocusonreservelevels,debtservicecoveragelevels,andpotentialrateaction.
ThroughbondresolutiontheDistrictestablishes,maintainsandcollectsratesandchargesforservicestoprovideforallpaymentsthattheDistrictisobligatedtopay.
Major Initiatives• TheDistrictinstalledadditionalthree-phasepowerandfiberopticcableacrosstheHarstineIslandBridge.
Theprojectwaspartofa$250,000effortbytheDistricttoenhanceelectricalserviceandextendtheDistrict’sfiberopticnetworkacrosstoHarstineIslandforpotentialfuturebroadbandservice.
• Districtlinemenreplaceda73year-old,high-voltagetransmissionpoleatthecornerofFirstandAlderStreetsindowntownSheltonthatcarries115thousandvoltpowerlinesleadingtotheMasonsubstationonKneelandStreet.ThreeDistrictsubstationswerede-energizedduetoaconcurrentBonnevillePowerAdministrationplannedoutage.Powerforresidentialandcommercialcustomerswasmaintainedbyreroutingservicefromothersubstations.
• DistrictengineersandlinemenconductedaninnovativetransmissionpolerelocationprojectrequiredbyaWashingtonStateDepartmentofTransportationStateRoute3roadwideningprojectinBelfair.Ratherthaninstallingnewtransmissionpolesandtakingseveraloutagestoapproximately6,000customerswhiletransferringthepowerlinesovertothenewfacilities,theDistrictlinemenwereabletoslidethree75-foottransmissionpolesapproximatelyninefeet.Thissavedthousandsofdollarsandeliminatedtheneedforseveralmajorplannedoutages.
• UndercontractwiththeNorthwestOpenAccessNetwork(NoaNet),theDistrictextendedfiberopticlinestovariouscelltowersitesinMasonCounty.
• DistrictlinemenspentthedayafterChristmasrestoringelectricitytocustomersindowntownSheltonafternearly700customershadtheirpowercut.AccordingtoanewsreleasefromthecityofSheltonPoliceDepartment,itappearsthatapieceoflargelog-handlingequipmentbeingtransportedbyrailcarcaughtaspanofwiresbetweenpoles.Thesnaggedwirespulleddownpowerpolesasthetraincontinuedon.
SubstationUpgrades–TheDistrictcompletedtheMasonsubstationrebuildprojectindowntownShelton.Constructionbeganinthesummerof2012,withcompletioninearly2013.Duringconstruction,3,400customersservedbythefacilitygottheirelectricityfromtheJohnsPrairie,SkookumorMt.Viewsubstations.
Theengineer’sestimatefortheentireprojectwas$3.5million,buttheactualcostoftheprojectcameinunderestimateatalittlemorethan$3million.
Priortotheupgrade,theMasonsubstationwastheoldestofthe11intheDistrict’sserviceterritory,withsomeofitscomponentsdatingtothe1940’s.
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ThesubstationservescustomersindowntownShelton,Angleside,aportionofRailroadAvenue,NorthcliffRoad,partofNorth13thStreet,Hillcrest,anareanorthofAlderStreet,theSimpsonLumberCompanywaterfrontmills,allofCloquallumRoad,WestandEastDeeganRoad,andtheShelton-MatlockInterchange.
ConservationPrograms–TheDistrict’sconservationdepartmentisworkingdiligentlyandsystematicallytopromoteenergyconservationinitsserviceterritory.TheDistrictisdedicatedtoeducatingitscustomersaboutaffordablewaystoimprovetheirhomes’energyefficiency,andinvestingresourcestoassistthecustomersinthecompletionoftheseprojects.
Someoftheconservationinitiativesinclude:
• WorkingwiththeMasonCountyHomelessShelterandrentalagencieswithintheDistrict’sserviceterritorytopromoteupgradestounder-insulatedhomes.TheDistrictisabletopay100percentoftheprojectcostsforqualifyinglow/moderateincomeweatherizationprojectsinelectricallyheatedhomes.
• EncouragingtheimplementationofductlessheatingandcoolingsystemsinMasonCounty.Ductlessheatpumpsrepresentanincrediblecost/BTUvalueforresidentsofthePacificNorthwest.
• Workingtowardacomprehensiveoverhaulofallcommerciallightinginitsserviceterritory.ThePacificNorthwestisonthecuspofatremendousshiftinlightingtechnologyavailable:fluorescentlightstoLEDs.Thisupgradeintechnologyrepresentsalargeopportunityinenergysavings.It’soneoftheconservationdepartment’sgoalstohelpitscustomersnavigatethistransitioninacost-consciousmanner.
• Detailingallofthecommercialandindustrialcustomers’conservationprojectscompletedandpotentialprojectslefttobedone.Itistheconservationdepartment’sgoaltohaveeverycommercialandindustrialcustomercontactedandencouragedtohaveafreeenergyauditdoneattheirqualifyingfacility.
• Filmingsimplehow-tovideosthatequipcustomerswithsimpleno-costorlow-costprojectsaroundtheirhometoimproveenergyefficiency.
Awards and Acknowledgements• WylaWood,MasonCountyPUD3managerfortenyears(2003through2013),retiredfromthe
leadershippostMarch31,2013.Wood,theeighthmanageroftheDistrictsinceitsformationin1939,wasalsothefirstfemalemanageroftheutility.AnnetteCreekpaum,theDistrict’sFinanceManager/Auditor,wasappointedbytheBoardofCommissionersastheDistrict’snewmanager,effectiveApril1,2013.
• MasonCountyPUD3CommissionerLindaGottwaselectedtoserveaspresidentofEnergyNorthwest’sBoardofDirectorsforatwo-yearterm.
• TheAmericanPublicPowerAssociationnamedMasonCountyPUD3CommissionerLindaGotttoaone-yeartermonitsPolicyMakersCouncil.The40-membercouncilassiststheassociationinpromotingfederallegislationthatisimportanttopublicpowerutilities,andworkstoprotectutilitiesfromharmfullegislation.Italsoprovidesadviceonotherissuesofimportancetothenationalorganization.
• TheMasonConservationDistrictnamedtheDistricta2012conservationstewardoftheyear(awardedin2013).TheconservationdistrictworkedcloselywiththeDistrictdesignteamtointroducenativeplantsintotheareaaroundtheJohnsPrairieoperationscenter,andadoptwaystomanagestormwaterrunoffinamannerthatreducedenvironmentalimpacts.ThepartnershipbetweentheconservationdistrictandtheDistrictdemonstratedhowlocalgovernmentcooperationcouldachievesubstantialpublicbenefitsthroughsharingofresourcesandthewiseuseofpublicfinances.
• TheDistrictpasseditsannualinspectionbytheWashingtonStateAuditor’sOfficewithanexemplaryevaluation.Thereportmarkedthe34thconsecutiveyearinwhichtheutilityhasreceivedacleanbillofhealthfromthestateagency.
• TheDistrictwasnamedamemberoftheUnitedWayofMasonCounty’sHigh-FiveClub:thetopfivebusinessesandorganizationswhoseemployeesmadedonationsduringtheUnitedWay’slocalworkplacefundraisingcampaign.Theannualcampaignpromotedgivingfromareabusinesses,federalandstateemployees.Themoneyisusedforhumanresourceagenciesthatprovideservicestolocalresidents.
• TheDistricttooktwoawardsinitsutilityclassintheNorthwestPublicPowerAssociationExcellenceinCommunicationawards.(Theclassincludesutilitieswith25,000-49,999customers).Theawardswerefirstplaceforits2011annualreportandthirdplaceforitsbrochureabouttheJohnsPrairieoperationscenter.
• TheDistrictreceivedtheAmericanPublicPowerAssociation’s“AwardofExcellence”initsclassfortheDistrict’s2012annualreport.(Theclassincludedutilitieswithgrossrevenuesoflessthan$75million.)ThethemeofthePUD’sannualreportwas“reliability,”focusingonhowemployeesusetheirknowledge
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making connections.
andtoolstoprovidesafeandreliableservicetotheutility’scustomers.• TheWashingtonPUDAssociationpresentedits“GoodSamaritanAward”toDistrictMeterReaderVince
Campagna.VincewashonoredforhisreactionfollowingaFebruary2013fataltrafficaccidentonHighway3thatsavedlivesandpreventedadditionalaccidentsandinjuriesatthesceneofahead-oncollision.
• DuringtheThanksgivingandChristmasseasons,DistrictemployeescontributedthemakingsfortenThanksgivingdinners;sponsoredgiftsandsupportfor14fosterchildrenandraisednearly$2,800inindividualdonationstohelpastrugglingfamilyhaveamemorableChristmas.
• TheGovernmentFinanceOfficersAssociationoftheUnitedStatesandCanada(GFOA)awardedaCertificateofAchievementforExcellenceinFinancialReportingtoMasonCountyPublicUtilityDistrictNo.3foritscomprehensiveannualfinancialreportforthefiscalyearendingDecember31,2012.ThiswastheninthconsecutiveyearthattheDistricthasreceivedthisprestigiousaward.InordertobeawardedaCertificateofAchievement,agovernmententitymustpublishaneasilyreadableandefficientlyorganizedcomprehensiveannualfinancialreport.Thisreportmustsatisfybothgenerallyacceptedaccountingprinciplesandapplicablelegalrequirements.
ACertificateofAchievementisvalidforaperiodofoneyearonly.WebelievethatourcurrentcomprehensiveannualfinancialreportcontinuestomeettheCertificateofAchievementProgram’srequirements,andwearesubmittingittotheGFOAtodetermineitseligibilityforanothercertificate.
PreparationoftheComprehensiveAnnualFinancialReportwasmadepossiblebythededicatedserviceoftheentirestaffoftheFinance,AdministrationandPublicInformationdepartmentsoftheDistrict.Wewishtoexpressourappreciationtothesestaffmembersfortheircontributionstothedevelopmentofthisreport.FurtherappreciationisextendedtotheBoardofCommissionersforitsleadershipandsupportinplanningandconductingthefinancialoperationsoftheDistrictinaresponsibleandenterprisingmanner.
Respectfullysubmitted,
AnnetteCreekpaum,CPA SherrySpeaks,CPAManager FinanceManager/Auditor
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“The management team works to make connections daily, ensuring PUD 3 delivers safe, reliable and cost-based electrical and telecommunication services, while encouraging economic development and being good stewards of the environment.”
The Management TeamAs pictured from left to right:
Director of Business Services John BennettManager Annette Creekpaum (CPA) Director of Engineering Terry Peterson Director of Business Operations Michelle Wicks (PHR)
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Organizational Chart
TreasurerBrian Taylor, CFE
AuditorSherry Speaks, CPA
Customers
Commissioners
Mason County PUD No. 3
Thomas J. FarmerLinda R. Gott
Bruce E. Jorgenson
ManagerAnnette Creekpaum, CPA
Director of Business Services
John Bennett
Director of EngineeringTerry Peterson
Director of Business Operations
Michelle Wicks, PHR
Finance Manager
Sherry Speaks, CPA
Public Information& Government
Relations ManagerJoel Myer
Executive Assistant& Records Supervisor
Lynn Eaton
AttorneyRobert Johnson
making connections.
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The PUD 3 Board of Commissioners is comprised of three members, each serving a six-year term. Commissioners represent their respective districts and are responsible for making policy decisions for the utility.
Linda R. GottSecretary
Bruce E. JorgensonVice President
Commissioner Jorgenson tookofficein1995andservescommissiondistrictthree,whichencompassesthewesternportionofthecounty,thecityofSheltonandareassouth.Hehasbeenre-electedthreetimes.HiscurrenttermendsDecember31,2018.
CommissionerGottservescommission district one,whichincludesthesoutheasternportionofthecounty.Shetookofficein1999,andwasre-electedinNovember2010.HerthirdtermendsDecember31,2016.
Thomas J. FarmerPresident
Commissioner Farmer beganasix-yearterminJanuary2009.Heservescommission district two,whichincludesthenortheasternportionofMasonCounty.HisfirsttermendsDecember31,2014.
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Board of Commissioners
DistrictNo. 1
DistrictNo. 3
DistrictNo. 2
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Independent Auditor’s Report on Financial Statements Public Utility District No. 3 of Mason CountyJanuary 1, 2013 through December 31, 2013
June 20, 2014
Board of CommissionersPublic Utility District No. 3 of Mason CountyShelton, Washington
REPORT ON THE FINANCIAL STATEMENTSWe have audited the accompanying financial statements of Public Utility District No. 3 ofMason County, Washington, as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
Washington State AuditorTroy Kelley
_________________________________________________________________________________________________Washington State Auditor’s Office
1Finac
ial S
ectio
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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Public Utility District No. 3 of Mason County, as of December 31, 2013, and the changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Matters of EmphasisAs discussed in Note 1 to the financial statements, in 2013, the District adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position and Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.
Other MattersRequired Supplementary InformationAccounting principles generally accepted in the United States of America require that the management’s discussion and analysis and information on postemployment benefits other than pensions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDSIn accordance with Government Auditing Standards, we have also issued our report dated June 20, 2014 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance
TROY KELLEYSTATE AUDITOR
_________________________________________________________________________________________________Washington State Auditor’s Office
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Management’s Discussion and AnalysisAsmanagementofMasonCountyPUDNo.3(District),weofferreadersoftheDistrict’sfinancialstatementsthisnarrativeoverviewandanalysisoffinancialactivitiesforthefiscalyearendedDecember31,2013.Weencouragereaderstoconsidertheinformationpresented.Itshouldbereadinconjunctionwiththebasicfinancialstatementsandaccompanyingnotes,aswellastheadditionalinformationthatwehavefurnishedinourletteroftransmittal.
Financial Highlights• TheassetsoftheDistrictexceededitsliabilitiesatthecloseoffiscalyear2013by$96.1million(net
position).Ofthisamount,$23.3millionrepresentunrestrictednetposition,whichmaybeusedtomeettheutility’songoingobligations.Netinvestmentincapitalassets(netofdepreciationandrelateddebt)was$66.4millionandaccountedfor69percentoftheDistrict’snetposition.
• TheDistrict’stotalnetpositiondecreased$2.4millionfrom2012becauseofincreasedpowercostsandadecreaseinkWhpurchasesbyitsresidentialcustomers.
Overview of the Financial StatementsThediscussionandanalysisprovidedhereareintendedtoserveasanintroductiontotheDistrict’sbasicfinancialstatements.Thebasicfinancialstatementsconsistofthreecomponents:1)proprietaryfundfinancialstatements;2)fiduciaryfundfinancialstatements;and3)thenotestofinancialstatements.Thisreportalsoincludessupplementaryinformationintendedtofurnishadditionaldetailtosupportthebasicfinancialstatementsthemselves.
TheDistrictaccountsforitsfinancialactivitieswithinasingleproprietaryfundtitledtheElectricSystem.TheElectricSystemisusedtoaccountforthepurchase,transmission,distributionandsaleofelectricenergy,aswellasthesaleofwholesaletelecommunicationservices.
InaccordancewithrequirementssetforthbytheGovernmentalAccountingStandardsBoard(GASB),theDistrict’sfinancialstatementsemploytheaccrualbasisofaccountinginrecognizingincreasesanddecreasesineconomicresources.Accrualaccountingrecognizesallrevenuesandexpensesduringtheyear,regardlessofwhencashisreceivedorpaid.
Thebasicfinancialstatements,presentedfortheyearendedDecember31,2013,arecomprisedof:
• Statement of Net Position: TheStatementofNetPositionpresentsinformationontheDistrict’sassetsandliabilities,withthedifferencebetweenthetworeportedasnetposition.Overtime,increasesordecreasesinnetpositionmayserveasausefulindicatorofwhetherthefinancialpositionoftheDistrictisimprovingordeteriorating.
• Statement of Revenues, Expenses, and Changes in Net Position: ThisstatementreflectsthetransactionsandeventsthathaveincreasedordecreasedtheDistrict’stotaleconomicresourcesduringthemostrecentfiscalyear.Revenuesarepresentednetofallowancesandaresummarizedbymajorsource.Revenuesandexpensesareclassifiedasoperatingornonoperatingbasedonthenatureofthetransaction.
• Statement of Cash Flows: TheStatementofCashFlowsreflectsthesourcesandusesofcashseparatedintofourcategoriesofactivities:operating,noncapitalfinancing,capitalandrelatedfinancing,andinvesting.
Restatementof2012: WiththeimplementationofGASBStatementNos.63&65,theDistrict’s2012financialstatementshavebeenrestatedtoconformwiththenewreportingandaccountingrequirements.Inpart,GASB63establishedaccountingandfinancialreportingstandardsthatreclassify,asdeferredoutflowsofresourcesordeferredinflowsofresources,certainitemsthatwerepreviouslyreportedasassetsandliabilities.Inpart,GASB65requireddebtissuancecosts,exceptanyportionrelatedtoprepaidinsurancecosts,toberecognizedasanexpenseintheperiodincurred.
CorrectionofPriorPeriodDepreciation–In1998,theDistrictupgradeditssystemsoftware.Duringtheconversionprocess,whenassetswereenteredintotheaccountingsystem,theassets’remainingusefullifestartedoverusingthefulllifeoftheassets.In2013,anadjustmentwasmadetocatchuptheunder-depreciationandtheremainingusefullivesoftheassetswerechanged(seeNote16).
FiduciaryfundsareusedtoaccountforresourcesheldforthebenefitofpartiesoutsidetheDistrict.FiduciaryfundsarenotreportedintheDistrict’sfinancialstatementsbecausetheresourcesofthosefundsarenotavailabletosupporttheDistrict’sownprograms.
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TheDistrictmaintainstwodifferenttypesoffiduciaryfunds.TheVEBAforEmployeesofWashingtonStatePUDsfundisusedtoreportresourcesheldintrustforemployeehealthcarebenefits.TheOtherPostemploymentBenefit(OPEB)Planfundisusedtoreportresourcesheldintrustforhealthcarebenefitsforretiredemployeesandtheirbeneficiaries.
Thenotestothefinancialstatements,presentedattheendofthebasicfinancialstatements,areconsideredanintegralpartoftheDistrict’spresentationoffinancialposition,resultsofoperations,andchangesincashflows.ThenotesprovideadditionalinformationthatisnecessarytoacquireafullunderstandingofthedataprovidedintheDistrict’sfinancialstatements.
Inadditiontothebasicfinancialstatementsandaccompanyingnotes,thisreportalsopresentsrequiredsupplementaryinformationconcerningtheDistrict’sprogressinfundingitsobligationtoprovideOPEBbenefitstoitsemployees.
Financial Analysis Asnotedearlier,netpositionovertimemayserveasausefulindicatorofagovernmentalentity’sfinancialposition.TheDistrict’sassetsexceededliabilitiesby$96.1millionatthecloseoffiscalyear2013.
Statement of Net Position (inthousands)
Therewasasignificantincreaseincurrentassetsandadecreaseinnoncurrentassets.Thiswasdueprimarilyto$6.7millionpreviouslyrestrictedforfuturecapitalconstruction(classifiedasanoncurrentasset)transferredtorestrictedconstructionfunds(classifiedasacurrentasset).
ByfarthelargestportionoftheDistrict’snetposition(69percent)reflectsitsinvestmentincapitalassets(e.g.,land,buildings,substations,andequipment);lessanyrelateddebtusedtoacquirethoseassetsthatisstilloutstanding.TheDistrictusesthesecapitalassetstoprovideservicestocustomers;consequently,theseassetsarenotavailableforfuturespending.AlthoughtheDistrict’sinvestmentsinitscapitalassetsarereportednetofrelateddebt,itshouldbenotedthattheresourcesneededtorepaythisdebtmustbeprovidedfromothersources,sincethecapitalassetsthemselvescannotbeusedtoliquidatetheseliabilities.
AnadditionalportionoftheDistrict’snetposition(sevenpercent)representsresourcesthataresubjecttoexternalrestrictionsonhowtheymaybeused.Theremaining(24percent)isunrestrictedandmaybeusedtomeettheDistrict’songoingobligations.
Attheendofthecurrentfiscalyear,theDistrictisabletoreportpositivebalancesinallcategoriesofnetposition.Thesamesituationwastrueforthepriorfiscalyear.
However,theDistrict’soverallnetpositiondecreased$2.4millionfromtherestatedpriorfiscalyear.Thereasonsforthisdecreasearediscussedinthefollowingsections.
2013 2012 Restated
Increase (Decrease) % Change
Currentassetsandspecialfunds $34,444 $30,217 $4,227 13.99%UtilityPlant 136,455 139,057 (2,602) -1.87%DeferredOutflowsofResources 233 270 (37) -13.70%Othernoncurrentassets 12,915 19,655 (6,740) -34.29%TotalAssetsandDeferredOutflowsofResources
$184,047 $189,199 $(5,152) -2.72%
Currentliabilities $11,151 $12,009 $(858) -7.14%Noncurrentliabilities 76,833 78,732 (1,899) -2.41%Totalliabilities $87,984 $90,741 $(2,757) -3.04%
Netinvestmentincapitalassets $66,390 $69,112 $(2,722) -3.94%Restrictedfordebtservice 6,423 6,942 (519) -7.48%Unrestricted 23,250 22,404 846 3.78%Total net position $96,063 $98,458 $(2,395) -2.43%
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Statement of Revenue, Expenses, and Changes in Net Position (in thousands)
TheDistrict’stotalrevenuesincreased$4.3millionbetweenfiscalyears2012and2013to$55.3million.Althoughcustomers’consumptiondecreasedinkWh,therewasanetincreaseinutilitysalesof$4.1million.Theincreaseispartiallydueto$1.7millionintaxespreviouslycategorizedasaliability.Thesetaxeswerereclassifiedasarevenueandexpensedwhenpaid(thishasnoeffectonnetposition).Theotherportionofthe$4.1millionisduetotherateincreaseseffectiveinApril2012andApril2013approvedbytheBoardofCommissionersin2012.Otheroperatingrevenuesincreasedbyalmost54percentduetoa$480,000increaseintelecommunicationsrevenuesandadditionalrevenuesof$301,000duetoapolecontactrateincrease.UndercontractwiththeNorthwestOpenAccessNetwork(NoaNet),PUD3extendedfiberopticlinestovariouscelltowersitesinMasonCountywhichincreasedtelecommunicationsrevenues.
Nonoperatingrevenuesdecreasedduetoacombinationofevents.Anunrealizedlossof$130,000wasrecognizedduetothefairmarketvalueofinvestmentsbeinglessthanhistoricalcost.Thecapitaldebtservicesubsidydecreasedby$185,000duetothefederalgovernmentsequestration.Also,in2012theDistricthadasizeableFederalEmergencyManagementAgency(FEMA)accrualintheamountof$443,000;however,in2013therewerenosignificanteventsthatqualifiedforFEMAdeclaration.
Totalexpensesincreasedpartiallydueto$1.7millionintaxespreviouslycategorizedasaliabilitybeingreclassifiedasarevenueandexpensedwhenpaid(havingnoeffectonnetposition).Also,interestexpensedecreasedduetoGASB65requiringdebtissuancecostof$770,000tobeexpensedand$290,000lessinbondinterestexpense.
Infiscalyear2013,65percentoftheDistrict’soperatingrevenuescamefromresidentialsales,andapproximately24percentfromcommercialandindustrialsales.Anotherfivepercentcomesfromonelargeindustrialcustomerandtheremainingfromothermiscellaneoussources.
Revenues for Fiscal Year 2013
5% 5%
65%
24%
1%
OutdoorLighting&FixedRateFacilities1%Commercial&Industrial24%
ResidentialSales65%
LargeIndustrial5%MiscellaneousOtherOperating5%
2013 2012 Restated
Increase (Decrease) % Change
OperatingrevenuesUtilitysalesandservicefees $51,811 $47,652 $4,159 8.73%Otheroperatingrevenues 2,555 1,664 891 53.55%NonoperatingrevenuesInvestmentearnings (130) 103 (233) -226.21% Other income 1,101 1,607 (506) -31.49%Totalrevenue $55,337 $51,026 $4,311 8.45%
OperatingexpensesPowersupply $24,833 $23,883 $950 3.98%Operation/Maintenance/General 18,508 17,857 651 3.65%Taxes/Depreciationexpense 10,255 8,387 1,868 22.27%NonoperatingexpensesInterestexpense 4,136 5,408 (1,272) -23.52%Totalexpenses $57,732 $55,535 $2,197 3.96%
Changeinnetposition $(2,395) $(4,509) $2,114 -46.88%Beginningnetposition 98,458 102,967 (4,509) -4.38% Ending net position $96,063 $98,458 $(2,395) -2.43%
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TheDistrict’soperatingexpensesincludetransmissionanddistributionexpensesalongwithcustomeraccounts,customerservicesandinformational,sales,andgeneralandadministrativeexpenses.Nearly43percentoftheDistrict’soperatingexpensesareforthepurchaseofpower.
Totalexpensesincreased$2.2millionfrom2012to2013.TheDistrict’sincreasedpowersupplycostsattributedto27percentoftheincreaseinoperatingexpenses.TheBonnevillePowerAdministrationimplementedanaverage10percentwholesalerateincreaseeffectiveOctober2012,resultinginapowersupplycostincreaseof$950,000from2012 to 2013.
Insummary,the2013totalrevenuesincreased$4.3millionandtotalexpensesincreased$2.2millionover2012resultinginanetincreaseinnetpositionof$2.1million.However,beginningnetpositiondecreasedby$4.5millionprimarilyduetothedepreciationcorrection(seeNote16),whichresultedinayear-endoveralldecreaseinnetpositionof$2.4million.
Capital Asset and Long-Term Debt ActivityAttheendof2013,theDistricthadinvested$222millionincapitalassets.Thisinvestmentincapitalassetsincludesland,buildings,generation,transmission,distributionandgeneralplant,andmachineryandequipment.ThetotalincreaseintheDistrict’sinvestmentincapitalassetsforthecurrentyearwas1.07percent.
Capital Assets (in thousands)
Therewerenonewmajorcapitalasseteventsduringfiscalyear2013however:
• TheJohnsPrairieoperationscenter$38.8millionworkorderwasfinalizedfromconstructioninprogressandcategorizedintotheappropriatecapitalassets.
• TheDistrictalsofinalizedthe$2.7millionMasonsubstationrebuildandnumerousprojectsassociatedwithimprovementstoexistingdistributioninfrastructure.
MoredetailedinformationabouttheDistrict’scapitalassetsispresentedinNote2tothefinancialstatements.
OutdoorLighting&FixedRateFacilities1%Commercial&Industrial24%
ResidentialSales65%
LargeIndustrial5%MiscellaneousOtherOperating5%
43%
7%18%
11%
5%
16%
Operating Expenses for Fiscal Year 2013
Operation&Maintenance16%CustomerAccounts&Service5%
PurchasedPower43%
GeneralAdministration11%Taxes&Depreciation18%Interest Charges 7%
2013 2012 Increase (Decrease) % Change
Landandintangibleplant $2,205 $2,180 $25 1.15%Plant 152,228 148,658 3,570 2.40%Structuresandimprovements 42,896 8,495 34,401 404.96%Machineryandequipment 20,267 16,011 4,256 26.58%Constructioninprogress 4,431 44,335 (39,904) -90.01%Total $ 222,027 $ 219,679 $ 2,348 1.07%
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Long-term Debt – Attheendofthecurrentfiscalyear,theDistricthad$76.8millioninbondsoutstanding,adecreaseoftwopercentoverlastyear.InOctober2012,theDistrictissued$9.8millionofElectricRevenueRefundingBondstoadvancerefund$11.5millionofoutstanding2002Bondsreducingaggregatedebtservicepaymentsby$1.9millionoverthenextnineyears.TheDistrictdidnotissueanybondsin2013.
Long-term Debt (in thousands)
MoredetailedinformationabouttheDistrict’slong-termliabilitiesispresentedinNote6tothefinancialstatements.
Bond Ratings – TheDistrict’screditratingwithStandard&Poor’sisA+anditscreditratingisAa3onMoody’sGlobalRatingsScale.
BondcovenantsrequiretheDistricttoestablish,maintainandcollectratesandchargesthatshallbeadequatetoprovideineachfiscalyearnetrevenuesinanamountequaltoatleast1.25timestheannualdebtserviceontheparitybondsoutstandinginsuchfiscalyear.TheDistrict’sdebtservicecoverageratiowas1.44percentin2013withafive-yearaverageof2.42percent.
Other Significant MattersInApril2012,theDistrict’sCommissionersapprovedamulti-yearscheduleforelectricityrateincreases.TherevisionsoffsethigherwholesaleelectricityrateschargedbytheBonnevillePowerAdministration(BPA).TheBPAincreaseswentintoeffectOctober1,2011. Theimplementationoftherateincreaseswasadoptedasfollows:
• May1,2012–anaveragethreepercentincreaseintherateforkilowatt-hourconsumptionanda$0.10perdayincreaseinthedailysystemcharge.
• April1,2013–anaveragethreepercentincreaseintherateforkilowatt-hourconsumptionanda$0.10perdayincreaseinthedailysystemcharge.
• April1,2014–anaveragethreepercentincreaseintherateforkilowatt-hourconsumption.(However,inOctober2013,theBPAputintoeffectaninepercentaveragewholesalepowerrateincrease.TheBPAalsoincreasedtransmissionratesbyanaverageofelevenpercent.Inresponse,DistrictcommissionersadoptedaresolutionrescindingtheApril1,2014rateincreaseandadoptinganewrateincrease.Thenewratewentfrom$.0651/kilowatt-hourconsumptionto$.0652/kilowatt-hourconsumptionanddecoupledthestateutilitytaxfromtheenergyratedisclosingitseparately.Thecommissionalsoincreasedthedailysystemchargeby$0.10perday.ThisrevisedrateincreasewentintoeffectFebruary1,2014.)
TheBPA’snewrateswillpayforimprovementstotheregion’sfederalhydropowerandtransmissionsystemstoensuredeliveryofreliable,carbon-free,affordablepowertoPacificNorthwestcustomers.
Requests for InformationThefinancialreportisdesignedtoprovideageneraloverviewoftheDistrict’sfinancesandtodemonstratetheDistrict’saccountabilityforthemoneyitreceives.QuestionsconcerninganyoftheinformationprovidedinthisreportshouldbedirectedtotheFinanceManageroftheDistrictatPOBox2148,Shelton,WA98584.
2013 2012 Increase (Decrease) % Change
Revenuebonds $76,840 $78,385 ($1,545) -1.97%
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ASSETS CurrentAssets:CashandCashEquivalents(Note4)CashandWorkingFunds $ 10,694,970Investments 6,151,082RestrictedConstructionFunds 7,684,468RestrictedBondFund-Principal&Interest 997,829AccountsReceivable,Net 6,390,876PlantMaterialandOperatingSupplies 2,495,404Prepayments 29,097 TotalCurrentAssets 34,443,726 NoncurrentAssets: Investments(Note4) 4,999,776 RestrictedBondReserveFund(Note4) 5,424,725 PreliminarySurveysandInvestigations 57,991 NetOpebAsset(Note10) 2,432,275 SubtotalNoncurrentAssets 12,914,767 CapitalAssets: LandandIntangiblePlant 2,204,651 Plant 152,227,999 StructuresandImprovements 42,895,866 MachineryandEquipment 20,267,584 Construction-in-Progress(Note3) 4,430,626 LessAccumulatedDepreciation (85,571,967) TotalCapitalAssets(Net)(Note2) 136,454,759 TotalNoncurrentAssets 149,369,526
DeferredOutflowsofResources: UnamortizedLossonDefeasedDebt 233,961 TotalDeferredOutflowsofResources 233,961 TotalAssetsandDeferredOutflowsofResources $ 184,047,213 LIABILITIES CurrentLiabilities: RevenueBonds,CurrentPortion(Note6) $ 1,610,000 CurrentPortionofPersonalTimeOff 1,479,593WarrantsPayable 586,193 AccountsPayable 4,286,652 CustomerDeposits 576,447 TaxesAccrued 1,070,796 InterestAccruedonLong-TermDebt 355,859 OtherCurrentandAccruedLiabilities 1,185,891 TotalCurrentandAccruedLiabilities 11,151,431 NoncurrentLiabilities: PersonalTimeOff 693,744 RevenueBonds(Note6) 76,139,203 TotalNoncurrentLiabilities 76,832,947 TotalLiabilities 87,984,378 NET POSITION Netinvestmentincapitalassets 66,390,024 Restrictedfordebtservice 6,422,553 Unrestricted 23,250,258TotalNetPosition $ 96,062,835
Statement of Net PositionProprietary Fund
December 31, 2013
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
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REVENUESOperatingRevenues: UtilitySalesandServiceFees $ 51,811,302OtherChargesforServices 1,551,880OtherOperatingRevenues 1,003,488TotalOperatingRevenues 54,366,670
EXPENSES OperatingExpenses: PurchasedPower $ 24,832,964Operation 3,485,934Maintenance 4,389,255CustomerAccounts 2,278,899CustomerService,Information,Advertising 839,495AdministrativeandGeneral 6,092,145MaintenanceofGeneralPlant 1,422,844Depreciation 6,678,552TaxesotherthanIncome 3,576,006TotalOperatingExpenses 53,596,094OperatingIncome(Loss) 770,576
OTHER REVENUES (EXPENSES) NonoperatingRevenues(Expenses): Revenue(Cost)ofMerchandising $ (7,590)InvestmentEarnings (130,129)InterestandAmortizationonLong-TermDebt (4,136,190)Gain(Loss)onSaleofCapitalAssets 86,111CapitalDebtServiceSubsidyfromtheFederalGovernment 1,044,635OtherNonoperatingRevenues (22,681)TotalNonoperatingRevenues(Expenses) (3,165,844) ChangeinNetPosition (2,395,268) NetPosition-BeginningBeforeRestatement 108,530,027RestatementofPriorPeriod(SeeNote16) (10,071,924)TotalNetPosition,BeginningofYearasRestated 98,458,103 NetPosition-Ending $ 96,062,835
Statement of Revenues, Expenses and Changes in Net PositionProprietary Fund
For the Year Ended December 31, 2013
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
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Statement of Cash FlowsProprietary Fund
For the Year Ended December 31, 2013CASH FLOWS FROM OPERATING ACTIVITIES CashReceivedfromCustomers $ 55,252,776CashPaidtoSuppliersandServiceProviders (29,497,553)CashPaidtoEmployeesforSalariesandWages (13,731,847)TaxesPaid (5,039,119)MiscellaneousotherRevenue(Expense) 69,849NetCashProvidedby(Usedfor)OperatingActivities 7,054,106 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES AcquisitionandConstructionofCapitalAssets (6,341,907)PrincipalPaidonCapitalDebt (1,557,025)InterestPaidonCapitalDebt (4,320,487)CapitalDebtServiceSubsidyfromtheFederalGovernment 1,044,635ProceedsFromtheSaleofCapitalAssets 912,962NetCashUsedforCapitalFinancingActivities (10,261,822) CASH FLOWS FROM INVESTING ACTIVITIES PurchaseofInvestments (7,667,078)ProceedsfromSaleofInvestments 14,393,514InterestonInvestments 120,807NetCashFlowProvidedbyInvestingActivities 6,847,243 NetIncrease(Decrease)inCashandCashEquivalents 3,639,527CashandCashEquivalents,BeginningofYear 21,888,823CashandCashEquivalents,EndofYear $ 25,528,350 Reconciliation of Operating Income (Loss) to Net Cash Provided by (used for) Operating Activities: OperatingIncome $ 770,576 AdjustmentstoReconcileOperatingIncometoNetCashProvidedbyOperatingActivities Merchandising-Net (7,590)DepreciationandAmortization 6,678,552Gain(Loss)onSaleofCapitalAssets 86,111MiscellaneousOtherExpense (16,262)Decrease(Increase)inCustomerAccountsReceivable (510,026)Decrease(Increase)inOtherAccountsReceivable (166,229)Decrease(Increase)inMaterialInventory 3,337Decrease(Increase)inPrepayments (1,132)Increase(Decrease)inCustomerDeposits 8,449Increase(Decrease)inOutstandingWarrants (28,104)Increase(Decrease)inAccountsPayable 365,297Increase(Decrease)inOtherPostemployeeBenefits(Opeb) (236,822)Increase(Decrease)inTaxesAccrued 106,838Increase(Decrease)inMiscellaneousAccruedLiabilities 1,111TotalAdjustments 6,283,530NetCashProvidedby(Usedfor)OperatingActivities $ 7,054,106
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
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Statement of Fiduciary Net PositionFiduciary Funds
December 31, 2013
Private-Purpose Other Postemployment Trust (VEBA) Benefits Plan (OPEB)
ASSETS Cashandcashequivalents $ 6,988 $ 320,633Investments 4,410,253 5,172,710 Total Assets 4,417,241 5,493,343 LIABILITIES 6,988 - TotalNetPositionHeldinTrustforOthers $ 4,410,253 $ 5,493,343
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
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Statement of Changes in Fiduciary Net PositionFiduciary Funds
For the Year Ended December 31, 2013
Private-Purpose Other Postemployment Trust (VEBA) Benefits Plan (OPEB)
ADDITIONS Contributions $ 60,143 $ 716,516NetInvestmentIncome 703,945 626,683TotalAdditions 1,305,608 1,343,199 DEDUCTIONS BenefitsPaidtoorforParticipants $ 410,341 $ 275,198NetInvestmentLoss - -TotalDeductions 410,341 275,198 ChangeinNetPosition 895,347 1,068,001
NetPosition-Beginning 3,514,906 4,425,342
NetPosition-Ending $ 4,410,253 $ 5,493,343
making connections.Theaccompanyingnotesareanintegralpartofthefinancialstatements.
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“PUD 3’s communications team thinks outside the box for ways to make strong connections with the community. We updated our newsletter with the focus on our customers. We’ve been especially excited about how our customers are using our social media outreach through Facebook & Twitter. PUD 3 is a leader in the connections we’re making online.” - Joel Myer
Public Information & Government Relations Manager
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Notes to Financial StatementsYear Ended December 31, 2013
NOTE 1 - Summary of Operations and Significant Accounting PoliciesMasonCountyPublicUtilityDistrictNo.3(District)isacustomer-ownedutilityprovidingelectricalandwholesaletelecommunicationservicesinMasonCounty,Washington.Formedbyapublicvotein1934,theutilityisamunicipalcorporationorganizedunderthelawsofthestateofWashington.Itislegallyandfiscallyindependentofotherstateorlocalgovernments.Itbeganprovidingelectricalservicein1939.TheDistrictprovidedelectricserviceto32,498customersasofDecember31,2013.
Aboardofthreecommissioners,electedbythevoters,servestheDistricttoestablishpolicy,reviewoperationsandapproveplans,budgetsandexpenses.ThelegalresponsibilitiesandpowersoftheDistrict,includingtheestablishmentofratesandchargesforservicesrendered,areexercisedthroughthecommission.
TheaccountingpoliciesoftheDistrictconformtogenerallyacceptedaccountingprinciplesasapplicabletoproprietaryfundsofgovernmentalutilities.TheGovernmentalAccountingStandardsBoard(GASB)istheacceptedstandardsettingbodyforestablishinggovernmentalaccountingandfinancialreportingprinciples.TheDistrictappliedallapplicableGASBpronouncementsincludingGASBStatementNo.63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position.Inaddition,theDistrictimplementedGASBStatementNo.65,Items Previously Reported as Assets and Liabilities.WithimplementationofGASB63and65,theDistrictrestatedits2012financialstatements(seeNote16).Thefollowingisasummaryofthemoresignificantpolicies(includingidentificationofthosepolicieswhichresultinmaterialdeparturesfromgenerallyacceptedaccountingprinciples).
A) Basis of Accounting and Presentation – TheaccountingandreportingpoliciesoftheDistrictareregulatedbytheWashingtonStateAuditor’sOfficeandarebasedontheUniformSystemofAccountsprescribedforpublicutilitiesandlicenseesbytheFederalEnergyRegulatoryCommission(FERC).TheDistrictusesthefull-accrualbasisofaccountingwhererevenuesarerecognizedwhenearnedandexpensesarerecognizedwhenincurred.RevenuesandexpensesrelatedtotheDistrict’sprincipaloperationsareconsideredtobeoperatingrevenuesandexpenses;whilerevenuesandexpensesrelatedtocapital,financingandinvestingactivitiesareconsideredtobenonoperatingrevenuesandexpenses.
B) Utility Plant and Depreciation – Utilityplantinserviceandothercapitalassetsarerecordedatcost,whichincludesbothdirectandindirectcostsofconstructionoracquisition.TheDistrict’scapitalizationthresholdis$1,000fornon-infrastructurecapitalwhileitsthresholdforinfrastructurecapitalis$50,000.Thecostofmaintenanceandrepairsischargedtoexpenseasincurred,whilethecostofreplacementsandimprovementsiscapitalized.
Property,plantandequipmentaredepreciatedusingthestraight-linemethodoverthefollowingestimatedusefullives:
TheDistrict’sContinuingPropertyRecordssystemreflectstherecordingofpropertyunitsaddedandretired.Initialdepreciationonutilityplantisrecordedinthemonthsubsequenttopurchaseorcompletionofconstruction.Whenoperatingplantassetsareretiredorotherwisedisposedof,theiroriginalcost(includingremovalcosts,lesssalvage)ischargedtoaccumulateddepreciation.
TheDistrictfollowsFERCoperatinginstructionsfordepreciationexpense,whichincludesallclassesofdepreciableelectricplantinserviceexceptdepreciationexpensechargeabletoclearingaccounts.Depreciationexpensesapplicabletotransportationequipmentandshopequipmentarechargedtoclearingaccountsinordertoobtainaproperdistributionofexpensesbetweenconstructionandoperation.
TheincreaseinaccumulateddepreciationisgreaterthanthedepreciationexpensereportedontheStatementofRevenues,ExpensesandChangesinFundNetPosition.ThisisaresultoftheFERCstandardthatelectricutilitiesmayreporttransportationequipmentandshopequipmentdepreciationtoclearing
StructuresandImprovements 40-50YearsGenerationPlant 17-30YearsElectricPlant-Transmission 25-36YearsElectricPlant-Distribution 23-50YearsElectricPlant/Equipment-Broadband 8-25YearsTransportationEquipment 4-8YearsGeneralPlant&Equipment 8-17Years
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accountsratherthandepreciationexpense.ThedepreciationexpensefortransportationequipmentandshopequipmentisincludedinMaintenanceunderOperatingExpensesontheStatementofRevenues,ExpensesandChangesinFundNetPosition.
Preliminarysurveyandinvestigationchargesincurredforproposedprojectsaredeferredpendingfinaldecisiontodeveloptheproject.Costsrelatingtoprojectsultimatelyconstructedarereclassifiedtoutilityplantandchargesrelatingtoabandonedprojectsareexpensed.
C) Deposits and Investments – TheDistrict’scashandcashequivalentsareconsideredtobecashonhand,demanddeposits,andshort-terminvestmentswithoriginalmaturitiesofthreemonthsorlessfromthedateofacquisition.
CashandinvestmentsarerecordedinaccountsasrequiredbytheDistrict’sbondindentures.Restrictedassetsrepresentaccountsthatarerestrictedbybondcovenantsorthird-partycontractualagreements.Accountsthatareallocatedbyresolutionofthecommissionersareconsideredtobeboarddesignatedaccounts.Boarddesignatedaccountsareacomponentofunrestrictedassetsastheirusemayberedirectedatanytimebyapprovalofthecommissioners.
TheDistrictconsidersalldepositswiththeWashingtonStateTreasurer’sLocalGovernmentInvestmentPool(LGIP)cashandcashequivalents.Sincethepoolissufficientlyliquidtopermitwithdrawofcashatanytimewithoutpriornoticeorpenalty,equityinthepoolisalsodeemedtobeacashequivalent.
Asrequiredbystatelaw,alldepositsandinvestmentsoftheDistrict’sfundsareobligationsoftheU.S.Governmentanditsagencies,certificatesofdeposit,generalobligationsofWashingtonStatemunicipalities,LGIP,passbookaccountsanddepositswithWashingtonStatebanksandsavingsandloanassociations,orotherinvestmentsallowedbyChapter39.59RCW.
TheDistrict’sdepositsandcertificatesofdepositareentirelycoveredbyfederaldepositoryinsurance(FDICandFSLIC)orbycollateralheldinamultiplefinancialinstitutioncollateralpooladministeredbytheWashingtonPublicDepositProtectionCommission(PDPC).
D) Restricted Assets – Inaccordancewithbondresolutions,relatedagreementsandlaws,separaterestrictedaccountshavebeenestablished.Theseassetsarerestrictedforspecificusesincludingdebtservice,bondreserveandcapitaladditions,andareclassifiedascurrentornoncurrentassets,asappropriate.
E) Receivables – Thepercentage-of-salesallowancemethodisusedtoestimateuncollectibleaccounts.AccountsthataredeterminedtobeuncollectiblebytheDistrictareturnedovertoacollectionagencybutremaininaccountsreceivableuntilitisdeterminedthereisnopossibilityofcollectionorthestatuteoflimitationsoncollectionshastranspired.Theyarethenchargedagainsttheprovisionforuncollectibles.
F) Inventories - Inventoriesarevaluedatweightedaveragewhichapproximatesthemarketvalue.
G) Personal Time Off (PTO) – TheDistrictaccruesaccumulatedunpaidpersonaltimeoff(PTO)benefitsasamountsareearned.PTOincludesvacation,sickleaveandotherleave.PTO,whichmaybeaccumulatedupto120days,ispayableuponresignation,retirement,ordeath.Changesincompensatedabsencesduringthecurrentfiscalperiodareasfollows:
TheDistrictestimates$1,479,593willbeusedinthenextfiscalyear.ThecurrentandnoncurrentliabilityforunpaidpersonaltimeoffappearsontheStatementofNetPosition.
H) Debt Premium and Discount – Originalissuebondpremiumsanddiscountsrelatingtorevenuebondsareamortizedoverthetermsoftherespectivebondissuesusingthebondsoutstandingmethod.Bondpremiumsanddiscountsoffsetthedebtoutstandingbalance.InaccordancewithGASBStatementNo.23,Accounting and Financial Reporting for Refundings of Debt Reported by Proprietary Activities,lossesondebtrefundingshavebeendeferredandamortizedovertheshorteroftheremaininglifeoftheoldornewdebt.
I) Reclassifications – Certain2012accountbalancesmayhavebeenreclassifiedtoconformtothe2013presentation.Suchreclassificationswouldhavenoeffectonpreviouslyreportedresultsofoperationsandcashflows.
Outstandingpersonaltimeoff,December31,2012 $2,179,602Personaltimeoffaccruedduring2013 1,594,519Personaltimeoffusedduring2013 (1,600,785)Outstandingpersonaltimeoff,December31,2013 $2,173,336
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J) Financial Statements – Separatefundfinancialstatementsareprovidedfortheproprietaryfundandthefiduciaryfunds.
Proprietaryfundsdistinguishoperatingrevenuesandexpensesfromnonoperatingitems.Operatingrevenuesandexpensesgenerallyresultfromprovidingservicesandproducinganddeliveringgoodsinconnectionwithaproprietaryfund’sprincipalongoingoperations.TheprincipaloperatingrevenuesoftheDistrict’senterprisefund,theelectricenterprisefund,arechargestocustomersforsalesandservices.TheDistrictalsorecognizesasoperatingrevenuetheportionofconnectionfeesintendedtorecoverthecostofconnectingnewcustomerstothesystem.Operatingexpensesforenterprisefundsincludethecostofsalesandservices,administrativeexpensesanddepreciationofcapitalassets.Allrevenuesandexpensesnotmeetingthisdefinitionarereportedasnonoperatingrevenuesandexpenses.
TheDistricthastwofiduciarytrusts.ThefirstistheVoluntaryEmployeesBeneficiaryAssociation(VEBA)TrustasdescribedinNote14andthesecondistheOPEBTrustasdescribedinNote15.
NOTE 2 - Utility Plant and DepreciationUtilityplantactivityfortheyearendedDecember31,2013,wasasfollows:
Interestincurredduringtheconstructionphaseofcapitalassetsisincludedaspartofthecapitalizedvalueofassetsconstructedwhentheconstructionperiodisaminimumofsixmonthsandtheestimatedcostoftheprojectisgreaterthan$100,000.
NOTE 3 - Construction in ProgressConstructioninprogressrepresentsbalancesofworkordersforutilityplantinprocessofconstruction.The2013year-endworkinprogressequaled$4,430,626.
Description ExpendedUndergroundCableReplacements $1,108,658SystemConstruction 2,039,905BroadbandSystem 973,395OtherMiscellaneousProjects 308,668Work in Progress Balance $4,430,626
Utility Plant Assets Ending Balance
12/31/2012 Restated
Increase Decrease Ending Balance 12/31/2013
Utility plant not being depreciated: Land $2,167,980 $24,890 $- $2,192,870Constructioninprogress 44,335,483 6,404,676 (46,309,533) 4,430,626Intangibleassets 11,781 - - 11,781Total utility plant not being depreciated $46,515,244 $6,429,566 $(46,309,533) $6,635,277
Utility plant being depreciated:Generatingplant $6,231,421 $- $- $6,231,421Transmissionplant 5,043,194 18,221 (6,506) 5,054,909Distributionplant 147,613,205 5,403,660 (1,072,122) 151,944,743Generalplant 14,276,443 39,964,713 (2,080,780) 52,160,376Total utility plant being depreciated $173,164,263 $45,386,594 $(3,159,408) $215,391,449
Less accumulated depreciation for:Generatingplant $(2,350,274) $(207,953) $- $(2,558,227)Transmissionplant (2,418,993) (167,200) 726 (2,585,467)Distributionplant (65,604,427) (5,158,501) 1,177,031 (69,585,897)Generalplant (9,517,691) (3,237,899) 1,913,214 (10,842,376)Total accumulated depreciation (79,891,385) (8,771,553) 3,090,971 (85,571,967)Net utility plant $139,788,122 $43,044,607 $(46,377,970) $136,454,759
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NOTE 4 – Cash, Deposits and InvestmentsAsofDecember31,2013,theDistricthadthefollowingcash,depositsandinvestments:
Interest rate risk –Inaccordancewithitsinvestmentpolicy,theDistrictmanagesitsexposuretodeclinesinfairvaluesbymatchinginvestmentmaturitiestomeetanticipatedcashflowrequirements.
Credit risk –TheDistrict’sinvestmentpolicyconformswithstatelawwhichrestrictsinvestmentsofpublicfundsto:debtsecuritiesandobligationsoftheU.S.Treasury;U.S.governmentagenciesandcertainotherU.S.governmentsponsoredcorporations;certificatesofdepositandotherevidencesofdepositatfinancialinstitutionsqualifiedbytheWashingtonPublicDepositProtectionCommission(PDPC);bankers’acceptances;investment-gradegeneralobligationdebtofstateandlocalgovernmentsandpublicauthorities;andWashingtonStateTreasurer’sLocalGovernmentInvestmentPool(LGIP).TheLGIPisanunrated2a7-likepoolandinvestmentsintheLGIParereportedbasedonthepool’sshareprice.Thereportedvalueofthepoolisthesameasthefairvalueofthepoolshares.TheLGIPisgovernedbytheStateFinanceCommitteeandisadministeredbytheStateTreasurer.
Custodial credit risk – Deposits.Foradeposit,thisistheriskthatintheeventofabankfailure,theDistrict’sdepositsmaynotbereturnedtoit.TheDistrict’sdepositsandcertificatesofdepositareentirelycoveredbytheFederalDepositoryInsuranceCommission(FDIC)orbycollateralheldinamultiplefinancialinstitutioncollateralpooladministeredbythePDPC.Understatelaw,publicdepositoriesunderthePDPCarerequiredtopledgesecuritiesascollateralat100percentofalldepositeduninsuredpublicfunds.Asaresult,depositscoveredbycollateralheldinthemultiplefinancialinstitutioncollateralpoolareconsideredtobeinsured.StatelawrequiresthatdepositsmayonlybemadewithinstitutionsthatareapprovedbythePDPC.
NOTE 5 – Lease CommitmentsOperatingLeases– TheDistrictiscommittedunderoperatingleasesforpersonalcomputersandotherofficemachines.Theseleasesareconsideredoperatingleasesforaccountingpurposes.Totalcostsforoperatingleaseswere$107,532fortheyearendedDecember31,2013.Thefutureminimumleasepaymentsfortheseleasesareasfollows:
Fiscal Year Ending December 31:
2014 $86,3302015 62,2312016 28,5232017 12,7952018 6,014Total $195,893
Investment Type Maturities Fair Value
BankDeposits $7,977,746ConstructionFunds 7,684,468BondFunds-PrincipalandInterest 997,829StateTreasurer'sLocalGovernmentInvestmentPool 55daysaverage 8,868,306FederalNationalMortgageAssociation 7/5/2014 2,027,840FederalHomeLoanMortgageCorporation 1/30/2015 1,000,372FederalNationalMortgageAssociation 5/15/2017 1,971,564FederalHomeLoanBank 10/30/2017 3,551,925FederalHomeLoanBank 2/5/2020 1,872,800Total Cash, Deposits and Investments $35,952,850
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NOTE 6 - Long-Term DebtTheDistricthasfourrevenuebondsoutstandingasofDecember31,2013.Theoriginalamountsofthesebondstotaled$79,520,000.Thefundswereusedfortheacquisitionandconstructionofmajorcapitalfacilities.Currentlyrevenuebondsoutstandingareasfollows:
Thefollowingisalistofthelong-termdebtactivityandyear-endsummaryasofDecember31,2013.
Issue Beginning Balance Additions Reductions Ending
Balance Amounts
Due Within One Year
2008ElectricRevenueBonds,dueinannualinstallmentsstartingin2026of$3,145,000-$3,490,000throughDecember1,2028
$9,950,000 $- $- $9,950,000 $-
2010AElectricRevenueRefundingBonds,dueinannualinstallmentsstartingin2010$35,000-$795,000throughDecember1,2021
6,120,000 - 580,000 5,540,000 605,000
2010BElectricRevenueBonds,dueinannualinstallmentsstartingin2022of$2,060,000-$24,560,000throughDecember1,2040
52,550,000 - - 52,550,000 -
2012ElectricRevenueBonds,dueinannualinstallmentsstartingin2013of$965,000-$1,235,000throughDecember1,2021
9,765,000 - 965,000 8,800,000 1,005,000
Subtotal $78,385,000 $- $1,545,000 $76,840,000 $1,610,000
Plus:UnamortizedDiscounts&Premiums 1,123,697 - 214,495 909,202 -
Less:UnamortizedLossonDefeasedDebt (269,433) - (35,472) (233,961) -
Total Bonds Payable $79,239,264 $- $1,724,023 $77,515,241 $1,610,000
CapitalLeases 12,025 - 12,025 - -
CompensatedAbsences 2,179,602 1,594,519 1,600,785 2,173,336 1,479,593
Total Long-Term Debt $81,430,891 $1,594,519 $3,336,833 $79,688,577 $3,089,593
Purpose Interest Rate Original Amount
2008-ElectricRevenueBonds 5.30% - 5.375% $9,950,000
2010A-ElectricRevenueBonds 2.00% - 4.00% 7,255,000
2010B-ElectricRevenueBonds(TaxableBABs) 2.334% - 6.347% 52,550,000
2012-ElectricRevenueBonds 2.00% - 4.00% 9,765,000
Total $79,520,000
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Futuredebtservicerequirementsonthebondsareasfollows:
Therearelimitationsandrequirementscontainedinthevariousbondindentures.TheDistrictisincompliancewithallsignificantlimitationsandrestrictionsincludingcompliancewithfederalarbitragerequirements.
Inprioryears,theDistrictdefeasedelectricrevenuebondsbyplacingproceedsofthenewbondswithanescrowagenttoprovideforallfuturedebtservicepaymentsontheoldbonds.Accordingly,theescrowaccountassetsandtheliabilityforthedefeasedbondsarenotincludedintheDistrict’sfinancialstatements.AtDecember31,2013,$15,325,000ofdefeasedbondsremainoutstanding.
TheDistrictestablishes,maintainsandcollectsratesandchargesthatshallbeadequatetoprovideineachfiscalyearnetrevenuesinanamountequaltoatleast1.25timestheAnnualDebtServiceontheParityBondsoutstandinginaccordancewiththebondcovenants.
PursuanttotheresolutionsauthorizingtheissuanceofOutstandingBonds,theDistricthassatisfiedtheReserveAccountRequirementsbypurchasingsuretybondsfromFinancialSecurityAssurance,Inc.(“FSA”)alongwithcashthataresufficienttosatisfytheReserveAccountRequirementfortheOutstandingBonds.The$807,172suretybondwithFSAexpiresonDecember1,2021.TheDistrictreplacedasuretybondwithFinancialGuarantyInsuranceCompany(FGIC)withproceedsfromthe2008Bondsandthe2010BBondsandDistrictreserves.AsofDecember31,2013,theDistricthadafairvaluebalanceof$5,424,725initsBondReserveAccount.TheDistrictmaintainsbondreservefundstoguaranteetheprincipalandinterestpaymentstobondholders.
TheDistrictdidnotengageinanyshort-termdebtactivityduringtheyear.
NOTE 7 - Pension PlansAllfull-timeandqualifyingpart-timeDistrictemployeesparticipateinoneofthefollowingstatewideretirementsystemsadministeredbytheWashingtonStateDepartmentofRetirementSystems,undercost-sharingmultiple-employerdefinedretirementplans.TheDepartmentofRetirementSystems(DRS),adepartmentwithintheprimarygovernmentoftheStateofWashington,issuesapubliclyavailablecomprehensiveannualfinancialreport(CAFR)thatincludesfinancialstatementsandrequiredsupplementaryinformationforeachplan.TheDRSCAFRmaybeobtainedbywritingto:DepartmentofRetirementSystems,CommunicationsUnit,P.O.Box48380,Olympia,WA98504-8380;oritmaybedownloadedfromtheDRSwebsiteatwww.drs.wa.gov.ThefollowingdisclosuresaremadepursuanttoGASBStatement27, Accounting for Pensions by State and Local Government EmployersandGASBStatement50,Pension Disclosures, an Amendment of GASB Statements 25 and 27.
Public Employees’ Retirement System (PERS) Plans 1, 2 and 3Plan Description –TheWashingtonStateLegislatureestablishedPERSin1947.Membershipinthesystemincludes:electedofficials;stateemployees;employeesoftheSupreme,Appeals,andSuperiorcourts;employeesoflegislativecommittees;employeesofdistrictandmunicipalcourts;andemployeesoflocalgovernments.Membershipalsoincludeshighereducationemployeesnotparticipatinginhighereducationretirementprograms.Approximately49percentofPERSsalariesareaccountedforbystateemployment.PERSretirementbenefitprovisionsareestablishedinChapters41.34and41.40RCWandmaybeamendedonlybytheStateLegislature.
PERSisacost-sharingmultiple-employerretirementsystemcomprisedofthreeseparateplansformembershippurposes:Plans1and2aredefinedbenefitplansandPlan3isadefinedbenefitplanwithadefinedcontributioncomponent.
Year Principal Interest Total2014 $1,610,000 $4,270,300 $5,880,3002015 1,645,000 4,232,050 5,877,0502016 1,690,000 4,186,750 5,876,7502017 1,740,000 4,140,050 5,880,0502018 1,800,000 4,081,100 5,881,1002019-2023 10,050,000 19,239,222 29,289,2222024-2028 14,450,000 16,357,208 30,807,2082029-2033 15,750,000 11,944,217 27,694,2172034-2038 19,245,000 6,572,058 25,817,0582039-2040 8,860,000 849,229 9,709,229Total $76,840,000 $75,872,186 $152,712,186
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PERSmemberswhojoinedthesystembySeptember30,1977arePlan1members.ThosewhojoinedonorafterOctober1,1977andbyeither,February28,2002forstateandhighereducationemployees,orAugust31,2002forlocalgovernmentemployees,arePlan2membersunlesstheyexercisedanoptiontotransfertheirmembershiptoPlan3.PERSmembersjoiningthesystemonorafterMarch1,2002forstateandhighereducationemployees,orSeptember1,2002forlocalgovernmentemployeeshavetheirrevocableoptionofchoosingmembershipineitherPERSPlan2orPlan3.Theoptionmustbeexercisedwithin90daysofemployment.Employeeswhofailtochoosewithin90daysdefaulttoPlan3.
PERSiscomprisedofandreportedasthreeseparateplansforaccountingpurposes:Plan1,Plan2/3,andPlan3.Plan1accountsforthedefinedbenefitsofPlan1members.Plan2/3accountsforthedefinedbenefitsofPlan2members,andthedefinedbenefitportionofbenefitsforPlan3members.Plan3accountsforthedefinedcontributionportionofbenefitsforPlan3members.AlthoughmemberscanonlybeamemberofeitherPlan2orPlan3,thedefinedbenefitportionsofPlan2andPlan3areaccountedforinthesamepensiontrustfund.AllassetsofthisPlan2/3maylegallybeusedtopaythedefinedbenefitsofanyofthePlan2orPlan3membersorbeneficiaries,asdefinedbythetermsoftheplan.Therefore,Plan2/3isconsideredtobeasingleplanforaccountingpurposes.
PERSPlan1andPlan2retirementbenefitsarefinancedbyacombinationofinvestmentearnings,employerandemployeecontributions.EmployeecontributionstothePERSPlan1andPlan2definedbenefitplansaccrueinterestataratespecifiedbytheDirectorofDRS.DuringDRS’FiscalYear2013,theratewasfiveandone-halfpercentcompoundedquarterly.MembersinPERSPlan1andPlan2canelecttowithdrawtotalemployeecontributionsandinterestthereon,inlieuofanyretirementbenefit,uponseparationfromPERS-coveredemployment.
PERSPlan1membersarevestedafterthecompletionoffiveyearsofeligibleservice.
PERSPlan1membersareeligibleforretirementfromactivestatusatanyagewithatleast30yearsofservice,atage55with25yearsofservice,oratage60withatleastfiveyearsofservice.Plan1membersretiringfrominactivestatuspriortotheageof65mayreceiveactuariallyreducedbenefits.
Themonthlybenefitistwopercentoftheaveragefinalcompensation(AFC)peryearofservice,butthebenefitmaynotexceed60percentoftheAFC.TheAFCisthemonthlyaverageofthe24consecutivehighest-paidservicecreditmonths.
PERSPlan1retirementbenefitsareactuariallyreducedtoreflectthechoice,ifmade,ofasurvivoroption.
Plan1membersmayelecttoreceiveanoptionalCOLAthatprovidesanautomaticannualadjustmentbasedontheConsumerPriceIndex.Theadjustmentiscappedat3percentannually.Tooffsetthecostofthisannualadjustment,thebenefitisreduced.
PERSPlan1providesdutyandnon-dutydisabilitybenefits.Dutydisabilityretirementbenefitsfordisablementpriortotheageof60consistofatemporarylifeannuity.Thebenefitamountis$350amonth,ortwo-thirdsofthemonthlyAFC,whicheverisless.Thebenefitisreducedbyanyworkers’compensationbenefitandispayableaslongasthememberremainsdisabledoruntilthememberattainstheageof60,atwhichtimethebenefitisconvertedtothemember’sserviceretirementamount.
Amemberwithfiveyearsofcoveredemploymentiseligiblefornon-dutydisabilityretirement.Priortotheageof55,thebenefitamountistwopercentoftheAFCforeachyearofservicereducedby2percentforeachyearthatthemember’sageislessthan55.Thetotalbenefitislimitedto60percentoftheAFCandisactuariallyreducedtoreflectthechoiceofasurvivoroption.Plan1membersmayelecttoreceiveanoptionalCOLAamount(basedontheConsumerPriceIndex),cappedatthreepercentannually.Tooffsetthecostofthisannualadjustment,thebenefitisreduced.
PERSPlan2membersarevestedafterthecompletionoffiveyearsofeligibleservice.Plan2membersareeligiblefornormalretirementattheageof65withfiveyearsofservice.ThemonthlybenefitistwopercentoftheAFCperyearofservice.TheAFCisthemonthlyaverageofthe60consecutivehighest-paidservicemonths.Thereisnocaponyearsofservicecredit;andacost-of-livingallowanceisgranted(basedontheConsumerPriceIndex),cappedatthreepercentannually.
PERSPlan2memberswhohaveatleast20yearsofservicecredit,andare55yearsofageorolder,areeligibleforearlyretirementwithareducedbenefit.Thebenefitisreducedbyanearlyretirementfactor(ERF)thatvariesaccordingtoage,foreachyearbeforeage65.
PERSPlan2memberswhohave30ormoreyearsofservicecreditandareatleast55yearsoldcanretireunderoneoftwoprovisions,ifhiredpriortoMay1,2013:
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• Withabenefitthatisreducedbythreepercentforeachyearbeforeage65;or
• Withabenefitthathasasmaller(orno)reduction(dependingonage)thatimposesstricterreturn-to-workrules.
PERSPlan2membershiredonorafterMay1,2013havetheoptiontoretireearlybyacceptingareductionoffivepercentforeachyearofretirementbeforeage65.Thisoptionisavailableonlytothosewhoareage55orolderandhaveatleast30yearsofservice.
PERSPlan2retirementbenefitsareactuariallyreducedtoreflectthechoice,ifmade,ofasurvivoroption.
PERSPlan3hasadualbenefitstructure.Employercontributionsfinanceadefinedbenefitcomponentandmembercontributionsfinanceadefinedcontributioncomponent.AsestablishedbyChapter41.34RCW,employeecontributionratestothedefinedcontributioncomponentrangefromfivepercentto15percentofsalaries,basedonmemberchoice.Memberswhodonotchooseacontributionratedefaulttoafivepercentrate.TherearecurrentlynorequirementsforemployercontributionstothedefinedcontributioncomponentofPERSPlan3.
PERSPlan3definedcontributionretirementbenefitsaredependentupontheresultsofinvestmentactivities.Membersmayelecttoself-directtheinvestmentoftheircontributions.Anyexpensesincurredinconjunctionwithself-directedinvestmentsarepaidbymembers.Absentamember’sself-direction,PERSPlan3contributionsareinvestedintheRetirementStrategyFundthatassumesthememberwillretireatage65.
ForDRS’FiscalYear2013,PERSPlan3employeecontributionswere$99million.Planrefundspaidoutwere$69.4million.
ThedefinedbenefitportionofPERSPlan3providesmembersamonthlybenefitthatisplanpercentoftheAFCperyearofservice.TheAFCisthemonthlyaverageofthe60consecutivehighest-paidservicemonths.Thereisnocaponyearsofservicecredit,andPlan3providesthesamecost-of-livingallowanceasPlan2.
EffectiveJune7,2006,PERSPlan3membersarevestedinthedefinedbenefitportionoftheirplanaftertenyearsofservice;orafterfiveyearsofservice,if12monthsofthatserviceareearnedafterage44;orafterfiveservicecredityearsearnedinPERSPlan2byJune1,2003.Plan3membersareimmediatelyvestedinthedefinedcontributionportionoftheirplan.
VestedPlan3membersareeligiblefornormalretirementatage65,ortheymayretireearlywiththefollowingconditionsandbenefits:
• Iftheyhaveatleasttenservicecredityearsandare55yearsold,thebenefitisreducedbyanERFthatvarieswithage,foreachyearbeforeage65.
• Iftheyhave30servicecredityearsandareatleast55yearsold,andwerehiredbeforeMay1,2013,theyhavethechoiceofabenefitthatisreducedbythreepercentforeachyearbeforeage65;orabenefitwithasmaller(orno)reductionfactor(dependingonage)thatimposesstricterreturn-to-workrules.
• Iftheyhave30servicecredityears,areatleast55yearsold,andwerehiredafterMay1,2013,theyhavetheoptiontoretireearlybyacceptingareductionoffivepercentforeachyearbeforeage65.
PERSPlan3benefitsareactuariallyreducedtoreflectthechoice,ifmade,ofasurvivoroption.
PERSPlan2andPlan3providedisabilitybenefits.Thereisnominimumamountofservicecreditrequiredforeligibility.ThePlan2monthlybenefitamountistwopercentoftheAFCperyearofservice.ForPlan3,themonthlybenefitamountisonepercentoftheAFCperyearofservice.Thesedisabilitybenefitamountsareactuariallyreducedforeachyearthatthemember’sageislessthan65,andtoreflectthechoiceofasurvivoroption.Thereisnocaponyearsofservicecredit,andacost-of-livingallowanceisgranted(basedontheConsumerPriceIndex)cappedatthreepercentannually.
PERSmembersmeetingspecificeligibilityrequirementshaveoptionsavailabletoenhancetheirretirementbenefits.Someoftheseoptionsareavailabletotheirsurvivors.
Aone-timeduty-relateddeathbenefitisprovidedtothebeneficiaryortheestateofaPERSmemberwhodiesasaresultofinjuriessustainedinthecourseofemployment,orifthedeathresultedfromanoccupationaldiseaseorinfectionthatarosenaturallyandproximatelyoutofthemember’scoveredemployment,iffoundeligiblebytheDepartmentofLaborandIndustries.
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Thereare1,176participatingemployersinPERS.MembershipinPERSconsistedofthefollowingasofthelatestactuarialvaluationdatefortheplansofJune30,2012:
Funding Policy –Eachbiennium,thestatePensionFundingCounciladoptsPERSPlan1employercontributionrates,PERSPlan2employerandemployeecontributionrates,andPERSPlan3employercontributionrates.EmployeecontributionratesforPlan1areestablishedbystatuteatsixpercentforstateagenciesandlocalgovernmentunitemployees.TheemployerandemployeecontributionratesforPlan2andtheemployercontributionrateforPlan3aredevelopedbytheOfficeoftheStateActuarytofullyfundPlan2andthedefinedbenefitportionofPlan3.UnderPERSPlan3,employercontributionsfinancethedefinedbenefitportionoftheplanandmembercontributionsfinancethedefinedcontributionportion.ThePlan3employeecontributionratesrangefromfivepercentto15percent.
ThemethodsusedtodeterminethecontributionrequirementsareestablishedunderstatestatuteinaccordancewithChapters41.40and41.45RCW.
Therequiredcontributionratesexpressedasapercentageofcurrent-yearcoveredpayroll,asofDecember31,2013,areasfollows:
BoththeDistrictanditsemployeesmadetherequiredcontributions.TheDistrict’srequiredcontributionsfortheyearsendedDecember31wereasfollows:
NOTE 8 - Power Supply/Power Sales ContractBonneville Power Administration (BPA) – TheBPAisafederalpowermarketingagency,establishedbytheBonnevillePowerActof1937.TheBPAispartoftheU.S.DepartmentofEnergy,butisself-financingandreceivesnofederaltaxrevenues.Costsarerecoveredbysellingwholesalepower,transmissionandrelatedservicesatcosttoutilities,industrialandgovernmentalcustomersinsideandoutsideoftheregion.Underfederallaw,theBPAmustmeetthepowerneedsofitspreferencecustomers;consumer-ownedutilitiesthatincludepublicutilitydistricts,people’sutilitydistricts,cooperatives,tribalutilities,municipalitiesandfederalcustomers.Aboutone-thirdofallthepowerusedinthePacificNorthwestissoldbytheBPA.
TheBPAmakesannualpaymentstotheU.S.TreasuryformoneyappropriatedtotheU.S.ArmyCorpsofEngineersandU.S.BureauofReclamation,orformoneyborrowedtoconstructdams,substationsandtransmissionfacilities.TheBPAalsofundsfishandwildlifemitigationcostsassociatedwiththefederalhydropowerdevelopmentintheColumbiaRiverBasin,equalingnearlyonethirdofitswholesalecostofpower,andprovidescapacityforintegrationofrenewablegenerationresourceswithinitsbalancingarea.
TheBPAdoesnotowngenerationresourcesordistributionfacilities.Itsfunctionistomarkettheoutputoffederalresourcesandtransmitbothfederalandnon-federalpoweroveritstransmissiongrid.TheCorpsofEngineersandtheBureauofReclamationoperateandmaintain31hydroelectricprojectswhichconstitutethebackboneofthefederalbasesystem.Inaddition,theBPApurchasesandmarkets1,170MWofEnergyNorthwest’sColumbiaGenerationStation,thePacificNorthwest’sonlynuclearpowerfacility,atthecostofproductionunderaformalnetbillingagreement.TheBPAownsandoperatesapproximately75percentoftheregion’stransmissioncapacity.theBPAhasover4,500megawattsofwindintegratedintoitstransmissionsystem,andexpectsanother2,500megawattsby2015.
*Theemployerratesincludetheemployeradministrativeexpensefeecurrentlysetat0.18percent.**Plan3definedbenefitportiononly.***Variablefrom5.0percentminimumto15.0percentmaximumbasedonrateselectedbythePERS3member.
PERS Plan 1 PERS Plan 2 PERS Plan 3Employer* 9.21% 9.21% 9.21%**Employee 6.00% 4.92% ***
PERS Plan 1 PERS Plan 2 PERS Plan 32013 $7,598 $625,303 $138,2982012 $69,792 $530,114 $119,3572011 $30,890 $423,934 $97,402
RetireesandBeneficiariesReceivingBenefits 82,242TerminatedPlanMembersEntitledto,butnotyetReceivingBenefits 30,515ActivePlanMembersVested 106,317ActivePlanMembersNonvested 44,273Total 263,347
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Lookback Payment – InSeptember2008,afinalrecordofdecisionwasissuedbytheBPAinresponsetothe2007USCourtofAppealsfortheNinthCircuitrulingagainsttheBPA(WP-07supplementalratecase).Therulingsetthepowerratesforfiscalyear(FY)2009andestablishedthepowerratecomponentsofanewResidentialExchangeProgram(REP)forfiscalyear2009andbeyond.Theratecaseaccomplishedthefollowing:
• RevisedpowerratesforFY2009.• DeterminedtheoverpaymentstoInvestorOwnedUtilities(IOUs)andassociatedoverchargestopreference
customersduetoimproperlysetratesforFY2002-2007(the“LookbackAmount”).• DeterminedResidentialExchangeProgrambenefitsforIOUsforFY2009.• DeterminedanamountofREPbenefitsthattheIOUswentwithoutforFY2009thatwasreturnedto
preferencecustomersinFY2009.• DeterminedoverchargestopreferencecustomersforFY2007-2008andclosedouttheinterimagreements
signed in March 2008.
ItwasdeterminedtheBPAoverchargeditscustomers$767millionforFY2002-2007(LookbackPayment).TheoverchargesfortheLookbackPaymentwerereturnedintheformofinstallmentsontheBPAcustomers’powerbills.TheDistrict’sportionoftheLookbackPaymentequaled$4.5million,ofwhich$550,000wascreditedin2008,$1.9millionin2009,$1.2millionin2010,$870,000in2011and$983,000in2012.
TheactualoverchargesfortheFY2007andFY2008totaled$256.8million.ItisthedifferencebetweenwhattheIOUsreceivedunderthesettlementagreementandwhattheywouldhavereceivedunderanREP.TheDistrictreceiveda$2,938,934refundinOctober2008andanotherrefundof$178,581inSeptember2009.TheDistrictwillcontinuetoreceivepaymentsthrough2019,withthepaymentfor2013beingthesameas2012at$983,000,andapproximately$850,000eachyearfortheyears2014through2019.
Tiered Rates – TheBPAsaysthecapacityoftheFederalColumbiaRiverPowerSystem(FCRPS)hasbeenreached.Therefore,in2008afternearlythreeyearsofregionaldialoguediscussions,theBPAofferednewpowersalescontractsforthetermof2011to2027,whichallocatethecapacityoftheexistingFCRPSbasedontheworst-casewateryearandmaintaintherelativelylowcostoftheresource.ItrequiresanyenergypurchasedinexcessofthatcapacitytobeattheBPA’scostofacquiringtheadditionalresources.TheDistrictsignedthecontract,withreservations,onNovember25,2008.ThenewcontractwentintoeffectOctober1,2011.
InNovember2009,theDistrictinformedtheBPAitwouldpurchaseTier2Short-TermservicefromtheBPAforloadsabovetheTier1allocationforthepurchaseperiodof2012-2014.SincetheDistricthasexperiencedlowloadgrowth,andanticipatessuchforthenextseveralyears,inSeptember2011theDistrictrequestedTier2Short-Termserviceforthesecondpurchaseperiodof2015-2019.CurrentlytheDistrictisinload-resourcebalance,anddoesnotanticipateactuallypurchasinganytheBPATier2Short-TermserviceuntilOctoberof2015.
Conservation Programs –TheDistricthasanagreementwiththeBPAtoparticipateintheEnergyEfficiencyIncentive(EEI)conservationprogram,effectiveOctober1,2011.TheEEIreplacestheConservationRateCredit(CRC),signedin2006,andtheEnergyConservationAgreement(ECA),signedin2009,andsupportstheBPA’sacquisitionofconservation.
TheBPAdeterminedEEIfundingforFY2012and2013byidentifyingtheaverageofeachutility’sallocationascalculatedfromrateperiod(FY2010-2011)expenditureanalysisandallocation.CustomerincentivespaidbytheDistrictarereimbursedbytheBPAuponsubmissionofqualifyinginvoicesanddocumentationonaproject-by-projectbasis.Theseprojectsincluderesidential,commercial,andindustrialconservationmeasures.ThedeterminedamountsbytheBPAforMasonCountyPUDNo.3’sEEIbudgetare$651,424forFY2013and$637,176forFY2014.
TheBPAhasalsodeterminedEEIfundingforFY2014and2015byidentifyingtheaverageofeachutility’sallocationascalculatedfromrateperiod(FY2012-2013)expenditureanalysisandallocation.CustomerincentivespaidbytheDistrictarereimbursedbytheBPAuponsubmissionofqualifyinginvoicesanddocumentationonaproject-by-projectbasis.Theseprojectsincluderesidential,commercial,andindustrialconservationmeasures.ThedeterminedamountbytheBPAforMasonCountyPUDNo.3’sEEIbudgetare$1,503,011forFY2014-2015.
Publicutilitycustomers’fundingamountsforEEIweredecreasedinresponseto,andasaresultof,theBPA’soverruninitscapitalfundingbudgetedforenergyefficiencyincentivesunderEnergyConservationAgreements.
TheDistrictachievedover8,100megawatthours(8,164,722kWh/year)ofenergyconservationduring2013,spending$1,466,175inincentivestodoso.Thetargetcostofavoidedcostconservationintheregionis$35permegawatt,asestablishedbytheNorthwestPowerandConservationCouncil(NWPCC).In2013,theDistrictacquiredconservationatarateof$18permegawattwitha30-yearaverageof$23permegawatt.ThisiswellbelowtheCouncil’sestimates,andshowsadedicationoffiscallyresponsibleenergyconservation.
TheaverageDistrictresidentialhome(stickbuiltandmanufactured)uses15,833kWh/year.In2013alone,theDistrictachievedenoughenergysavingstopower516MasonCountyhomesforayear.Energyconservation
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achievementsfor2013havequadrupledtheprevious28years’averageannualachievement,aftermorethandoublingitin2012.
QualifyingmeasuresfortheBPA’sEnergyEfficiencyProgramaredeterminedbytheRegionalTechnicalForum(RTF)andreportedontheBPA’sInterimReportingSolution2.0(IS2.0)website.TheRTFisanadvisorycommitteeoftheNorthwestPowerPlanningCouncil,establishedin1999todevelopstandardstoverifyandevaluateconservationsavings.MembersareappointedbytheCouncilandincludeindividualsexperiencedinconservationprogramplanning,implementationandevaluation.TheDistricthashademployeerepresentationattheRTFsinceitsinception.
Energy Independence Act (Initiative 937) – ApprovedbyWashingtonStatevotersin2006,theEnergyIndependenceAct(theAct),alsoknownasInitiative937(I-937)requireselectricutilitieswithmorethan25,000customerstoinvestinprescribedrenewableenergysourcesandenergyconservationprograms.I-937requirementsarecodifiedinstatelawundertheRevisedCodeofWashington(RCW)19.285andWashingtonAdministrativeCode(WAC)194-37.
TheActhastworequirements.Thefirstisthateachqualifyingutilitypursueallavailableconservationthatiscost-effective,reliable,andfeasiblewithinitsserviceterritory.Thesecondrequirementdictateseachqualifyingutilitytoacquiresetpercentagesofitsloadfromqualifyingrenewableresourcesoracquireequivalentrenewableenergycredits(REC)byspecifictimelines(threepercentby2012,ninepercentby2016and15percentby2020).ARECrepresentsthelegalrightstotheenvironmentalattributesassociatedwiththegenerationofonemegawatthourofrenewableenergy.
TheDistricthastakenmanystepstocomplywiththeAct.Theseincludecontinuedemphasisonresidential,commercialandindustrialconservationprograms;participationinallthreephasesoftheNineCanyonWindProject;along-termenergypurchasefromtheWhiteCreekWindProject;andalong-termRECpurchasefromaPacificNorthwestwinddeveloper.TheDistrictmetitsmandateofthreepercentrenewablesin2012andexpectstomeetthesamelevelthrough2015.Inaddition,thesecuringoftheRECcontractwillenabletheDistricttomeetitsmandateofninepercentrenewablesin2016.Thespecificstrategyforcompliancewiththefifteenpercentrequirementin2020isbeingevaluated.
Olympic View Generating Station –Duetothehighcostofmarketpowerpurchasesduringthe2001energycrisis,theBPAaskedallofitscustomerstoreducetheirloadbytenpercent.TheDistrictsignedthe“RateMitigationAgreement”inJuneof2001.Inadditiontotheenergyconservationmeasurestakentoreduceload,theDistrictalsoconstructedgenerationcapacitytohelpmeettheloadreduction.
Asaresult,theDistrictsecuredatermloanfor$6milliontofinancetheconstructionofanaturalgasgenerationfacilityutilizingtwoWärtsila2.8megawattreciprocatingengineswithABBgenerators.Thisloanwasretiredin2010.
TheDistricthasparticipatedintwopilotprojects,undercontractwiththeBPA,tohelpdelayplannedtransmissionlineconstructionontheOlympicPeninsulabyoperatingtheplantduringtimesofanticipatedpeakload.TheDistrictplanstousethefacilitytooffsethighercostresourcesandcapacityneedsduringpeakhoursinthefuture.Inaddition,thefacilityisbeingevaluatedasbothacontractedcommercialback-uppowerresource,aswellasforadisasterresponseasset.
Energy Northwest (ENW) – ENW,previouslyWashingtonPublicPowerSupplySystemorWPPSS,isamunicipalcorporationandjointoperatingagencyofWashingtonState,organizedin1957.Itisempoweredtofinance,acquire,constructandoperatefacilitiesforthegenerationandtransmissionofelectricpower.WhileMasonCountyPublicUtilityDistrictNo.3wasafoundingmemberofWPPSS,itwithdrewitsmembershiponSeptember11,1984.InJuly2001theDistrictonceagainbecameamemberofEnergyNorthwest.Thereare27memberutilitiesandallmembersownandoperateelectricsystemswithinWashingtonState.EnergyNorthwesthasnotaxingauthority.FinancialstatementsforEnergyNorthwestmaybeobtainedbywritingto:EnergyNorthwest,P.O.Box968,Richland,WA99352-0968.Awebsiteisavailableatwww.energy-northwest.com.
Nuclear Projects 1, 2 and 3 – TheDistrictcontinuestofulfillitsobligationsconsistentwiththetermsandconditionsoftheNetBillingAgreementswithEnergyNorthwestandtheBonnevillePowerAdministration(BPA).
TheDistrictpurchased1.262percentofWPPSSNuclearProject(WNP)No.1,1.446percentofWNPNo.2and1.265percentofthecapacityoftheEnergyNorthwest70percentownershipshareofWNPNo.3.TheDistrictinturnsoldthiscapacitytotheBPA.UndertheNetBillingAgreements,theBPAisunconditionallyobligatedtopaytheDistrictandtheDistrictisunconditionallyobligatedtopayEnergyNorthwesttheproratashareofthetotalannualcostsofeachproject,includingdebtserviceonrevenuebondsissuedtofinancetheprojects,whetherornottheprojectsarecompleted,operableoroperatingandnotwithstandingthesuspension,reductionorcurtailmentoftheproject’soutput.
WNPNo.2,nowreferredtoastheColumbiaGeneratingStation(CGS),commencedcommercialoperationinDecember1984.InMay1994theBPAandWPPSSterminatedWNPNo.1andWNPNo.3,subjecttorepaymentof
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thedebtserviceontheoutstandingrevenuebonds.
TheDistrict’sobligationsundertheNetBillingAgreementsarescheduledtobefulfilledonCGSin2024,onWNPNo.1in2017andonWNPNo.3in2018.
Columbia Generating Station (CGS) – TheCGSisareliableenergyproducer.Itproduceselectricity24hoursaday,sevendaysaweek,unlessitissafelyshutdownbyplantoperators,asitisduringarefuelingoutage.Inaddition,operatorsareabletoadjustpowerlevelstomeetBonnevillePowerAdministration’sneedsbasedonriverconditions;referredtoas“loadfollowing.”Refuelingandmaintenanceoutagesoccureverytwoyearsduringthespring,whentheColumbiaRiverBasinhasamplerunofftogenerateelectricitythroughhydroelectricturbines.
OnJanuary19,2010,EnergyNorthwestannouncedthatithadappliedtotheNuclearRegulatoryCommission(NRC)fora20-yearrenewaloftheoperatinglicenseforitsColumbiaGeneratingStationnuclearenergyfacility.Thelicenserenewalprocesstookapproximately2½yearsandinvolvedcomprehensivereviewsandpublichearingsbytheNRC.InMay2012theNRCapprovedtheCGSlicenseforanadditional20years,extendingtheoperationthrough2043.
Packwood Hydroelectric Project – ThePackwoodHydroelectricProjectislocatednearthetownofPackwoodineasternLewisCounty,Washington.Theprojectisa27.5megawattpeakingresource.CommercialoperationbeganinJune1964.
TheDistricthasatenpercentshareintheproject(participantownersarenotequallyinvestedintheproject).Theparticipantownersareobligatedtopayannualcostsoftheproject.InMarch2009,debtserviceonthePackwoodHydroelectricProjectwasretired.Thiswasearlierthantheoriginallyscheduleddateof2012.
Underpowersalesagreements,someoftheEnergyNorthwestmemberpublicutilitydistrictspurchasedtheprojectoutputofPackwood.InAugustof2008theparticipantsagreedtosellthetotalgenerationoutputtoSnohomishCountyPublicUtilityDistrict,anotherprojectparticipant.Thepowersalescontractwasatwo-yeartermwiththeoptiontorenewwithfullagreementbyallparties.In2010,Snohomishoptedtorenewthepowersalescontractforanotherone-yearterm.However,theDistrictbegantobringitstenpercentsharetoloadstartinginOctober2011withan18-yearagreement,asaTier1resourceundertheBPARegionalDialogueContract.
TheFederalEnergyRegulatoryCommission(FERC)licenseforPackwoodexpiredin2010.Theprojectwasgrantedacontinuancetooperateundertheexistinglicenseonayear-to-yearbasisuntilthenewlicenseisissued.EnergyNorthwestbegantherelicensingprocessin2005.Applicationforanew50-yearoperatinglicensewassubmittedtotheFERCinFebruaryof2008.ThefinalEnvironmentalAssessmentandWaterQualityCertificationwerecompletedinJulyof2009.Participantselectedtoreceivenopaymentsfromthesaleoftheproject’senergyoutputinordertoprovidefundsfortherelicensingeffortswhicharenowpaidinfull.Projectmanagerssubmittedafinalrelicensingapplicationin2010,andareawaitingfinalapproval.
Nine Canyon Wind Project – Inearly2001EnergyNorthwestapproachedpublicutilitiesaboutdevelopingawindgenerationproject.InSeptemberof2001,theDistrictsignedanagreementwithEnergyNorthwesttopurchaseaonemegawattshare(2.08percent)oftheNineCanyonWindProject,Phase1.
NineCanyonPhaseIconsistsof37Bonuswindturbineswithapeakgeneratingcapacityof48megawatts.ThisphaseoftheprojectbegancommercialoperationinOctoberof2002.AswiththePackwoodHydroelectricProject,participantsofNineCanyonareobligatedtopaytheannualcostsoftheproject,includingdebtservice,whetherornottheprojectisoperable,untiltheoutstandingbondsarepaidorprovisionismadefortheirretirementinaccordancewiththebondresolution.Bondsintheamountof$71millionweresoldtofinanceconstructionofPhaseIoftheproject.InDecemberof2004,EnergyNorthwestrefinancedthePhaseIbonds,resultinginasavingsof$5.3million.
OnApril22,2003,theDistrictagreedtoenterintoa27-yearagreementforPhaseIIoftheNineCanyonWindProjectwithEnergyNorthwestandfourotherparticipants.TwelvemoreBonuswindturbineswereerectedinthesameareaasPhaseI.Theyhaveapeakgeneratingcapacityofanadditional15.6megawatts.TheDistrict’sshareofPhaseIandPhaseIItogetheristwomegawattsor3.14percent.Bondsintheamountof$32.9millionweresoldtofinancetheconstructionofthissecondphase.CommercialoperationofthesecondphasebeganinSeptember2003.BondsforPhaseIandIIareexpectedtomaturein2023.
InOctoberof2005,EnergyNorthwestannouncedtheinvestigationintoanotherexpansionoftheNineCanyonWindProject.OnOctober3,2006,theDistrictsigneda23-yearpowerpurchaseagreementforonemegawattofoutputfromthePhaseIIIexpansion,keepingitsoutputshareat3.14percentoftheoverallproject.In2006,bondsintheamountof$68millionweresoldtofinancetheconstructionandarescheduledtoconcludein2030.PhaseIIIconsistsof14-2.3megawattSiemenswindturbinestotaling32.2megawatts.ConstructionbeganinJune2007,andcommercialoperationstartedinJune2008.
TheNineCanyonWindProjectisoneofthelargestpubliclyownedwindprojectsinthenation.With63windturbines(14ratedat2.3megawattsand49moreat1.3megawatts),NineCanyon’stotalinstalledcapacityis95.9
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megawatts.IntotaltheDistrictbuysthreemegawattsofrenewableenergy,orgreenpower,producedbytheNineCanyonWindProject(PhasesI,IIandIII),whichisusedtoserveDistrictload,aswellastomeettheDistrict’srenewablesmandatesundertheWashingtonState’sEnergyIndependenceAct.
White Creek Wind Project –In2010,theDistrictenteredintoan18-yearpurchaseagreementwithLakeviewLightandPowerWindEnergy,Inc.fortheelectricaloutputandallassociatedenvironmentalattributesorRECsfrom3.22megawattsofcapacityintheWhiteCreekWindProject.DuetominimalDistrictloadgrowth,theenergyisbeingresoldontheopenmarket.TheRECsarebeingretainedfortheDistrict’scompliancewiththethreepercentrenewablestargetundertheEnergyIndependenceAct.However,inSeptember2011theDistrictnotifiedtheBPAthattheenergywillbeusedtomeetDistrictloadgrowthbeginningOctober1,2014.
Long-Term REC Purchase - InSeptember2011,theDistrictenteredintoacontractwithExergyofIdaho,LLCtopurchase50,000RECsperyear.ThecontracttermbeginsonJanuary1,2016andrunsforaperiodof17years.ThispurchasewillbringtheDistrictintocompliancewiththeEnergyIndependenceActattheninepercentlevel.ProjectionssuggestthatthispurchasecouldsavetheDistrictinexcessof$50millionoverthecontractterm,asopposedtotheoptionofpurchasingabundledenergyandRECproductoverthesame17-yearterm.Inaddition,thisoptionallowstheDistricttoserveloadgrowthasitoccurs,withalessexpensive,morereliablebase-loadresource.
NOTE 9 - Public Entity Risk PoolsLIABILITY RISK POOL
A) Liability Pool – Primary Self-Insured and Excess Coverages
ThePublicUtilityRiskManagementServices(hereinafter,“PURMS”)providesliabilityinsurancecoveragesforitsmembersparticipatingintheliabilityriskpool(“liabilitypool”),andtoalimitedextentforthebenefitoftheiremployees,underanagreemententitled“PURMSJointSelf-InsuranceAgreement”(amendedandrestatedasofNovember10,2011(“SIA”)).UndertheSIA,from1977through1995,theliabilitypoolhadaself-insuredretention(or“liabilitycoveragelimit”)of$500,000peroccurrence.EffectiveJanuary1,1996,PURMSincreasedtheliabilitycoveragelimitto$1.0millionperoccurrence,whichwasthecoveragelimitineffectfor2013,andineffectasofDecember31,2013.
Atalltimes,PURMSmaintainsexcessliabilityinsuranceforitsmembersintheliabilitypool(“excessliabilityinsurance”). In2013, thefirst layerofexcess liability coverage, inwhichall liabilitypoolmembersmustparticipate,was$35millionexcessoftheliabilitypool’s$1millionliabilitycoveragelimit.Theliabilitypoolalso offers an additional layer of excess liability insurance coverage for thosemembers that choose toparticipate.For2013,thisadditionalexcessliabilityinsurancelayerwas$25millionexcessof$35million.
B) Liability Pool – Funding Level and Assessment Mechanisms
As a general matter, the liability pool is funded to the amount of its designated liability pool balance(“designated balance”), which in 2013was $3million. Of this amount, $500,000 is used to pay claimscostsastheyareincurredandongoingliabilitypooloperatingexpenses,includingprogramadministration(collectively,“operatingfunds”).The$500,000ofoperatingfundsisreplenishedbyassessmentsofliabilitypoolmembers,asdescribedbelow.Theremaining$2.5millionofthedesignatedbalance isheldbytheliabilitypooltomeetregulatoryreserverequirements,asdescribedinparagraphsC.–E.below.
Assessments to fund operation of the liability pool (“liability assessments”) are triggered automaticallyinaccordancewith the termsof the liabilitygeneralassessment formula (“automaticassessments”).Anautomaticannualassessmentisissuedatthebeginningofeachcalendaryeartoreplenishtheliabilitypooltoits$3milliondesignatedbalance.Inaddition,duringtheyear,automaticinterimassessmentsareissuedtoreplenishthe$3milliondesignatedbalancewhenevertheliabilitypool’scashandinvestments(“actualbalance”)aredepletedtotheamountoftheliabilitypool’sautomaticassessment“trigger”,whichin2013was$500,000belowthedesignatedbalance,orat$2.5million(“actualbalancetrigger”).Inthismanner,theliabilitypool:(a)paysforitsclaimscostsandoperatingexpensesonanongoingbasiswhilegenerallymaintainingcashandinvestmentsbetween$3millionand$2.5million;and(b)startseverynewfiscalyearbyreplenishingtheliabilitypool’sactualbalancetoits$3milliondesignatedbalance.
C) Liability Pool – WAC Program Funding Requirements
In2013,WAC200-100-03001(1)requiredeachjointself-insuranceprogramatthecloseofitsfiscalyeartoobtainanactuarialreportfromanindependentqualifiedactuary(“actuarialreport”)which,amongotherthings,determinedthe“expected”(i.e.55percent)and70percentconfidencelevelsfortheprogram’sunpaidclaimsasoftheendofthefiscalyear.WAC200-100-00301(2)thenrequiredtheprogramtoestablishandmaintainprimaryassets(definedbyWAC200-100-020(20)tomean“cashandinvestments”)
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atorabovethe“expected”confidencelevel(“primaryassettest”)andtoestablishandmaintaintotalassets(i.e.,cashandinvestmentsplus“secondaryassets”)atorabovethe70percentconfidencelevel(“totalassettest”)(collectively,“programfundingrequirements”).
D) Liability Pool – Funding Methodology
TheliabilitypoolfundingmethodologyensurescompliancewiththeWACprogramfundingrequirementsbyadoptingthe70percentconfidencelevelrequiredfor“totalassets”fundingunderWAC200-100-03001(3)asitsminimumlevelof“primaryassets”funding(ratherthanusingthelower55percentconfidenceleveldesignatedbyWAC200-100-03001(2)astheminimumpermittedprimaryassetfunding)(hereinafter,“70percentfundinglevel”).Asaresult,the70percentfundinglevel,whichcoincideswiththeactuariallyestablished70percentconfidencelevel,istheminimumamounttowhichliabilitypoolcashandinvestmentscouldbereducedbypaymentofclaimscostsandoperatingexpensesbeforetriggeringanautomaticassessmenttoreturntheliabilitypooltoits$3milliondesignatedbalance(regardlessoftheamountatwhichtheactualbalancetriggerisset,seediscussioninnextparagraphbelow).Furthermore,solongasthe70percentfundinglevelisestablishedatanamountbelowtheliabilitypool’s$2.5millionactualbalancetrigger(asithasbeeninthepastandwasin2013,seeparagraphE.below),thentheliabilitypool’scashandinvestmentsareunlikelytobedepletedtothe70percentfundinglevelbeforeanautomaticinterimassessmentofallliabilitypoolmembers(whichunderthePURMSinterlocalagreementmustbepaidwithin30daysofissuance)replenishestheliabilitypool’sactualbalancetotheamountofits$3milliondesignatedbalance(seeparagraphE.below).
Finally,theliabilitypool’sfundingmethodologyensuresthepoolultimatelymaintainsitscashandinvestmentsatanamountgreaterthanthe70percentconfidencelevel,evenifanactuarialreportestablishedthatnumberatanamountinexcessoftheactualbalancetrigger.Thefundingmethodologyaccomplishesthisbytriggeringanautomaticinterimassessmentwhentheactualbalancedropseithertothe$2.5millionactualbalancetriggerortothe70percentfundinglevel,whicheveramountisgreater.(SeeparagraphB.aboveandparagraphE.below)Thus,iftrendsinclaimsexperienceortheassertionofamajorclaimresultedinthe70percentconfidencelevelincreasingtoanamountthatexceededthe$2.5millionactualbalancetrigger,thenthe70percentfundinglevelwouldbecometheliabilitypool’sautomaticassessment trigger.
AcopyoftheactuarialreportfortheliabilitypoolisprovidedtotheWashingtonStateRiskManager(“SRM”)andmadeavailabletotheStateAuditor.
E) Liability Pool – 2013 Claims Payments and Operating Funding Levels
Thetotalpaidforliabilityclaimsin2013was$692,960,includingclaimsadjustmentexpenses,i.e.,costsandattorneys’feesfordefendingclaims(butexcludingliabilitypooloperatingexpenses).
For2013,theliabilitypool’sdesignatedbalancewas$3million.The70percentconfidencelevelfortheliabilitypoolestablishedbytheactuarialreportineffectfor2013was$2,008,991,anamountthatis$491,009lessthantheliabilitypool’s$2.5millionactualbalancetriggerforanautomaticassessment.InJanuary2013,theautomaticannualassessmentreplenishedtheliabilitypooltoits$3milliondesignatedbalance.Fortheremainderof2013,anautomaticinterimassessmenttoreplenishtheliabilitypool’sactualbalanceto$3millionwastriggeredwhenevertheactualbalancedroppedto$2.5million,anamountsubstantiallyinexcessofthe$2,008,991minimum70percentconfidencelevelapplicabletotheliabilitypoolin2013.
F) Liability Pool – Pending Claims at Year End – Assessments to Replenish Cash Assets to Designated Balance
AsofDecember31,2013,therewere57knownincidentsorunresolvedliabilityclaimspendingagainstoneormoremembersorformermembersoftheliabilitypool(“pendingliabilityclaims”).Thetotaldollaramountoftheriskposedbytheseclaimstosuchmembersandtotheliabilitypoolitselfisunknownandcanonlybeestimated.Thecasereservessetbytheadministratorfortheseclaims,asofDecember31,2013,was$198,668.Theliabilitypool’sactualbalancewasreplenishedtothe$3milliondesignatedbalanceviatheautomaticannualassessmentissuedinJanuary2014.
G) Liability Pool – Members’ Contractual Obligations relating to Paying Pending Liability Claims and IBNR Liability.
Becausethetotaldollaramountoftheriskposedbythependingliabilityclaimsisbasedoncasereservesestimatedbytheadministrator,andbecausetheamountof“incurred-but-not-reported”claims(“IBNRliability”)isbasedontheactuarialreport,theDistricthasnotreceivedanopinionorrepresentationastotheriskthetotalofsuchpendingliabilityclaimsandIBNRliabilityposetothesolvencyoftheliabilitypool.
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However,asacontractualmatter,sincethePURMS’interlocalagreementrequiresmembersparticipatingintheliabilitypooltopaytheirliabilityassessmentswithinthirty(30)daysofthedatetheyareissued,assumingthattheseassessmentobligationsofmembersareenforceableandthatthemembersareatthetimesolventandpaysuchassessments,theliabilitypoolwouldhavetheassetstopaythependingliabilityclaimsandIBNRliabilityonbehalfofitsparticipatingmembersforanyreasonablyforeseeablerisksuchclaimsposetotheliabilitypool.
PROPERTY RISK POOL
A) Property Risk Pool – Primary Self-Insured and Excess Coverages
PURMSprovidespropertyinsurancecoverageforitsmembersparticipatinginthepropertyriskpool(“propertypool”)inaccordancewiththetermsoftheSIA.UndertheSIA,fromitsinceptionin1997tothepresent,thepropertypoolhashadaself-insuredretention(or“propertycoveragelimit”)of$250,000perpropertyloss.
Atalltimes,PURMSalsomaintainsexcesspropertyinsuranceforitsmembersinthepropertypool(“excesspropertyinsurance”).For2013,theamountoftheexcesspropertyinsurancewas$200million,withexcesscoverageattachingatthe$250,000propertycoveragelimitforallpropertylossesexceptthosesubjecttoincreasedretentionlevelsforcertainpropertyrisks(“increasedretentions”).
Thepropertypoolalsoprovidesitsmemberswithautomaticextendedpropertycoverageforpropertylossesthatexceedthepropertypool’s$250,000propertycoveragelimitifthoselosseswerealsosubjecttoincreasedretentionsundertheexcesspropertyinsurance.Undertheexcesspropertyinsuranceretentionsineffectfor2013,themaximumexposuretothepropertypoolfromapropertylossthatexceeded$250,000,andthatwassubjecttoanincreasedretentionwas$250,000,lesstheapplicabledeductible,oramaximumof$250,000morethanthepropertycoveragelimit.
B) Property Pool – Funding Level and Assessment Mechanisms
Asageneralmatter,thepropertypoolisfundedtotheamountofitsdesignatedpropertypoolbalance(“designatedbalance”),whichin2013was$750,000.Ofthisamount,$250,000isusedtopayclaimscostsastheyareincurredandongoingpropertypooloperatingexpenses,includingprogramadministration(“operatingfunds”).The$250,000ofoperatingfundsisreplenishedbyassessmentsofpropertypoolmembers,asdescribedbelow.Theremaining$500,000ofthedesignatedbalanceisheldbythepropertypooltomeetregulatoryreserverequirements,asdescribedinC.–E.below.
Assessmentstofundoperationofthepropertypool(“propertyassessments”)aretriggeredautomaticallyinaccordancewiththetermsofthepropertygeneralassessmentformula(“automaticassessments”).Anautomaticannualassessmentisissuedatthebeginningofeachcalendaryeartoreplenishthepropertypooltoits$750,000designatedbalance.Automaticinterimassessmentsarealsoissuedtoreplenishthe$750,000designatedbalanceatanytimeduringtheyearthatthepropertypool’scashandinvestments(“actualbalance”)isdepletedtotheamountofthepropertypool’sautomaticassessmenttrigger,whichin2013was$500,000(“actualbalancetrigger”).Inthismanner,thepropertypool:(a)paysforitsclaimscostsandoperatingexpensesonanongoingbasiswhilegenerallymaintainingcashandinvestmentsbetween$750,000and$500,000;and(b)startseverynewfiscalyearbyreplenishingthepropertypool’sactualbalancetoits$750,000designatedbalance.
C) Property Pool – WAC Program Funding Requirements and Property Pool Funding Methodology
ThepropertypoolisgovernedbythesamerequirementscontainedinWAC§200-100-03001regarding“actuariallydeterminedliabilities,programfundingandliquidity”thatapplytotheliabilitypool.(SeeparagraphC.regardingtheliabilitypoolabove.)Therefore,thesamefundingmethodologyasdescribedfortheliabilitypoolinparagraphD.abovewasalsoadoptedforthepropertypool.Inparticular,thepropertypoolfundingmethodologyusestheactuariallyestablished70percentfundinglevelastheminimumamounttowhichpropertypool’s“primaryassets”(i.e.,itscashandinvestments)canbereducedbypaymentofclaimscostsandoperatingexpensesbeforetriggeringanautomaticassessmenttoreturnthepropertypooltoits$750,000designatedbalance.Also,liketheliabilitypool,thepropertypoolfundingmethodologyensuresthepropertypoolultimatelymaintainsitscashandinvestmentsatanamountgreaterthanthe70percentfundinglevelbytriggeringanautomaticinterimassessmentwhenevertheactualbalancedropseithertothe$500,000actualbalancetriggerortothe70percentfundinglevel,whicheveramountisgreater.(SeeparagraphB.aboveandparagraphD.below.)
AcopyoftheactuarialreportforthepropertypoolisprovidedtotheSRMandmadeavailabletotheStateAuditor.
D) Property Pool – 2013 Claims Payments and Operating Funding Levels
Thetotalpaidforpropertyclaimsin2013was$129,510,includingclaimsadjustmentexpenses(but
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excludingpropertypooloperatingexpenses).
For2013,thepropertypool’sdesignatedbalancewas$750,000.InJanuary2013,theautomaticannualassessmentreplenishedthepropertypooltoits$750,000designatedbalance.Thereafter,fortheremainderof2013,automaticinterimassessmentstoreplenishthepropertypool’sactualbalanceto$750,000weretriggeredwhenevertheactualbalancedroppedto$516,974.ThiswastheamountPURMSbelievedrepresentedthe70percentconfidencelevel,andthereforethe70percentfundinglevel,ineffectfor2013.Sincethe70percentfundinglevelof$516,974exceededthepropertypool’s$500,000actualbalancetrigger,during2013,automaticinterimassessmentsweretriggeredat$516,974ratherthanatthelower$500,000actualbalancetrigger.
E) Property Pool – Pending Claims at Year End – Assessments to Replenish Cash Assets to Designated Balance
AsofDecember31,2013,therewere12knownpropertyclaimspendingfromthemembersofthepropertypool(“pendingpropertyclaims”).Thetotaldollaramountoftheriskposedbytheseclaimstothepropertypoolisunknownandcanonlybeestimated.Thecasereservessetbytheadministratorfortheseclaims,asofDecember31,2013,was$285,074.Thepropertypool’sactualbalancewasreplenishedtoits$750,000designatedbalanceviatheautomaticannualassessmentissuedinJanuary2014.
F) Property Pool – Members’ Contractual Obligations Relating to Paying Pending Claims and IBNR Liability
Becausethetotaldollaramountoftheriskposedbythependingpropertyclaimsisbasedoncasereservesestimatedbytheadministrator,andbecausetheamountof“incurred-but-not-reported”claims(“IBNRliability”)isbasedontheactuarialreport,thisletterprovidesnoopinionastotheriskthetotalofsuchpendingpropertyclaimsandIBNRliabilityposetothesolvencyofthepropertypool.However,asacontractualmatter,sincetheinterlocalagreementrequiresmembersparticipatinginthepropertypooltopaytheirpropertyassessmentswithinthirty(30)daysofthedatetheyareissued,assumingthattheseassessmentobligationsofmembersareenforceableandthatthemembersareatthetimesolventandpaysuchassessments,thepropertypoolwouldhavetheassetstopaythependingpropertyclaimsandIBNRliabilityonbehalfofitsparticipatingmembersforanyreasonablyforeseeablerisksuchclaimsposetothepropertypool.
HEALTH & WELFARE RISK POOL
A) H&W Pool – Primary Self-Insured and Stop-Loss Coverage
PURMSprovideshealthandwelfareinsurancecoveragefortheemployeesofeachofitsmembersparticipatinginthehealth&welfareriskpool(“H&Wpool”)inaccordancewiththetermsofthehealth&welfarecoverageoftheSIA(“H&Wcoverage”)andthetermsofeachmember’srespectivecoveragebookletprovidedtoitsemployees.TheH&WpoolwasestablishedasoneofPURMS’riskpoolseffectiveMarch31,2000.
B) H&W Pool – Funding Level and Assessment Mechanisms
UnderthetermsoftheinterlocalagreementandtheH&Wgeneralassessmentformula(“H&Wassessmentformula”),theH&Wpoolisfundedwithcashreserves(“H&Wpoolreserves”)inanamountapproximatelyequaltothesumofthree(3)timestheamountofeachmember’shistoricalaveragemonthlyH&Wclaimsexperience(“poolclaimsexperiencereserves”)foritsrespectiveemployeesandtheirdependents.(Hereinafter,“employees”includes“dependents”.)UnlessrequiredotherwisebytheH&Wpoolfundingmethodology(seeparagraphE.below),the“poolclaimsexperiencereserves”(ofthree(3)timeseachmember’shistoricalaveragemonthlyH&Wclaimsexperience)shallbedeemedits“designatedH&Wpoolreserves.”TheH&Wpoolmembers’H&WclaimsexperiencewasreevaluatedandrecalculatedinJune2011,establishingthedesignatedH&Wpoolreservesat$2,185,474.Everymonth,aportionoftheH&WpoolreservesisusedforpayingH&WclaimsandH&Wpooloperatingexpenses,andthefundsspentarereplenishedmonthlybyassessmentsoftheH&Wpoolmembers,asdescribedbelow.TheremainingreservesareheldbytheH&Wpooltomeetregulatoryreserverequirements,asdescribedinparagraphsD.,E.andG.below.
TheH&Wpool’soperationsarefinancedthroughassessmentsofitsparticipatingmembers(“H&Wassessments”)inaccordancewiththeH&Wgeneralassessmentformula(“H&Wassessmentformula”).UndertheH&Wassessmentformula,eachmonth,eachmemberoftheH&Wpoolisassessedfor:(a)thecosttheH&WpoolincurredduringtheprecedingmonthfortheH&Wclaimsforsuchmember’semployees(“H&Wclaimscosts”);and(b)forsuchmember’sshareofsharedH&Wcosts.“SharedH&Wcosts”consistofadministrativeexpensesincurredbytheH&Wpool,premiumsforstop-lossinsurance,PPOchargesandsharedH&Wclaims.Thus,undertheH&Wassessmentformula,eachmonth:(1)theoperatingexpensesof
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theH&Wpoolandallmembers’H&Wclaimscostsforthatmontharepaid;and(2)theH&WpoolreservesarereplenishedbytheseassessmentstotheamountofthedesignatedH&Wpoolreserves.
C) H&W Pool – Limits on Members’ Self-Insured Exposures to the H&W Claims Costs of their Respective Health Plans
1. Stop-Loss Insurance Acquired by H&W PoolTheexposureofeachH&WpoolmembertotheH&Wclaimscostsofitsemployeesislimitedbytwodifferentpairsofstop-losspoints(“stop-losspoints”).Thefirstpairofstop-losspointsisestablishedannuallybytheexcessstop-lossinsurancethattheH&Wpoolacquiresandmaintainsforitsmembers.Thesestop-losspointsrepresentthedollaramountsatwhichthestop-lossinsuranceattachesandbeginspayingeithertheH&Wclaimcostsrelatingtoanindividualemployee’stotalmedicalclaimsfortheyear(“H&Wpoolindividualstop-losspoint”)ortheH&Wclaimscostsofallemployeesofallmembersfortheyear(“H&Wpoolaggregatestop-losspoint”).For2013,theH&WpoolIndividualstop-losspointwas$225,000peremployeeandtheH&Wpoolaggregatestop-losspointwas$15,643,814forthecombinedH&WclaimscostsoftheemployeesofallmembersoftheH&Wpool.2. Shared H&W Claims Within H&W PoolEachH&Wpoolmember’sexposuretotheH&Wclaimscostsofitsemployeesisfurtherlimitedbyevenlowerstop-losspointsdeterminedbytheH&Wpoolforitsmembers(“memberstop-losspoints”).Medicalexpensesthatexceedthesestop-losspointsbecome“sharedH&Wclaims”andthereforeareassessedas“sharedH&Wcosts”whicharepaidbyallH&Wpoolmembersexceptthememberwhoseemployee’sH&Wclaimexceededtheapplicablestop-losspoint.Thememberstop-losspointsarecalculatedannuallyundertheH&Wassessmentformulabasedontheamountsoftheindividualandaggregatestop-losspointsestablishedfortheyearbythestop-lossinsurance.Asaresultofthisprocess,eachmemberisassignedadollaramountatwhichanyfurtherpaymentsbytheH&WpoolonclaimsforaparticularemployeeconstitutesharedH&Wcosts(“member’sindividualstop-losspoint”)andadollaramountatwhichanyfurtherpaymentsbytheH&WpoolontheH&Wclaimsofallofamember’semployeesconstitutesharedH&Wcosts(“member’saggregatestop-losspoint”).3. Scope of Members’ Self-Insurance ExposuresExceptforH&Wclaimswhicharesharedclaimsbecausetheyexceedamember’sindividualstop-losspoint,andtheportionsofclaimsthatarecoveredbystop-lossinsurancebecausetheyexceedamember’saggregatestop-losspoint,eachmemberanditshealthplanissolelyresponsibleforpayingthemember’sH&Wclaimscostsandtheassessmentsissuedtothemembertocoverthoseclaimscostsandthemember’sshareofH&Wpooloperatingcosts.Exceptforobligationsrelatingtosharedclaims,nootherH&Wpoolmemberorhealthplan,northeH&Wpool,isrequiredtopayanythingtowardsthemember’sH&Wclaimscostsorassessmentstocoverthosecosts.
D) H&W Pool – WAC Program Funding Requirements
WAC200-110-040requiresjointlyself-insuredhealthandwelfareprogramreservestobefundedattheamountdeterminedbytheformulasetforthinWAC200-110-040(1),orattheamountoftheactuariallydeterminedprogramliability(“programliability”)iftheprogramdoesnotestablishprogramandcontingencyreservesinaccordancewiththeformula.(SeeWAC§200-110-040(2).)WAC200-110-040(3)alsorequiresaprogramtoestablishreservesforprescriptiondrug,dentalandvisionbenefitsintheminimumamountofeight(8)weeksofprogramexpensesallocabletothosebenefits.(SeeparagraphG.below.)
E) H&W Pool – Funding Methodology
TheH&WpoolfundingmethodologyallowstheH&WpooltodeterminetheminimumfundingrequirementsfortheH&WpoolreservesbyestablishingtheprogramliabilityformedicalbenefitseitherbyactuarialreportorundertheformulainWAC200-110-040(1).Likethefundingmethodologyfortheliabilityandpropertypools,theH&WpoolfundingmethodologyalsorequiresfundingactionandspecifiesthefundingmechanismsintheeventofanincreaseinH&WclaimsexperiencethatresultsinestablishingtheprogramliabilityinexcessoftheamountofthedesignatedH&Wpoolreserves.
F) H&W Pool – 2013 Claims Payments
ThetotalpaidbytheH&WpoolforH&Wclaimscostsin2013was$11,514,071(includingsharedH&WclaimsbutexcludingH&Wpooloperatingexpenses).
G) H&W Pool – H&W Claims IBNR and Designated H&W Pool Reserves
ThemostrecentactuarialreportfortheH&Wpool,datedFebruary3,2014,statesthattheH&Wpool’s
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incurred-but-not-reportedreserveliabilityformedicalcoverageis$880,647(“medicalIBNR”).Thereportstatesthatthisnumberreflectstheactuary’s“…bestestimatesoftheamountsforwhichPURMS(i.e.,theH&Wpool)wouldbeliableifthe[medical]benefitprogramhadterminatedonDecember31,2013…”Inaddition,asdirectedbyWAC200-110-040(3),theadministratorhasdeterminedthateightweeksofprogramexpensesforprescriptiondrug,dentalandvisionbenefitswas$305,998,$165,577and$31,802,respectively.Thesenumbersarebasedonthemonthlyaverageexpendituresforthesebenefitsoveratwelve-monthperiodofclaimsexperienceendingDecember31,2013.ThemedicalIBNRof$880,647establishedbytheactuarialreportandtheeightweeksofprogramexpensescalculatedbytheadministratorforprescriptiondrug,dentalandvisionbenefits,inthecombinedamountof$503,377,resultsinatotalH&WpoolreservesrequirementunderWAC200-100-040of$1,384,024,asofDecember31,2013.TheamountofthedesignatedH&WpoolreservesasofDecember31,2013was$2,185,474.UndertheH&Wassessmentformula,themonthlyH&WassessmentofeachmemberpaysfortheH&WclaimscostsofthepreviousmonthanditsallocationofsharedH&WcoststoreplenishtheH&WpooltotheamountofthedesignatedH&Wpoolreserves.(SeeparagraphB.above).
H) H&W Pool – Members Contractual Obligations Relating to Paying H&W Pool Program Liability
BecausetheH&Wpoolprogramliabilityisbasedontheactuarialreport,andontheadministrator’scalculationsforprescriptiondrug,dentalandvisionbenefits,theDistricthasnotreceivedanopinionorrepresentationastotherisktheknownandIBNRclaimsthatmakeupthatprogramliabilityposetothesolvencyoftheH&Wpool.However,asacontractualmatter,sincetheinterlocalagreementrequireseachmemberparticipatingintheH&WpooltopayitsH&Wassessmentonamonthlybasiswithintwenty(20)daysofthedateitisissuedtofullyreplenishitsshareoftheH&Wpoolreserves,assumingthattheseassessmentobligationsofmembersundertheSIAareenforceableandthatthemembersareatthetimesolventandpaysuchassessments,theH&Wpoolwouldhavetheassetstopaytheprogramliabilityonbehalfofeachofitsparticipatingmembers.Further,forreasonsdiscussedinparagraphC.3above,thislettermakesnorepresentationsrelatingtothesolvencyofanyH&Wpoolmemberoritshealthplan,ortheabilityofthememberorhealthplantopayitsassessmentsissuedbytheH&Wpool.
State and Independent AuditsPURMSandeachofPURMS’riskpoolsareauditedannuallybytheStateAuditor’sOffice.AsrequiredbyWAC200-100-060(3)and200-110-130(2),onanannualbasis,PURMSsubmitsauditedfinancialstatements,intheformatprescribedbytheStateAuditor’soffice,totheStateRiskManager’soffice.Finally,onanannualbasis,PURMSengagestheservicesoftheaccountingfirmofMossAdamstoperformaclaimsauditforeachoftheriskpools.
NOTE 10 – Postemployment Benefits Other Than Pension Benefit (OPEB)A) Plan Description – ByresolutiontheDistrictprovidesthreepercentperyearpremiumcreditsbasedon
yearsofemploymentformedical,visionandprescriptionbenefitsforqualifiedretiredemployeesandtheireligibledependents.Thecalculatedpremiumcreditistheemployerportionoftheannualhealthcarepremiumandisabenefittotheretireeasapostemploymentbenefit;thedifferenceinthehealthcarepremiumisfundedbytheretiree.TheplanisadministeredbytheDistrictandaseparate,auditedGAAP-basispostemploymentbenefitplanreportisnotavailable.ThebenefitsforboththeretireesandactiveemployeesaremanagedthroughthePURMSHealthandWelfareRiskPool,anagentmultiple-employerplan,asdescribedinNote9.
B) Funding Policy – TheDistrictfundsitspostemploymenthealthcarebenefitsbymakingAnnualRequiredContributions(ARC).TheDistrictmeetsitscurrentretireeobligationbypayingmonthlyassessmentstothePURMSHealthandWelfareRiskPool.TheDistrictalsomakescontributionstotheOtherPostemploymentBenefits(OPEB)Trustforfutureretireehealthandwelfarebenefits.ThepaymentsmadetoPURMS,aswellasthecontributionstotheOPEBTrust,arecountedtowardtheDistrict’sARC.
C) Annual OPEB Cost and Net OPEB Obligation – TheDistrict’sannualOPEBcostiscalculatedbasedontheARCoftheemployer.TheARCisanamountactuariallydeterminedbasedontheprojectedunitcreditmethod,inaccordancewiththeguidanceofGASBStatementNo.45.TheARCrepresentslevelfundingthat,ifpaidonanon-goingbasis,isprojectedtocovernormalcostseachyearandamortizeanyunfundedactuarialaccruedliabilitiesoveraperiodnottoexceed30years.TheDistrictimplementedGASBStatementNo.45prospectivelyin2008.TheDistrict’sannualrequiredOPEBcost(expense)for2013was$744,013.
AnnualRequiredContribution $720,771InterestonNetOPEBObligation (153,682)AdjustmenttoAnnualRequiredContribution 176,924 Annual OPEB Cost $ 744,013
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ThecurrentyearfundingoffutureOPEBcostsresultedinadecreaseinthenetOPEBobligationof$236,822withanendingcreditbalanceof$2,432,275.
ThefollowingtableshowsthecomponentsoftheDistrict’sannualOPEBcostfortheyear2013,theamountactuallycontributedtotheplan,andchangesintheDistrict’snetOPEBobligation.ThenegativenetOPEBobligationhasbeenrecordedasaNetOPEBAssetontheDistrict’sStatementofNetPosition.
D) Funding Status and Funding Progress –ThefundedstatusoftheplanasofDecember31,2013,wasasfollows:
Actuarialvaluationsofanongoingplaninvolveestimatesofthevalueofreportedamountsandassumptionsabouttheprobabilityofoccurrenceofeventsfarintothefuture.Examplesincludeassumptionsaboutthefutureemployment,mortality,andthehealthcarecosttrend.Amountsdeterminedregardingthefundedstatusoftheplanandtheannualrequiredcontributionsoftheemployeraresubjecttocontinualrevisionasactualresultsarecomparedwithpastexpectationsandnewestimatesaremadeaboutthefuture.TheScheduleofFundingProgress,presentedasrequiredsupplementaryinformationfollowingthenotestothefinancialstatements,presentsmulti-yeartrendinformationthatshowswhethertheactuarialvalueofplanassetsisincreasingordecreasingovertimerelativetotheactuarialaccruedliabilitiesforbenefits.
E) Actuarial Assumptions – Projectionsofbenefitsforfinancialreportingpurposesarebasedonthesubstantiveplan(theplanasunderstoodbytheemployerandplanmembers)andincludethetypesofbenefitsprovidedatthetimeofeachvaluationandthehistoricalpatternofsharingofbenefitcostsbetweentheemployerandplanmemberstothatpoint.Theactuarialmethodsandassumptionsusedincludetechniquesthataredesignedtoreduceshort-termvolatilityinactuarialaccruedliabilitiesandtheactuarialvalueofassets,consistentwiththelong-termperspectiveofthecalculations.
TheJanuary1,2012,actuarialvaluation,whichwasusedtodeterminethe2013AnnualRequiredContribution(ARC),usedtheProjectedUnitCreditCostMethod.Theactuarialassumptionsincludeda7.0percentinvestmentrateofreturnonamixofequitiesandbondsforthetrust,andanannualhealthcarecosttrendrateof10.0percentfor2012(9.5percentfor2013)forpre-65benefitsand6.0percentfor2012(5.75percentfor2013)forpost-65benefits,reducedinincrementstoanultimaterateoffivepercentafterelevenyears.Bothratesincludea2.0percentinflationassumption.Theactuarialvalueoftheplansassetsisequaltothemarketvalueoftheassets.TheDistrict’sunfundedactuarialaccruedliabilityisbeingamortizedoveremploymenthistoryfromtheageofhiretoretirementageusingthelevelpercentageofprojectedpayrollwithanopen30-yearamortizationperiod.
Actuarialaccruedliability(AAL) $10,099,433Actuarialvalueofplanassets $5,493,343Unfundedactuarialaccruedliability(UAAL) $4,606,090Fundedratio(actuarialvalueofplanassets/AAL) 54.4%Coveredpayroll(activeplanmembers) $10,177,803UAALasapercentageofcoveredpayroll 45.3%
NetOPEBObligationBeginningofYear $(2,195,453)AnnualOPEBCost 744,013BenefitspaidtoretireesfromPURMSinexcessofpremiums (264,319)ContributionsmadetoOPEBTrust (716,516) Net OPEB Obligation at End of Year $(2,432,275)
Fiscal Year Ended Annual OPEB CostPercentage of
Annual OPEB Cost Contributed
Net OPEB Obligation
12/31/2010 $805,967 132.9% ($1,531,625)12/31/2011 $777,862 154.9% ($1,739,282)12/31/2012 $757,165 160.2% ($2,195,453)12/31/2013 $744,013 131.8% ($2,432,275)
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NOTE 11 – Participation in Northwest Open Access Network, Inc. (NoaNet)TheDistrict,alongwithtenotherWashingtonStatepublicutilitydistrictsandEnergyNorthwest,isamemberofNoaNet,aWashingtonnonprofitmutualcorporation.NoaNetwasincorporatedinFebruary2000toprovideabroadbandcommunicationsbackboneoverpublicbenefitfibersleasedfromtheBonnevillePowerAdministration.ThiscommunicationsbackbonethroughoutWashingtonassistsitsmembersintheefficientmanagementofload,conservationandacquisitionofelectricenergyaswellasotherpurposes.ThenetworkbegancommercialoperationinJanuary2001.
AsamemberofNoaNet,theDistrictguaranteescertainportionsofNoaNetdebtbasedonitsproportionateshare(seeNote13).TheDistrict’smembershipinterestinNoaNetis12.51percent.ThemanagementofNoaNetanticipatesmeetingthebonddebtobligationsthroughprofitableoperations,butitwasnecessaryforNoaNettoassessmemberstocoverdeficitsduringtheinitialyearsofoperation.TheDistrictwasnotchargedmemberassessmentsin2013or2012.Assessmentsfor2014asdeterminedbytheNoaNetboardofdirectorsarealsoestimatedatzerofordebtservicepaymentsonoutstandingbonds.
NoaNetrecordedanincreaseinnetposition(excludingmemberassessments)of$25,346,160in2013,andanincreaseof$47,709,253for2012.InaccordancewithAccountingPrinciplesBoardOpinionNo.18,The Equity Method of Accounting for Investments in Common Stock,aswellasapositionstatementissuedbytheWashingtonStateAuditorconcerningtheappropriateaccountingtreatmentforNoaNet,aproportionateshareofthechangesinnetpositionhasnotbeenrecordedbytheDistrict.NoaNethadpositivenetpositionof$99,474,750asofDecember31,2013,andpositivenetpositionof$74,128,591asofDecember31,2012.
FinancialstatementsforNoaNetmaybeobtainedbywritingto:NorthwestOpenAccessNetwork,CorporateOffice,5802OverlookAvenueNE,Tacoma,WA98422.Awebsiteisavailableatwww.noanet.net.
NOTE 12 –Telecommunication ServicesMasonCountyPublicUtilityDistrictNo.3wasafoundingmemberofNoaNetin1999.TheDistrictbeganinstallationoffiber-opticcommunicationsforutilityusein1999afterexaminingvarioustypesofinfrastructurethatcouldbeusedtodeliveradvancedtelecommunicationsservices.Theresultingresearchshowedthatfiber-opticcableprovidedthemostrobustandcost-effectivesolution.Fiberhasanextremelylonglifecycleandalmostunlimitedbandwidthcapacity,whichwillallowtheDistricttomigratetonewtechnologieswithoutreplacinganexpensiveoutsideplantinfrastructure.Thefiber-opticnetworkprovidesabackbonefortheDistrict’sutilitycommunications.TheDistrictusesitsfiber-opticnetworkbackboneforinternalcommunications,SupervisoryControlandDataAcquisition(SCADA),communicationswithotherutilitiesandlong-hauldatatransmissionviatheNorthwestOpenAccessNetwork.
Withthepassageofwholesaletelecommunicationsauthorityin2000bytheWashingtonStateLegislature,high-speedcommunicationcapabilitywasbroughttoMasonCounty.TheDistrictisbuildingoutitsfiber-opticnetworktosharethebenefitofthetechnologyinvestment.TheDistrictisawholesalerforprivateserviceprovidersandbillstheprovidersdirectlyforwholesaletelecommunicationservices.Theseprivateserviceprovidersaredirectlyresponsibleforbillingeachend-user.TheDistrictended2013with568end-useractiveconnectionsand422fibermiles.
Asummaryoftelecommunicationsrevenues,expensesandcapitalinvestmentfor2013islistedasfollows:
For Year Ended December 31, 2013Operating revenuesWholesalefiberservicestoISP $985,792Darkfiberlease 8,198Installationcharges 9,498 Total Operating revenues $1,003,488Nonoperatingrevenue (11,884)Operating expensesOperatingexpenses $1,039,639Depreciation 620,323 Total Operating expenses 1,659,962 Change in net position $(668,358) Capital investmentCurrentyearchangeinnetplant $335,183Cumulativenetplant $9,355,875
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NOTE 13 – Commitments and ContingenciesLitigation – AnypendingorthreatenedlawsuitsagainsttheDistrictareeitheradequatelycoveredbyinsuranceorwouldnotmateriallyaffectthefinancialstatements.Repayment Agreements Relating to NoaNet (see Note 11) InJune2011,NoaNetrefinanceditsJuly2001TelecommunicationsNetworkRevenueBonds(Bonds).TheBondswereoriginallyissuedat$27milliontofinancetherepaymentofthefoundingmembersandthecostsofinitialconstruction,operationsandmaintenance.Theywererefinancedfor$13,165,000andbecameduebeginninginDecember2012through2016withinterestduesemi-annuallyatratesrangingfrom0.75percentto3.00percent.TheamountofoutstandingBondswas$8,185,000and$10,835,000atDecember31,2013and2012,respectively.CurrentandformermembersofNoaNethaveenteredintoarepaymentagreementtoguaranteethedebtofNoaNet.Undertherepaymentagreement,eachguarantoracknowledgesandagreesthatitisaguarantorofthepaymentoftheprincipalandinterestontheBondsandisliablebyassessmentorotherwisetorepayNoaNetforamountsdueandowingwithrespecttosuchprincipalandinterestuptoeachmember’spercentageinterest.TheDistrict’sguaranteeis7.88percentoftheoutstandingBonds,or$644,978and$853,798asofDecember31,2013and2012,respectively.Intheeventofafailurebyanyguarantortopaysuchamountswhendue,NoaNetmaybillfromtimetotimeasnecessary,andeachguarantorisobligatedtopay30daysafterreceiptofthebill,anadditionalamountuptoamaximumof25percentofsuchmember’spercentageinterest(the“Step-Up”),uptothemaximumpercentageinterest,inordertocoverthedeficiencycausedbysuchmember’sormembers’failuretopay.Anymemberthatpaysanadditionalamounttocoveradeficiencyreservesallrightstoseekreimbursementfromthememberormembersthatfailedtopay.TheDistrict’smaximumpercentageinterestis9.85percentor$806,223and$1,067,248asofDecember31,2013and2012,respectively.InAugust2012,NoaNetestablisheda$5millionlineofcreditwithBankofAmericatofundcapitalexpenditures.Thisnoteisguaranteedbythemembers.Theoutstandingbalanceonthe2012lineofcreditwas$5,000,000and$756,400asofDecember31,2013and2012,respectively.TheDistrict’sguaranteeis12.51percentoftheoutstandingbalanceor$625,500and$94,626atDecember31,2013and2012,respectively.InAugust2009,NoaNetopeneda$1.5millionlineofcreditwithBankofAmericatofundcapitalexpenditures.Thisnoteisguaranteedbythemembers.Theoutstandingbalanceonthe2009lineofcreditwas$166,667and$500,000asofDecember31,2013and2012,respectively.TheDistrict’sguaranteeis10.33percentoftheoutstandingbalanceor$17,217and$51,650atDecember31,2013and2012,respectively.InSeptember2008,NoaNetopeneda$1.5millionlineofcreditwithBankofAmericatofundcapitalexpenditures.Thisnoteisguaranteedbythemembers.Theoutstandingbalanceonthe2008lineofcreditwas$0and$300,000atDecember31,2013and2012,respectively.TheDistrict’sguaranteeis10.33percentoftheoutstandingbalanceor$0and$30,990atDecember31,2013and2012,respectively.Energy Northwest – Nine Canyon Wind ProjectTheNineCanyonWindEnergyProjectisownedandoperatedbyEnergyNorthwest.TheDistrict,alongwithnineotherpublicutilities,isaparticipantinPhasesI,II,andIIIoftheProject.UnderitsPowerPurchaseAgreement,theDistrictisobligatedtopayitspercentageshareoftheannualdebtserviceofeachprojectphaseandtheoperationandmaintenancecostsoftheprojectinreturnforitspercentageshareofprojectoutput,whetherornottheprojectisoperatingorcapableofoperating.Undertheagreement,theDistrictisobligatedtopayanamendedpercentageshareeffectiveMay2008whenPhaseIIIachievedcommercialoperation.Underastep-upprovision,theDistrictcouldberequiredtopayuptoamaximumof125percentofitspercentageshareintheeventofdefaultbyanotherpurchaser.TheAgreementlimitsEnergyNorthwest’stotalannualoperationandmaintenancecostto$4millionpriortoPhaseIIICommercialOperationandto$7millionpostPhaseIIICommercialOperation.Theselimitswillchangeannuallybaseoncertaininflationindexes.TheagreementterminatesJuly1,2030.TheDistrict’sapplicablepercentageshareobligationsare:
Allocation of Cost District % ShareDistrict % Share under Step-up
ProvisionDebtService-PhaseI 2.08% 2.60%DebtService-PhaseII 6.41% 8.01%DebtService-PhaseIII 3.14% 3.93%O&MCosts 3.14% 3.93%
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NOTE 14 – VEBA TrustInFebruary2004theBoardofCommissionersdirectedtheFinanceManager/AuditortonotifyMSAVoluntaryEmployees’BeneficiaryAssociation(“VEBA”)thattheDistrictwouldbeterminatingitsmembershipinthestatewide,employerdirected,taxexemptmedicalsavingsaccounttrust.Becauseofconcernsregardingthefinancialdifficultiesofacompanyinwhichamajorportionofthetrustfundswasinvested,itwasdecidedtoexploreotherpossibilitiesforatrust.Aftermonthsofresearch,onMay11,2004,theBoardvotedtoproceedwithimplementingatrustforVEBAforEmployeesofWashingtonPublicUtilityDistrictswithMasonCountyPublicUtilityDistrictNo.3self-administeringtheplan.AnnetteCreekpaum,FinanceManager/Auditor,wasnamedastrustee.OnMay14,2004,$1,042,089fundsweretransferredfromtheMSAVEBAinvestmentstotheDistrict.TheyweresubsequentlytransferredforinvestmentinVanguardFederalMoneyMarketFundsuntilemployeeshadanopportunitytochoosefromthreeVanguardFundinvestmentoptions.TheDistrictsetupa501(c)(9)trustwiththeassistanceandadvicefromanattorneywithexpertiseinthisareaandfiledtheappropriateformswiththeIRStoestablishthenewtrust.ThetrustisadministeredbytheDistrictundersupervisionofthetrustee.ThefinalapprovalfromtheIRSforthetrustwasreceivedinearly2005.Thefundsheldintrustbelongtotheemployees,nottheDistrict.TheDecember31,2013,marketvalueofthetrustwas$4,410,253.Theallocationsbetweeninvestmentoptionswere:18.8percentinshort-terminvestments,14.9percentinbondsand66.3percentinstocks.During2013,employercontributionswere$601,743,claimspaidequaled$410,341andtherewasagainof$703,945ontheinvestmentsheldinthetrust.
NOTE 15 – OPEB TrustInSeptember2008theDistrict’sBoardofCommissionerspassedResolutionNo.1446establishinganOtherPostemploymentBenefits(OPEB)Trust.TheresolutionappointedAnnetteCreekpaum,FinanceManager/Auditorastrustee.Anactuarywashiredin2007todeterminetheamountofcontributionsneededeachyeartomeettheobligationsrequiredunderGASBStatementNo.45.TheDistricthassetupa115trustwiththeassistanceandadvicefromanattorneywithexpertiseinthisareaandfiledtheappropriateformswiththeIRStoestablishthetrust.ThetrustisadministeredbytheDistrictundersupervisionofthetrustee.AletterrulingfromtheIRSforthetrustwasreceivedin2009.TheDecember31,2013,marketvalueofthetrustwas$5,493,343withinvestmentsof5.8percentincashorcashequivalents,64.1percentinequitymutualfundsand30.1percentinfixedincomemutualfunds.
NOTE 16 – Restatement of Prior YearImplementation of New Accounting Standard –In2012GASBissuedStatementNo.65,ItemsPreviouslyReportedasAssetsandLiabilities,whichprovidesguidanceforreclassifyingcertainitemsasdeferredoutflowsofresourcesordeferredinflowsofresources.Thisstatementalsorequiresreportingofcertainitemspreviouslyrecordedasassetsandliabilitiestobepresentedasexpensesorrevenues.Inaccordancewiththisguidance,theDistrictexpenseddebtissuancecosts,whichpreviouslywererecordedasassetsandamortized.Asaresult,$881,965ofbondissuecostsincurredin2013wasexpensedfortheyearendedDecember31,2013.Additionally,unamortizedbondissuecostsof$769,563atthebeginningof2013arepresentedasacumulativeeffectofrestatementandreducethebeginningnetpositionasofJanuary1,2013.Lossondebtrefundingsof$233,961wasreclassifiedfromassetstodeferredoutflowsofresourcesintheStatementofNetPositionasofDecember31,2013,andreclassificationofthisbalancehadnoeffectonnetposition.Correction of Prior Period Depreciation – In1998,theDistrictupgradeditssystemsoftware.Duringtheconversionprocess,whenassetswereenteredintotheaccountingsystem,theassets’remainingusefullifestartedoverusingthefulllifeoftheassets.In2013,anadjustmentwasmadetocatchuptheunder-depreciationandtheremainingusefullivesoftheassetswerechanged.Thisresultedin$278,595additionaldepreciationexpensefortheyearendedDecember31,2013.ApriorperiodadjustmenttobeginningNetPositionasofJanuary1,2013wasmadeintheamountof$8,571,258.AnadditionalpriorperiodadjustmenttobeginningNetPositionasofJanuary1,2013wasmadeintheamountof$731,103toaccountfordepreciationoftheJohnsPrairieOperationCenterthatbecameoperationalasofApril2012.However,theworkorderwasnotclosedinthesystemanddepreciationdidnotstartuntil2013.CumulativeeffecttobeginningNetPositionasofJanuary1,2013intheamountof$9,302,362wasrecordedtoaccountfortheunder-depreciation.
NOTE 17 – Subsequent EventsTheDistricthasnosubsequenteventsthatshouldbefactoredintothefinancialstatementsbeingpresented.
51
Required Supplementary InformationOther Postemployment Benefits
Actuarial Valuation
Date
Actuarial Value of Plan Assets
(a)
Actuarial Accrued
Liability (AAL)* (b)
Unfunded AAL (UAAL)
(b-a)
Funded Ratio (a/b)
Covered Payroll (c)
UAAL as a Percentage of Covered
Payroll [(b-a)/c]
1/1/2008 $- $7,822,974 $7,822,974 0% N/A N/A12/31/2008 $1,322,793 $8,350,651 $7,027,858 15.8% $8,436,439 83.3%12/31/2009 $2,250,518 $8,482,596 $6,232,078 26.5% $8,756,679 71.2%12/31/2010 $3,061,417 $8,695,591 $5,634,174 35.2% $9,118,034 61.8%12/31/2011 $3,672,686 $8,765,101 $5,092,415 41.9% $9,039,380 56.3%12/31/2012 $4,425,342 $9,682,948 $5,257,606 45.7% $9,736,412 54.0%12/31/2013 $5,493,343 $10,099,433 $4,606,090 54.4% $10,177,803 45.3%
Schedule of Funding Progress
Fiscal Year Ending
Total Employer Contributions
Annual Required Contribtuon
(ARC)Percentage of
ARC Contributed
12/31/2008 $1,577,017 $925,870 170.3%12/31/2009 $1,275,646 $878,308 145.2%12/31/2010 $1,071,372 $793,721 135.0%12/31/2011 $1,205,238 $763,049 158.0%12/31/2012 $1,213,336 $738,753 164.2%12/31/2013 $980,835 $720,771 136.1%
Schedule of Employer Contributions
*BasedonprojectedunitcreditactuarialcostmethodN/AindicatesdatanotavailableSource: Dan McM Consulting LLC
making connections.
52
“Our goal is to make creative connections. We respect tradition, but sometimes we get excellent results by challenging the status quo. We had several unconventional initiatives in 2013 that led to great partnerships and customer benefits.” - Justin Holzgrove
Conservation Manager
53
Stat
istic
al Se
ctio
n
This part of Mason County PUD No. 3’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District’s overall financial health.
Contents:
Financial Trends TheseschedulescontaintrendinformationtohelpthereaderunderstandhowtheDistrict’sfinancialperformanceandwell-beinghavechangedovertime.
Revenue Capacity TheseschedulescontaininformationtohelpthereaderassesstheDistrict’smostsignificantlocalrevenuesource,electricsales.
Debt Capacity TheseschedulespresentinformationtohelpthereaderassesstheaffordabilityoftheDistrict’scurrentlevelsofoutstandingdebtandtheDistrict’sabilitytoissueadditionaldebtinthefuture.
Demographic and Economic InformationTheseschedulesofferdemographicandeconomicindicatorstohelpthereaderunderstandtheenvironmentwithinwhichtheDistrict’sfinancialactivitiestakeplace.
Operating Information TheseschedulescontainserviceandinfrastructuredatatohelpthereaderunderstandhowtheinformationintheDistrict’sfinancialreportrelatedtotheservicestheutilityprovidesandtheactivitiesitperforms.
53
54
2004
2005
2006
2007
2008
2009
2010
2011
2012
Res
tate
d20
13
OPE
RATI
NG R
EVEN
UES
Utility
Salesand
ServiceFee
s$36
,138
,566
$38
,034
,493
$41
,036
,115
$43
,811
,627
$45
,461
,067
$46
,723
,787
$
46,382
,942
$4
6,77
3,57
1$47
,652
,092
$51
,811
,302
OtherCha
rgesfo
rServices
1,687
,244
2,072
,568
2,230
,546
2,489
,036
2,139
,716
1,430
,896
1,23
0,38
21,759
,678
1,140
,786
1,551
,880
Misc
ellane
ousO
peratin
gRe
venu
es112
,073
112
,163
141
,803
132
,598
230
,771
325
,422
3
20,095
53
0,96
9523
,037
1,003
,488
T
otal
Ope
ratin
g Re
venu
e$37
,937
,883
$40
,219
,224
$43
,408
,464
$46
,433
,261
$47
,831
,554
$48
,480
,105
$
47,933
,419
$4
9,06
4,21
8$49
,315
,915
$54
,366
,670
OPE
RATI
NG E
XPEN
SES
Purchased
Pow
er$20
,872
,530
$21
,095
,946
$22
,160
,973
$21
,790
,061
$18
,607
,855
$20
,387
,819
$
21,670
,151
$2
1,66
6,58
5$23
,883
,237
$24
,832
,964
Ope
ratio
n2,290
,182
2,256
,736
3,087
,790
3
,216
,972
2,989
,812
2,378
,003
3
,323
,598
3,412
,839
3,443
,208
3,485
,934
Mai
nten
ance
2,336
,816
2,629
,800
4,389
,822
3
,775
,383
3,767
,600
3,885
,014
4,19
2,98
54,31
5,88
84,337
,810
4,389
,255
CustomerAccou
nts
1,317
,541
1,536
,440
1,482
,642
1,667
,344
1,760
,267
1,815
,221
1
,913
,446
1,770
,770
2,745
,575
2,278
,899
CustomerService,Informati
on,A
dvertising
334
,551
346
,086
776
,217
316
,461
479
,775
823
,417
2
56,205
32
9,17
3705
,067
839
,495
Adm
inistrativ
e&Gen
eral
4,297
,399
4,755
,392
3,561
,293
3,441
,177
4,803
,393
5,104
,776
4
,474
,990
5,192
,285
5,563
,120
6,092
,145
Mainten
anceofG
eneralPlant
472
,559
534
,186
539
,625
662
,089
664
,558
660
,448
9
64,479
77
4,24
91,062
,683
1,422
,844
Dep
recia
tion (
1)4,488
,430
4,690
,154
4,830
,922
5,000
,383
5,175
,236
5,415
,081
5,64
5,65
55,85
1,86
46,592
,569
6,678
,552
TaxesOtherth
anIn
come
1,319
,610
1,489
,142
1,620
,619
1,726
,807
1,727
,455
1,747
,469
1
,200
,681
1,79
3,26
51,794
,335
3,576
,006
T
otal
Ope
ratin
g Ex
pens
es$37
,729
,618
$39
,333
,882
$42
,449
,903
$41
,596
,677
$39
,975
,951
$42
,217
,248
$
43,642
,190
$4
5,10
6,91
8$50
,127
,604
$53
,596
,094
OPE
RATI
NG IN
COM
E (L
OSS
)
$20
8,26
5
$88
5,34
2
$9
58,5
61
$4
,836
,584
$
7,85
5,60
3
$6,2
62,8
57
$
4,29
1,22
9
$3,
957,
300
(
$811
,689
)
$77
0,57
6
NONO
PERA
TING
REV
ENUE
S &
EXP
ENSE
S
Mer
chan
disin
g$1
,496
$
9,33
4$79
($1,840)
$
5,99
1$2
,235
($
5,06
3)$9,21
6$2
,960
($7
,590
)
Investm
entE
arning
s278
,215
456
,620
594
,197
591
,222
443
,182
216
,866
2
00,892
19
0,28
8102
,775
(1
30,129
)
Interest&
Amortizati
ononLTDeb
t(2)
(1,66
6,54
8)(1,64
5,04
5)(1,55
8,05
6)(1,45
0,29
0)(1,42
1,65
5)(1,87
2,59
2)(2,79
7,24
8)(3,546
,857
)(5,40
7,30
6)(4,13
6,19
0)
OtherNon
operati
ngReven
ues
107
,061
120
,326
824
,662
2,049
,000
188
,426
175
,179
5
67,553
1,29
4,87
51,604
,182
1,108
,065
T
otal
Non
oper
ating
Rev
enue
s (E
xpen
ses)
($1,27
9,77
6)($1,05
8,76
5)($139,118)
$1
,188
,092
($7
84,056
)($1,47
8,31
2)($
2,03
3,86
6)($2
,052
,478
)($3,69
7,38
9)($3,16
5,84
4)
CHAN
GE IN
NET
PO
SITI
ON
($1
,071
,511
)
($
173,
423)
$
819,
443
$6
,024
,676
$7,0
71,5
47
$4
,784
,545
$2,
257,
363
$
1,90
4,82
2
($4,
509,
078)
($2
,395
,268
)
NET
POSI
TIO
N
For t
he ye
ars e
nded
Dec
embe
r 31
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Invested
inCap
italA
ssets,Ne
tofD
ebt(3
)$64
,373
,308
$69
,150
,659
$71
,712
,019
$73
,925
,304
$66
,837
,953
$77
,213
,989
$
73,351
,769
$7
4,42
8,92
5$69
,112
,110
$66
,390
,024
Restric
tedforD
ebtS
ervice
724
,813
684
,093
736
,105
729
,851
3,285
,751
2,825
,709
8
,294
,936
7,35
2,66
16,941
,760
6,422
,553
Unrestric
ted(2
)15
,180
,087
1
0,27
0,03
38,476
,104
12
,293
,749
23
,896
,747
18
,765
,298
19,41
5,65
421,18
5,59
522
,404
,233
23
,250
,258
TOTA
L NET
PO
SITI
ON
$80
,278
,208
$
80,1
04,7
85
$80
,924
,228
$
86,9
48,9
04
$94
,020
,451
$
98,8
04,9
96
$10
1,06
2,35
9 $
102,
967,
181
$98
,458
,103
$
96,0
62,8
35
STAT
EMEN
T O
F RE
VENU
ES, E
XPEN
SES
AND
CHAN
GES
IN N
ET P
OSI
TIO
Nfo
r the
year
s end
ed D
ecem
ber 3
1
(1) P
riorP
eriodDe
preciatio
nEn
try-In199
8,th
eDistrictu
pgrade
ditssy
stem
softw
are.Duringtheconversio
nwhe
nassetswereen
teredintoth
eaccoun
tingsystem
,the
assets’remaining
usefullifestartedoverusin
gthefulllife
ofth
easset.In201
3,anad
justmen
twasm
adetoca
tchup
theun
der-d
eprecia
tionan
dtheremaining
usefullifewasch
anged.Thisresultedin$27
8,59
5ad
ditio
naldep
recia
tiontobead
dedtoth
ecurren
tyeara
ndaye
ar-end
priorp
eriodad
justmen
ttoRe
tained
Earningsw
asm
adeinth
eam
ountof$
8,57
1,25
8.A
nad
ditio
nalprio
rperiodad
justmen
tfordep
recia
tionwasm
adeinth
eam
ountof$
731,10
3toaccou
ntfo
rthe
John
sPrairieOp
erati
on
Centerth
atbecam
eop
erati
onalaso
fApril2
012,how
everth
eworko
rderwasnotclosed
unti
l201
3.Calen
dary
ears200
4-20
12fina
ncialstatemen
tswererestated
forcom
parativ
epu
rposes.
(2) G
overnm
entalA
ccou
ntingStand
ardsBoa
rdStatemen
tNo.65wasim
plem
entedeff
ectiv
e20
13classifyin
gde
btissuan
ceco
stsa
sexpen
sedwhe
nincurred
.20
12wasre
stated
forcom
parativ
epu
rposesinth
efin
ancia
lst
atem
ents
.(3) In
vested
inCap
italA
ssets,Ne
tofD
ebtw
asre
classified
forthe
years2
004-2
012forthe
prio
rperiodde
preciatio
nen
try.
55
REVE
NUES
AND
CO
NSUM
PTIO
N BY
CUS
TOM
ER C
LASS
for t
he ye
ars e
nded
Dec
embe
r 31
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
NUM
BER
OF
CUST
OM
ERS
Residen
tial
27,65
728,61
929,27
929,94
030,26
930,36
830,24
030,24
930,00
130,23
1
Com
mercia
l2,074
2,121
2,160
2,161
2,180
2,182
2,196
2,185
2,167
2,183
LargeIn
dustria
l 1
1
1
1
1
1
1
1
1
1
Oth
er
86
89
88
88
86
83
83
83
80
83
T
otal
29,81
830,83
031,52
832,19
032,53
632,63
432,52
032,51
832,24
932,49
8
RETA
IL E
NERG
Y SA
LES
(kW
h)
Residen
tial
363
,915
,264
369
,780
,401
389
,004
,242
420
,059
,433
429
,970
,570
435
,728
,408
418
,585
,338
439
,742
,517
425
,975
,579
420
,030
,119
Com
mercia
l162
,880
,230
171
,614
,419
184
,284
,662
182
,430
,877
184
,178
,051
181
,895
,889
183
,438
,627
176
,111
,109
183
,165
,987
181
,179
,646
LargeIn
dustria
l69,43
6,80
074,79
3,60
070,41
6,00
064,06
5,60
055,85
7,60
040,69
4,40
050,45
7,60
049,03
2,00
052,35
8,40
053,09
2,80
0
Oth
er2,046
,464
2,067
,158
2,114
,701
2,092
,195
2,098
,434
2,086
,311
2,085
,236
2,040
,075
2,037
,307
2,060
,332
T
otal
598
,278
,758
618
,255
,578
645
,819
,605
668
,648
,105
672
,104
,655
660
,405
,008
654
,566
,801
666
,925
,701
663
,537
,273
656
,362
,897
REVE
NUES
FRO
M S
ALES
OF
ENER
GY
Resid
entia
l$2
3,16
6,51
6$2
4,05
1,72
5$2
6,14
0,24
0$2
8,72
1,01
2$3
0,12
8,43
1$3
1,55
9,12
8$3
0,82
0,64
3$3
2,10
0,31
8$3
2,33
6,20
9$3
5,23
6,96
1
Commercia
l (1)
9,265
,698
10,04
9,53
411,03
1,71
711,45
4,32
911,90
4,87
612,17
1,39
812,21
4,05
611,78
1,90
612,26
0,97
313,20
9,44
8
LargeIndu
stria
l (2)
2,888
,372
3,079
,556
2,922
,458
2,720
,256
2,449
,757
1,991
,051
2,332
,208
2,302
,063
2,468
,116
2,753
,594
Othe
r (3)
514
,289
516
,088
541
,632
561
,541
586
,689
575
,801
594
,412
589
,284
586
,794
611
,299
Tot
al$3
5,83
4,87
5$3
7,69
6,90
3$4
0,63
6,04
7$4
3,45
7,13
8$4
5,06
9,75
3$4
6,29
7,37
8$4
5,96
1,31
9$4
6,77
3,57
1$4
7,65
2,09
2$5
1,81
1,30
2
ANNU
AL k
Wh
PER
CUST
OM
ER
Residen
tial
13,15
812,92
113,28
614,03
014,20
514,34
813,84
214,53
714,19
913,89
4
Com
mercia
l78,53
480,91
285,31
784,42
084,48
583,36
283,53
380,60
084,52
582,99
6
LargeIn
dustria
l69,43
6,80
074,79
3,60
070,41
6,00
064,06
5,60
055,85
7,60
040,69
4,40
050,45
7,60
049,03
2,00
052,35
8,40
053,09
2,80
0
Oth
er23,79
623,22
624,03
123,77
524,40
025,13
625,12
324,57
925,46
624,82
3
A
vera
ge -
All C
lass
es20,06
420,05
420,48
420,77
220,65
720,23
720,12
820,50
920,57
520,19
7
REVE
NUE
PER
kWh
(CEN
TS)
Residen
tial
6.3
7 6
.50
6.7
2 6
.84
7.0
1 7
.24
7.3
6 7
.30
7.5
9 8
.39
Com
mercia
l 5
.69
5.8
6 5
.99
6.2
8 6
.46
6.6
9 6
.66
6.6
9 6
.69
7.2
9
LargeIn
dustria
l 4
.16
4.1
2 4
.15
4.2
5 4
.39
4.8
9 4
.62
4.7
0 4
.71
5.1
9
Oth
er 2
5.13
2
4.97
2
5.61
2
6.84
2
7.96
2
7.60
2
8.51
2
8.89
2
8.80
2
9.67
Ave
rage
- Al
l Cla
sses
5.9
9 6
.10
6.2
9 6
.50
6.7
1 7
.01
7.0
2 7
.01
7.1
8 7
.89
(1) Include
scom
mercia
lcustomersa
ndpub
licautho
rities.
(2) Sim
pson
Lumbe
rCom
pany.
(3) In
clude
soutdo
orlig
htingand
unm
etered
signs
56
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Sche
dule
12
- Res
iden
tial
Ene
rgyRa
te(p
erkWh)
$0.05
16
$0.05
32
$0.05
66
$0.05
66
$0.05
96
$0.06
14
$0.06
14
$0.06
14
$0.06
32
$0.06
51
DailyCustomerCha
rge
SinglePh
ase
$0.46
00
$0.48
00
$0.48
00
$0.48
00
$0.50
00
$0.50
00
$0.50
00
$0.50
00
$0.60
00
$0.70
00
Three
Pha
se$0.74
00
$0.78
00
$0.78
00
$0.78
00
$0.82
00
$0.82
00
$0.82
00
$0.82
00
$0.92
00
$1.02
00
Sche
dule
20
- Gen
eral
Ser
vice
with
out D
eman
d
Ene
rgyRa
te(p
erkWh)
$0.05
65
$0.05
82
$0.06
21
$0.06
21
$0.06
53
$0.06
73
$0.06
73
$0.06
73
$0.06
93
$0.07
14
DailyCustomerCha
rge
SinglePh
ase
$0.68
00
$0.72
00
$0.72
00
$0.72
00
$0.72
00
$0.72
00
$0.72
00
$0.72
00
$0.82
00
$0.92
00
Three
Pha
se$0.94
00
$1.00
00
$1.00
00
$1.00
00
$1.00
00
$1.00
00
$1.00
00
$1.00
00
$1.10
00
$1.20
00
Sche
dule
21
- Gen
eral
Ser
vice
with
Dem
and
Ene
rgyRa
te(p
erkWh)
$0.03
43
$0.03
59
$0.03
81
$0.03
81
$0.04
01
$0.04
13
$0.04
13
$0.04
13
$0.04
25
$0.04
38
DailyCustomerCha
rge
$1.82
00
$1.94
00
$1.94
00
$1.94
00
$1.94
00
$1.94
00
$1.94
00
$1.94
00
$2.04
00
$2.14
00
Dem
andRa
te(p
erm
easuredkW
hofdem
and)
$6.21
00
$6.18
00
$6.56
00
$6.56
00
$6.56
00
$6.56
00
$6.56
00
$6.56
00
$6.56
00
$6.56
00
Sche
dule
61
- Lar
ge In
dust
rial
Ene
rgyRa
te(p
erkWh)
$0.03
07
$0.03
07
$0.03
07
$0.03
07
$0.03
07
$0.03
16
$0.03
16
$0.03
16
$0.03
25
$0.03
67
Dem
andRa
te(p
erm
easuredkW
hofdem
and)
$5.59
00
$5.59
00
$5.59
00
$5.59
00
$5.59
00
$5.75
00
$5.75
00
$5.75
00
$5.75
00
$6.31
00
RETA
IL R
ATES
(1)
as o
f Dec
embe
r 31
(1) The
sera
tesrep
resentth
etypicalcustomerinth
atclass.Ot
herratesche
dulesa
lsoineffe
ctareoutdo
orlig
hting,taxexemptstatusand
misc
ellane
ous.
57
2013
2004
Ener
gyPe
rcen
tage
of
Perc
enta
geEn
ergy
Perc
enta
ge o
f Pe
rcen
tage
Rate
paye
r's R
ate
Clas
sSa
les (
kWh)
Rank
Tota
l kW
hRe
venu
eSa
les R
even
ueSa
les (
kWh)
Rank
Tota
l kW
h R
even
ue
Sale
s Rev
enue
LargeIndu
stria
lCustomer(6
1)53,09
2,80
01
8.09
%$2
,753
,594
5.
31%
69,43
6,80
01
11.6
1%$2
,888
,372
8.
06%
LargeGe
neralServiceCustomer(2
2)14,74
7,40
02
2.25
%85
7,13
41.
65%
15,90
1,20
02
2.66
%73
3,93
42.
05%
LargeGe
neralServiceCustomer(3
3)10,84
8,00
03
1.65
%57
4,04
21.
11%
8,271
,600
5
1.38
%417
,532
1.
17%
LargeGe
neralServiceCustomer(2
2)7,821
,600
4
1.19
%44
8,55
60.
87%
8,748
,000
3
1.46
%40
7,17
21.
14%
LargeGe
neralServiceCustomer(2
3)7,533
,600
5
1.15
%44
3,03
40.
86%
6,622
,200
4
1.11
%29
2,76
80.
82%
LargeGe
neralServiceCustomer(2
1)4,738
,000
6
0.72
%27
9,87
60.
54%
5,490
,000
7
0.92
%264
,905
0.
74%
LargeGe
neralServiceCustomer(2
3)4,473
,600
7
0.68
%28
5,59
20.
55%
5,320
,400
9
0.89
%242
,353
0.
68%
LargeGe
neralServiceCustomer(2
3)4,102
,800
8
0.63
%25
1,93
20.
49%
-
-0.
00%
-
0.00
%
LargeGe
neralServiceCustomer(2
3)3,448
,200
9
0.53
%202
,253
0.
39%
3,125
,160
8
0.52
%15
3,18
40.
43%
LargeGe
neralServiceCustomer(2
3)3,378
,000
10
0.51
%23
1,22
40.
45%
2,555
,400
6
0.43
%11
6,90
30.
33%
LargeGe
neralServiceCustomer(2
3) -
-
0.00
% -
0.
00%
3,564
,000
10
0.60
%15
8,53
20.
44%
114
,184
,000
17
.40%
$6,327
,237
12
.21%
129
,034
,760
21
.57%
$5,675
,655
15
.84%
TotalA
llRa
tepa
yers
656
,362
,897
$5
1,81
1,30
2598
,278
,758
$3
5,83
4,87
5
DIST
RICT
’S P
RINC
IPAL
RAT
EPAY
ERS
for t
he ye
ars e
nded
Dec
embe
r 31
58
Curr
ent R
ate
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
StatePu
blicUti
lityTax
3.87
34%
$1,360
,927
$1
,460
,042
$1
,596
,247
$1
,671
,864
$1
,711
,087
$1
,762
,503
$1
,726
,359
$1
,766
,953
$1
,818
,558
$1
,858
,868
StatePrivilegeTax
2.14
0%743
,610
754
,337
878
,294
852
,529
896
,699
930
,804
833
,315
542
,598
966
,168
963
,509
CityofShe
ltonUti
lityTax
6.00
0%54
3,10
456
1,87
657
4,46
858
2,03
957
4,28
855
6,98
057
1,63
657
3,29
458
9,64
661
1,01
4
Leaseh
oldTax
12.8
40%
14,224
20
,010
14
,873
14
,738
-
-
-
4,63
914
,864
38
,265
PayrollTaxes
Vario
us52
6,53
458
7,26
559
9,10
158
9,48
163
4,58
763
0,76
265
2,15
764
7,11
269
5,15
172
4,15
1
L&I,Employmen
tSecurity
Vario
us14
2,74
112
3,41
911
3,71
511
1,53
916
1,55
614
4,55
315
3,02
516
2,82
016
0,35
515
3,16
9
Misc
ellane
ousT
axes
Vario
us53
,319
54
,331
69
,962
75
,893
65
,307
38
,975
40
,213
44
,139
46
,139
41
,732
TotalTaxes
$3,384
,459
$3
,561
,280
$3
,846
,660
$3
,898
,083
$4
,043
,524
$4
,064
,577
$3
,976
,706
$3
,741
,555
$4
,290
,881
$4
,390
,708
TotalO
peratin
gRe
venu
es$3
7,93
7,88
3$4
0,21
9,22
4$4
3,40
8,46
4$4
6,43
3,26
1$4
7,83
1,55
4$4
8,48
0,10
5$4
7,93
3,41
9$4
9,06
4,21
8$4
9,31
5,91
6$5
4,36
6,67
0
%ofO
peratin
gRe
venu
es8.
92%
8.85
%8.
86%
8.40
%8.
45%
8.38
%8.
30%
7.63
%8.
70%
8.08
%
COM
PARA
TIVE
TAX
CO
STS
for t
he ye
ars e
nded
Dec
embe
r 31
59
2004
2005
2006
2007
2008
2009
2010
2011
2012
Res
tate
d20
13
DEBT
SER
VICE
CAL
CULA
TIO
N
Cha
ngeinNetPosition
($1,07
1,51
1)($17
3,42
3)$8
19,443
$6
,024
,676
$7
,071
,547
$4
,784
,545
$2
,257
,363
$1
,904
,822
($4,50
9,07
8)($2,39
5,26
8)
Adj
ustm
ents
to (f
rom
) Cha
nge
in N
et P
ositi
on
Dep
recia
tion&Amortizati
on(1)
$4,488
,430
$4
,690
,154
$4
,830
,922
$5
,000
,383
$5
,175
,236
$5
,415
,081
$5
,645
,655
$5
,851
,864
$6
,592
,569
$6
,678
,552
InterestE
xpen
se1,61
5,66
31,59
5,83
71,51
1,16
61,40
5,85
91,37
9,82
41,81
3,38
32,73
5,86
53,510
,133
4,60
2,54
64,350
,684
Amortizati
onDeb
tDisc
ount,P
remium
50,885
49
,208
46
,890
44
,431
41
,831
59
,209
61
,383
3
6,72
480
4,76
0(2
14,494
)
RateStab
ilizatio
nAc
coun
t(2)
-
-
-
-
-
-
-
(1,68
5,86
1) -
-
Extraordina
ryItem
-
-
-
-
-
-
-
-
-
-
REVE
NUE
AVAI
LABL
E FO
R DE
BT S
ERVI
CE$5
,083
,467
$6
,161
,776
$7
,208
,421
$1
2,47
5,34
9 $1
3,66
8,43
8 $1
2,07
2,21
8 $1
0,70
0,26
6
$9,6
17,6
82
$7,4
90,7
97
$8,
419,
474
DEBT
SER
VICE
(3)
$2,2
21,0
50
$2,6
53,2
75
$2,5
85,7
10
$2,6
20,7
05
$2,6
22,5
48
$2,6
21,1
35
$4,9
83,5
70
$3
,961
,260
$5
,036
,955
$5,8
65,2
96
DEBT
SER
VICE
CO
VERA
GE R
ATIO
2.2
9 2
.32
2.7
9 4
.76
5.2
1 4
.61
2.1
5
2.
43
1.4
9
1.
44
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Revenu
eAv
ailableforD
ebtS
ervice
$5,083
,467
$6
,161
,776
$7
,208
,421
$1
2,47
5,34
9$1
3,66
8,43
8$1
2,07
2,21
8$1
0,70
0,26
6$9
,617
,682
$7
,490
,797
$8
,419
,474
Annu
alDeb
tService(3
)$2
,221
,050
$2
,653
,275
$2
,585
,710
$2
,620
,705
$2
,622
,548
$2
,621
,135
$4
,983
,570
$3
,961
,260
$5
,036
,955
$5
,865
,296
Maxim
umAllowab
leAnn
ualD
ebtS
erviceper
Bond
Coven
ants(4
)$4
,066
,774
$4
,929
,421
$5
,766
,737
$9
,980
,279
$1
0,93
4,75
0$9
,657
,774
$8
,560
,213
$7
,694
,146
$5
,992
,638
$6
,735
,579
Allowab
leAdd
ition
alAnn
ualD
ebtS
ervice
$1,845
,724
$2
,276
,146
$3
,181
,027
$7
,359
,574
$8
,312
,202
$7
,036
,639
$3
,576
,643
$3
,732
,886
$9
55,683
$8
70,283
DEBT
SER
VICE
CO
VERA
GEfo
r the
year
s end
ed D
ecem
ber 3
1
DEBT
MAR
GIN
INFO
RMAT
ION
for t
he ye
ars e
nded
Dec
embe
r 31
(1) Calen
dary
ears200
4-20
12wererestated
forthe
und
er-dep
recia
tionasexplained
inNote16
forc
ompa
rativ
epu
rposes.
(2) P
erBon
dCo
vena
nts,an
yam
ountwith
draw
nfro
mth
eRe
venu
eFund
and
dep
osite
dinth
eRa
teStabilizati
onAccou
ntinanyFisc
alYearw
illbesubtracted
from
NetReven
uesforth
epu
rposesofcalculatin
gthede
bt
coveragere
quire
men
t(3) D
oesn
otinclu
deTermLo
an-JuniorLien
Loan
norca
pitalized
interestonbo
ndproceed
s.
(4) The
bon
dcovena
ntss
tateth
atnew
bon
dsm
aybeiss
uediftheam
ountofthe
netre
venu
efora
nytw
elveco
nsecuti
vem
onthsina24
mon
thperioddivide
dbyth
emaxim
umann
ualdeb
tserviceinanyfu
tureyearisn
otless
than
125
percent.
60
(1) Calen
dary
ears200
4-20
12wererestated
forthe
und
er-dep
recia
tionasexplained
inNote16
forc
ompa
rativ
epu
rposes.
(2) P
erBon
dCo
vena
nts,an
yam
ountwith
draw
nfro
mth
eRe
venu
eFund
and
dep
osite
dinth
eRa
teStabilizati
onAccou
ntinanyFisc
alYearw
illbesubtracted
from
NetReven
uesforth
epu
rposesofcalculatin
gthede
bt
coveragere
quire
men
t(3) D
oesn
otinclu
deTermLo
an-JuniorLien
Loan
norca
pitalized
interestonbo
ndproceed
s.
(4) The
bon
dcovena
ntss
tateth
atnew
bon
dsm
aybeiss
uediftheam
ountofthe
netre
venu
efora
nytw
elveco
nsecuti
vem
onthsina24
mon
thperioddivide
dbyth
emaxim
umann
ualdeb
tserviceinanyfu
tureyearisn
otless
than
125
percent.
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Revenu
eBo
nds
$3
4,21
5,70
1$32
,482
,565
$3
0,66
4,56
9$2
8,76
0,62
2$3
6,71
3,77
8$34
,622
,865
$82,09
5,00
0$8
0,68
0,00
0$7
8,38
5,00
0$7
6,84
0,00
0
Unam
ortized
PremiumDisc
ount
andLossonDe
feasan
ce(53
,819
)(47
,698
)(41
,910
)(36
,477
)(208
,117
)(194
,718
)27,96
410,06
6854
,265
675
,241
CapitalLeases
-
-
-
-
11
0,61
26
6,02
157,98
628,80
412,02
5 -
TotalO
utstan
ding
Deb
t$3
4,16
1,88
2$3
2,43
4,86
7$3
0,62
2,65
9$2
8,72
4,14
5$3
6,61
6,27
3$34
,494
,168
$82,18
0,95
0$8
0,71
8,87
0$7
9,25
1,29
0$7
7,51
5,24
1
TotalD
ebttoOp
erati
ng
Revenu
es
9
0%
8
1%
7
1%62
%
7
7%
7
1%17
1%16
5%16
1%14
3%
TotalD
ebttoTo
talA
ssets
27%
26%
24%
22%
25%
23%
41%
40%
40%
42%
TotalD
ebtp
erRatep
ayer
$
1,14
6$1,05
2$97
1$8
92$
1,12
5$
1,05
7$2
,527
$2,482
$2,457
$2,385
RATI
OS
OF
OUT
STAN
DING
DEB
Tfo
r the
year
s end
ed D
ecem
ber 3
1
61
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Popu
latio
nofCou
nty (1
)50,80
051,90
053,10
054,60
056,30
056,80
060,69
961,10
061,45
061,80
0
Unem
ploymen
tRateofCou
nty (
2)6.
7%5.
6%5.
8%6.
0%8.
6%11
.3%
10.2
%11
.1%
10.1
%9.
0%
Med
ianHo
useh
oldIncomeofCou
nty(3)
$46,43
6$4
7,71
3$5
0,87
8$4
6,89
3$4
8,65
5$4
7,89
8$4
7,27
3$4
7,72
4$4
8,80
4$4
9,99
3
PerC
apita
Persona
lIncom
eofCou
nty(4)
$27,03
4$2
7,48
2$2
8,82
9$3
0,46
2$3
1,23
5$3
0,63
6$3
0,81
6$3
1,64
6$3
2,69
6N/
A
Scho
olEnrollm
ento
fCou
nty(5)
8,138
8,191
8,236
8,122
8,059
8,081
8,230
8,096
7,982
7,972
DEM
OGR
APHI
C ST
ATIS
TICS
for t
he ye
ars e
nded
Dec
embe
r 31
(1) S
ource:W
ashing
tonStateOffi
ceofFinan
cialM
anagem
ent
(2) S
ource:Lab
orM
arketa
ndEcono
micAn
alysis,W
ashing
tonEm
ploymen
tSecurity
Dep
artm
ent
(3) S
ource:W
ashing
tonStateOffi
ceofFinan
cialM
anagem
ent
(4) S
ource:BureauofEcono
micAn
alysis
(5) S
ource:W
ashing
tonStateOffi
ceofSup
erintend
ento
fPub
licIn
struction
62
20
1320
04
Empl
oyer
Prod
uct/
Serv
iceEm
ploy
ees
Rank
Perc
enta
ge o
f To
tal C
ount
y Em
ploy
men
tEm
ploy
ees
Rank
Perc
enta
ge o
f To
tal C
ount
y Em
ploy
men
t
LittleCreekCasinoHo
tel
Casin
oan
dho
tel
788
13.
66%
600
22.
87%
Washing
tonCo
rrectio
nCe
nter
Correctio
nal
647
23.
00%
685
13.
28%
SheltonScho
olDistric
tEd
ucati
onprovide
r59
43
2.76
%54
93
2.63
%
Mason
Gen
eralHospital
Med
icalfacility
547
42.
54%
428
52.
05%
TaylorShe
llfish
Shellfish
350
51.
62%
300
81.
44%
Mason
Cou
nty
Governmen
t33
86
1.57
%36
47
1.74
%
Wal-M
art
Retailstore
297
71.
38%
486
42.
33%
Squa
xinIn
dian
Trib
eTribalFacility
287
81.
33%
189
110.
91%
Olym
picP
anelProdu
cts
Plyw
ood,ven
eer
283
91.
31%
270
101.
29%
NorthMason
Schoo
lDistric
tEd
ucati
onprovide
r27
610
1.28
%28
49
1.36
%
Simpson
Lumbe
rCom
pany
Lumbe
r26
011
1.21
%41
86
2.00
%
Islan
dEn
terprises
TribalCom
panies
175
120.
81%
3943
0.00
%
Total
4,84
222
.47%
4,61
221
.90%
Source:Econ
omicDe
velopm
entC
ouncilofM
ason
Cou
nty
PRIN
CIPA
L EM
PLO
YERS
for t
he ye
ars e
nded
Dec
embe
r 31
63
2004
20
05
2006
20
07
2008
20
09
2010
20
11
2012
20
13
Ope
ratin
g Ex
pens
es /
Reve
nues
97.9
%96
.4%
96.5
%88
.4%
82.4
%85
.9%
89.9
%90
.8%
99.0
%98
.6%
Tota
l Ele
ctric
Sal
es in
MW
h
Re
tailSales
598
,279
618
,256
645
,820
668
,648
672
,105
660
,405
654
,567
666
,926
663
,537
656
,363
Annu
al k
Wh
per C
usto
mer
Re
siden
tial
13,15
812,92
113,28
614,03
014,20
514,34
813,84
214,53
714,19
913,89
4
Ge
neralService
78,53
480,91
285,31
784,42
084,48
583,36
283,53
380,60
084,52
582,99
6
Indu
stria
l69,43
6,80
074,79
3,60
070,41
6,00
064,06
5,60
055,85
7,60
040,69
4,40
050,45
7,60
049,03
2,00
052,35
8,40
053,09
2,80
0
Misc
ellane
ous
23,79
623,22
624,03
123,77
524,40
025,13
625,12
324,57
925,46
624,82
3
Aver
age
Annu
al k
Wh
per C
usto
mer
-All
Clas
ses
20,06
420,05
420,48
420,77
220,65
720,23
720,12
820,50
920,57
520,19
7
Aver
age
Reve
nue
per R
esid
entia
l Cus
tom
er$8
44$8
53$9
01$9
67$1
,002
$1,046
$1,018
$1,059
$1,068
$1,167
Annu
al R
even
ue p
er C
usto
mer
- Al
l Cla
sses
$1,202
$1,223
$1,289
$1,350
$1,385
$1,419
$1,413
$1,438
$1,478
$1,594
Addi
tions
to P
lant
, exc
ludi
ng W
ork-
in-P
rogr
ess (1
)$6
,194
,450
$6,967
,080
$4,569
,715
$5,976
,049
$5,532
,730
$6,048
,307
$6,953
,589
$4,663
,307
$3,049
,114
$42,25
2,07
6
Net U
tility
Pla
nt$1
02,088
,517
$105
,753
,357
$107
,101
,640
$108
,026
,826
$109
,209
,590
$112
,548
,254
$120
,184
,401
$143
,711
,176
$148
,359
,380
$136
,454
,759
Num
ber o
f Sub
stati
ons
10
10
11
11
11
11
11
11
11
11
Prim
ary
Line
Mile
s
Ov
erhe
ad 6
43
654
6
58
660
6
71
677
6
83
686
6
90
690
Un
dergroun
d 9
84
993
1,010
1,030
1,050
1,062
1,072
1,074
1,076
1,078
To
talPrim
aryLin
eMiles
1,627
1,647
1,668
1,690
1,721
1,739
1,755
1,760
1,766
1,768
Capi
taliz
ed P
ayro
ll$1
,839
,435
$1,722
,558
$1,709
,384
$1,758
,612
$1,894
,770
$1,834
,631
$1,759
,896
$1,625
,996
$1,735
,988
$1,878
,325
Tota
l Pay
roll
Expe
nse
$7,424
,612
$7,607
,202
$7,963
,194
$8,628
,890
$8,361
,891
$8,756
,679
$9,118
,034
$9,039
,380
$9,736
,413
$10,17
7,80
3
Num
ber o
f Ful
l-Tim
e Em
ploy
ees
117
1
16
115
1
16
117
1
18
116
1
15
116
1
20
OPE
RATI
NG IN
DICA
TORS
for t
he ye
ars e
nded
Dec
embe
r 31
64
2004
20
05
2006
20
07
2008
20
09
2010
20
11
2012
20
13
Pow
er O
utag
es
Ov
erhe
ad 3
22
289
3
40
296
2
60
327
3
27
433
4
70
275
Un
dergroun
d 2
38
215
2
43
193
2
01
183
1
58
143
1
56
159
To
talPow
erOutages
560
5
04
583
4
89
461
5
10
485
5
76
626
4
34
Appl
icatio
ns R
ecei
ved
Ne
w 8
52
1,083
9
63
687
3
44
239
2
51
165
1
71
192
Altered
481
5
77
553
6
48
601
5
52
669
5
53
567
7
13
Ba
ckbo
ne 1
9 1
1 3
4 2
0 8
4
4
7
3
3
To
talA
pplicati
onsR
eceived
1,352
1,671
1,550
1,355
9
53
795
9
24
725
7
41
908
Conn
ects
Pe
rman
ent
419
6
62
586
4
68
214
1
04
111
6
6 6
2 6
9
Co
mmercia
l 8
3 7
5 5
2 3
4 3
8 3
1 2
1 2
3 2
3 1
8
Season
al 1
06
24
22
13
17
10
14
9
11
11
Misc
ellane
ous
119
1
34
161
1
66
87
75
69
69
71
61
To
talCon
nects
727
8
95
821
6
81
356
2
20
215
1
67
167
1
59
Tree
Trim
min
g
Mileso
fLines
53
70
50
57
70
71
63
55
66
43
Heati
ngDegreeDa
ys(2
)5,024
5,135
5,240
5,478
5,812
5,687
5,321
5,886
5,469
5,339
Annu
alPrecip
itatio
n(in
ches)(
3) 4
5.82
6
2.98
8
2.05
6
1.25
5
3.99
5
5.03
6
3.99
5
3.84
5
5.66
4
8.04
(1) The
John
sPrairieOp
erati
onsC
enterw
hichco
st$38
.8m
illionan
dtheMason
substatio
nwhichco
st$2.7millionwerebo
thfina
lized
and
add
edto
theElectricPlan
taccou
ntin201
3.(2) Sou
rce:N
ation
alW
eatherServiceForecastO
ffice
(3) Sou
rce:Distric
t’sM
t.View
weatherstati
on
“Our well-trained staff focuses on providing the best service possible to our customers. Whenever
we search for solutions, the customer needs are center stage. We upped our game in 2013
with programs designed to enhance PUD 3’s efficiency; all aimed at making our customer’s
experience as easy as possible.”
- Diane HennessyCustomer Service Manager
65
making connections.66
MasonCountyPublicUtilityDistrictNo.3P.O.Box2148
Shelton,MasonCounty,Washington(360)426-8255
www.masonpud3.org
making connections.