June 5, 2015 I NTRODUCTION D ISCLAIMER This electronic investor - - PowerPoint PPT Presentation

PUBLIC UTILITY DISTRICT NO. 1 OF SNOHOMISH COUNTY, WASHINGTON

June 5, 2015

ELECTRIC SYSTEM REVENUE BONDS, SERIES 2015 GENERATION SYSTEM REVENUE BONDS, SERIES 2015

DISCLAIMER

INTRODUCTION

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This electronic investor presentation that you are about to view is provided as of June 5, 2015 for a proposed offering of the Public Utility District No. 1 of Snohomish County, Washington Electric System Revenue Bonds, Series 2015 and Generation System Revenue Bonds, Series 2015 (together, the “Bonds”). This presentation has been prepared for information purposes only and for your sole and exclusive use in connection with the proposed transaction. The information contained herein is subject to completion and amendment. Any offer or solicitation with respect to the Bonds will be made by means of a final official statement. If you are viewing this investor presentation after the date stated above, events may have occurred that have a material adverse effect on the financial information presented. This presentation does not constitute and does not form part of an offer to sell or purchase, or the solicitation of an offer to sell or purchase, any securities or an offer or recommendation to enter into any transaction described herein nor does this presentation constitute an offer, commitment or obligation on the part of the issuer, underwriter or any of its affiliates to provide, issue, arrange or underwrite any financing or enter into any other transaction. You will be responsible for making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transaction and any other transactions contemplated by this presentation and neither the issuer nor the underwriter is making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Neither the issuer nor the underwriter makes a representation or warranty as to the (i) accuracy, adequacy or completeness of information in this investor presentation or (ii) legal, tax or accounting treatment of any purchase of Bonds by you or any other effects such purchase may have on you and your affiliates. This investor presentation may contain “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward-looking statements. Accordingly we caution you not to place undue reliance on these statements. All statements other than the statements of historical fact could be deemed forward-looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. THE PRINTING, DUPLICATING, DOWNLOADING, SCREEN CAPTURING, ELECTRONIC STORING, RECORDING, PUBLISHING OR DISTRIBUTING OF THIS INVESTOR PRESENTATION IN ANY MANNER IS STRICTLY PROHIBITED. By viewing this investor presentation you acknowledge that you understand and agree to the provisions of this page.

• The current market presents SFPUC with very attractive interest rates

PRESENTATION PARTICIPANTS

INTRODUCTION

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• Craig Collar, Assistant General Manager, Power, Rates & Transmission Management
• (425) 783-1825

cwcollar@snopud.com

• Glenn McPherson, Assistant General Manager, Finance & Treasurer
• (425) 783-8356

gsmcpherson@snopud.com

• Jim Herrling, Senior Manager Treasury, Risk Management & Supply Chain
• (425) 783-8303

jlherrling@snopud.com

FINANCIAL ADVISOR, PUBLIC FINANCIAL MANAGEMENT

• Mike Berwanger, Managing Director
• (213) 489-4075

berwangerm@pfm.com

• Will Frymann, Director
• (415) 982-5544

frymannw@pfm.com

SENIOR UNDERWRITER, CITI

• Jerry Bobo, Director
• (206) 628-4952

jerry.l.bobo@citi.com

• Ben Selberg, Director
• (206) 628-4951

benjamin.selberg@citi.com

SNOHOMISH COUNTY PUD

2015 ELECTRIC SYSTEM REVENUE BONDS

PLAN OF FINANCE

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Issuer: Public Utility District No. 1 of Snohomish County, Washington Estimated Par*: $142,565,000 Structure*: Fixed-Rate Bonds due 2016-2025 and 2036-2040 Tax Status: Tax-Exempt Non AMT Ratings*: Ratings to be confirmed via wire Retail Order Period*: Monday, June 15 Pricing Date*: Tuesday, June 16 Closing Date*: Tuesday, June 30 Principal Due: December 1 Optional Redemption *: Expected 10-year par call Security*: Payable from and secured solely by the Electric System Revenues subject to the prior payment

• f Electric System Operating Expenses. The District is obligated to pay all costs of its

Generation System, including Generation System debt service, (i) as Operating Expenses of the Electric System for any month in which any power and energy from the Generation System is made available and (ii) at all other times on a parity with the Electric System Bonds Use of Proceeds: To finance additions, betterments, and improvements to and renewals, replacements and extensions of the Electric System Senior Manager: Citigroup Global Markets Inc. Co-Managers: BofA Merrill Lynch, Goldman Sachs

*Preliminary and subject to change

2015 GENERATION SYSTEM REVENUE BONDS

PLAN OF FINANCE

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Issuer: Public Utility District No. 1 of Snohomish County, Washington Estimated Par*: $37,845,000 Structure*: Fixed-Rate Bonds due 2025-2045 Tax Status: Tax-Exempt Non AMT Ratings*: Ratings to be confirmed via wire Retail Order Period*: Monday, June 15 Pricing Date*: Tuesday, June 16 Closing Date*: Tuesday, June 30 Principal Due: December 1 Optional Redemption *: Expected 10-year par call Security*: Payable from and secured solely by the Generation System Revenues, subject to the prior payment of Generation System Operating Expenses Use of Proceeds: To finance additions and improvements to the Generation System, including the construction of the Calligan Creek Project and the Hancock Creek Project. The sale of the 2015 Generation System Bonds is conditioned upon the District’s receipt of FERC licenses for the Projects prior to June 15, 2015 Senior Manager: Citigroup Global Markets Inc. Co-Managers: BofA Merrill Lynch, Goldman Sachs

*Preliminary and subject to change

PUD OVERVIEW

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• SnoPUD is a municipal corporation of the State of

Washington established in 1936, independent of Snohomish County

• The PUD is organized through three systems:

Electric, Generation, and Water — Each system is separately financed with separate books and records

• The PUD is the largest PUD in the state, 2nd largest

public utility in the Northwest, and 12th largest public power utility in the United States measured by customers served Electric System

• Consists of the PUD’s transmission lines, substations, distribution lines, transformers, meters, and general plant
• Obligated to purchase the power produced by the Generation System on a take-or-pay basis

Generation System

• Generation System includes the Jackson Hydroelectric Project, Youngs Creek Hydroelectric Project, and the

Woods Creek Hydroelectric Project

• Construction is expected to begin on two additional low-impact hydroelectric projects upon FERC licensing

SERVICE AREA

4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 9.50% 10.00% 10.50% 2010 2011 2012 2013 2014 2015 Snohomish County Washington United States

Median Household Income

ECONOMIC OVERVIEW

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• Snohomish County is the third largest county in Washington state with 741,000 residents and is part of the Puget

Sound regional economy, just north of Seattle

• The expected median household income in Snohomish County was approximately $65,454 in 2014, about 15%

higher than the median for the state of Washington and 29% higher than the U.S. median

SERVICE AREA

Unemployment

*Through March 2015

*

Source: U.S. Census Bureau; U.S. Bureau of Labor Statistics; State of Washington

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 2009 2010 2011 2012 2013 Snohomish County Washington United States

• SnoPUD’s electric rates are competitive with that of
• ther local service providers

— District’s rates are among the lowest in the nation

• Top 10 customers accounted for 9% of retail sales

revenue in 2014

COMPETITIVE RATES

8 Average Monthly Residential Electricity Bill (1,000 kWh)

SERVICE AREA

Puget Sound Energy City of Seattle SnoPUD City of Tacoma

Tacoma

Regional Service Areas

$0 $30 $60 $90 $120 $150 City of Tacoma PUD No. 1 of Cowlitz County Pacific Power AVISTA City of Seattle PUD No. 1 of Clark County SnoPUD Puget Sound Energy Portland General Electric Co.

• The PUD’s electric rates and charges are controlled locally by the PUD’s three member Board of Commissioners

— Not subject to any other jurisdiction or oversight

• The Board’s policy provides for a review and pass-through of any adjustment to wholesale energy and

transmission rates charged by the Bonneville Power Administration — The Board currently expects a BPA pass-through rate adjustment in October

RATE SETTING PROCESS

9 Recent SnoPUD Rate Actions

RATE SETTING

3.50% 2.90% 2.30% 1.90% 2.90% 0.90% 2.70% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% General Rate Increase BPA Pass-Through

$ 100 $ 90 $ 80 $ 70 $ 60 $ 50 $ 40 $ 30 $ 20 $ 10 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Average Power Supply Cost $33.50

BPA Slice BPA Block

Jackson, Packwood, and Small Hydro Wind/Biomass/Biogas/ LFG Short-Term Market Purchases

ELECTRIC & GENERATION SYSTEMS

• The District benefits from

a low cost, clean power supply portfolio, including priority access to Bonneville Power

• In 2014, the District

purchased: — 82% of its power from Bonneville — 7% from long-term power contracts — 6% from the Jackson Project, the Youngs Creek Project and the Woods Creek Project — 5% from the wholesale market

POWER RESOURCES AND COST OF POWER

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2015 HYDRO AND WEATHER UPDATE

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ELECTRIC & GENERATION SYSTEMS

• While poor water/snowpack conditions exist in much
• f the US West and Southwest, the Northwest

situation is considerably more positive

• The Federal system benefits from a diversity of

watersheds, with five distinct basins throughout the region

• Columbia River water flows have been above

average due to above average precipitation and early snowmelt due to warmer weather — Observed 101% of average for the Federal Water Year started October 1, 2014 through June 3, 2015 at the Dalles Dam — Projected to total 88% of average for October through September1

• District power supply is adequate for the remainder
• f the water year to meet District loads

1As of June 3, 2015 at the Dalles Dam.

• New cumulative conservation, when combined with the PUD’s existing and committed resources, is expected to

meet forecasted customer loads through 2023

• SnoPUD expects future resources to include Land Fill Gas, Small Hydro, Wind, Biomass, and Geothermal

— SnoPUD is currently in compliance with Washington’s RPS (Initiative I-937), and existing and committed resources are projected to remain adequate for I-937 compliance through 2027

LOAD VS. EXISTING AND COMMITTED RESOURCES

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ELECTRIC & GENERATION SYSTEMS

• 200

400 600 800 1,000 1,200 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 aMW BPA Contract Existing/Comitted Resources New Conservation Future Resources Load Forecast

Load vs. Existing and Committed Resources

BPA contract shown assuming critical water

• The PUD’s Board of Commissioners adopted the current IRP in

November of 2013

• The IRP details how the PUD will meet its future load growth

under a variety of scenarios: — Conservation remains the resource of choice – Between 2014 and 2028, the PUD expects to achieve 109 aMW in new cumulative conservation — For any load growth not met by conservation, the PUD will pursue a diverse portfolio of clean, renewable resources

• The PUD has virtually no carbon footprint and has long provided

a variety of energy efficiency programs to its customers — On a cumulative basis, average electric loads in 2014 were more than 100 aMW lower than would have occurred without the existence of the District’s long-standing programs — While the IRP includes a modest amount of distributed solar generation, the impact is expected to be limited given relative electricity rates and weather conditions in the Northwest

INTEGRATED RESOURCE PLAN

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ELECTRIC & GENERATION SYSTEMS

• The PUD expects to receive licenses from FERC for the

development of two new run-of-the-river hydroelectric projects — Similar in to the District’s 8 MW, $30 million, Youngs Creek Hydroelectric Project, commissioned in 2011 — 2015 Generation System Bonds will only be sold if the District receives FERC licenses prior to June 15, 2015

• Hancock Creek Hydroelectric:

— Located on Hancock Creek, downstream of Lake Hancock, a tributary to North Fork Snoqualmie River in King County — 6 MW nameplate, expected output ~2.5 aMW — Anticipated annual output ~22,100 MWh — Estimated project cost $29 million

• Calligan Creek Hydroelectric:

— Located on Calligan Creek, downstream of Calligan Lake, tributary to North Fork Snoqualmie River in King County — 6MW nameplate, expected output ~2.4 aMW — Anticipated annual output ~20,700 MWh — Estimated project cost $24 million

• Currently expected to be commissioned and in service by the end
• f 2017

— Expected cost (including financing) of $77 to $88/MWh

GENERATION SYSTEM PROJECTS

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ELECTRIC & GENERATION SYSTEMS Hancock Creek Calligan Creek

• Since 2010, energy

consumption has remained relatively stable

• Total energy sales have

steadily improved as a result of a series of modest rate increases

• Purchased power reflects

a 17-year power purchase agreement with BPA which began in 2011

• Electric System debt

service coverage has averaged 3.18x over the last 5 years

• PUD policy is to maintain

minimum Electric System debt service coverage of 1.75x

HISTORIC ELECTRIC SYSTEM OPERATING RESULTS

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FINANCIAL RESULTS

Electric System Historic Revenues, Expenses and Debt Service Coverage ($000s) 2010 2011 2012 2013 2014 Operating Revenues Sales of Electric Energy $ 542,074 $ 560,901 $ 570,210 $ 587,331 $ 604,019 Other Operating Revenues 18,695 25,186 20,800 21,672 24,563 Total Operating Revenues 560,769 586,087 591,010 609,003 628,582 Operating Expenses Purchased Power and Generation1 $ 320,049 $ 308,793 $ 317,301 $ 323,572 $ 332,375 Operations & Maintenance 172,913 175,605 176,840 182,955 198,716 Depreciation 40,313 42,242 43,854 45,968 48,336 Taxes 30,885 31,699 31,517 32,582 33,149 Total Operating Expenses 564,160 558,339 569,512 585,077 612,576 Net Operating Income (Loss) (3,391) 27,748 21,498 23,926 16,006 Interest and Other Income and Expense Other Income and Expense 33,245 11,412 17,251 10,269 2,313 Interest Charges, net (17,148) (19,129) (17,111) (15,507) (14,191) Capital Contributions 11,023 11,397 11,434 14,424 18,287 Net Income $ 23,729 $ 31,428 $ 33,072 $ 33,112 $ 22,415 Balance Available For Electric System Debt Service Coverage2 65,190 104,680 92,326 92,446 87,941 Electric System Bond Debt Service 22,396 24,271 32,850 30,667 30,643 Electric System Bond Debt Service Coverage 2.9x 4.3x 2.8x 3.0x 2.9x

(1) Includes Generation System debt service. (2) Balance Available For Electric System Debt Service Coverage assumes debt service on Generation System Bonds is paid as an Electric System Operating Expense.

ELECTRIC SYSTEM OPERATING FORECAST

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PROJECTED FINANCIAL RESULTS

Electric System Forecasted Revenues, Expenses and Debt Service Coverage ($000s) Year 2015 2016 2017 Operating Revenues Sales of Electric Energy $ 600,131 $ 643,864 $ 664,539 Other Operating Revenues 19,785 19,989 20,321 Total Operating Revenues 619,916 663,853 684,860 Operating Expenses Purchased Power and Generation1 $ 330,087 $ 351,207 $ 350,962 Operations & Maintenance 210,948 218,663 224,475 Depreciation 49,069 49,560 50,056 Taxes 33,908 35,755 37,150 Total Operating Expenses 624,012 655,185 662,643 Net Operating Income (Loss) (4,096) 8,668 22,217 Interest and Other Income and Expense Other Income and Expense 12,183 6,128 5,407 Interest Charges, net (15,847) (14,471) (14,085) Capital Contributions 20,005 21,529 24,264 Net Income $ 12,245 $ 21,854 $ 37,803 Balance Available For Electric System Debt Service Coverage2 75,161 83,885 98,943 Electric System Bond Debt Service 29,678 27,697 27,366 Electric System Bond Debt Service Coverage 2.5x 3.0x 3.6x

• Projections continue to

illustrate strong financial performance — Steady growth in retail revenues supported by conservative load growth and modest projected rate increases

• CIP anticipates $367

million in expenses through 2017 — District anticipates 60% revenue/cash financing

• ver time
• Projections reflect impact
• f 2015 plan of finance
• Electric System debt

service coverage is projected to average 3.0x

(1) Includes Generation System debt service (2) Balance Available For Electric System Debt Service Coverage assumes debt service on Generation System Bonds is paid as an Electric System Operating Expense. Assumptions:

• 2015 projections assume Blend Water conditions; first quarter reflects actual results
• 2016 and 2017 projections assume average water conditions at hydroelectric facilities
• Retail Sales of Electric Energy reflect a 1.9% rate increase effective April 1, 2015, a projected 4.5% rate increase expected to be effective October 1, 2015, a

projected 2.9% rate increase expected to be effective April 1, 2017 and a projected 2.1% rate increase expected to be effective October 1, 2017.

• Purchased Power and Generation Costs reflect a 5.3% increase in the cost of wholesale power from Bonneville effective October 1, 2015 and a 2.2% increase in the

cost of wholesale power from Bonneville effective October 1, 2017.

• Retail power loads are forecasted with less than 1% annual increases
• Electric System Bonds Debt Service in 2015 reflects debt service on the 2005 Bonds through September 1, 2015, when the District expects to defease the 2005

Bonds, and projected debt service on the 2015 Bonds beginning July 1, 2015.

RISK MANAGEMENT AND POWER SUPPLY POSITION

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RISK MANAGEMENT

• District manages its wholesale market activity through its Energy Risk Management Policy
• The District executes short-term purchases and sales in the wholesale power market to balance seasonal

and daily variations in its customer loads and owned and contracted-for resources — Net power position drives wholesale activity — District is naturally long power as BPA contract is based on Critical Water — The majority of the District’s short-term wholesale market sales are from surplus energy from the Slice product

• Volatility of net wholesale power revenues has declined over recent years as the District continues to

budget based on Blend Water and is also using conservative price assumptions for wholesale revenue — Blend Water is defined as the midpoint between critical and average water conditions — Over the past 5 years, wholesales sales have averaged 8.4% of total energy sales

• The $171 million Power Market Volatility Reserve is intended to protect the District’s financial position from

volatility associated with wholesale market exposures

• The Board of Commissioners adopted a financial reserve policy which includes:

RESERVE POLICY AND BALANCES

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LIQUIDITY POSITION

Reserve Balances ($Millions) Current Policy December 2014 Operating $ 89 $ 96 Power market volatility 171 171 Self insurance 12 12 Resource reinvestment

• 68

Debt management reserve

• 100

Total Reserve Balance $ 272 $ 447

— Operating reserve equal to 90 days of non-power budgeted expenses — A $171 million power market volatility reserve; includes the PUD’s $115 million rate stabilization reserve

• PUD currently expects to utilize the debt management

reserve to retire the Series 2005 bonds by December 2015

$- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2010 2011 2012 2013 2014 Operating Reserve Debt Management Reserve Power Market Volatility Resource Re-Investment Self Insurance Bond Proceeds Electric System Infrastructure Minimum Operating Reserve Level

Reserve Balances ($000s)

FINANCING SCHEDULE

Date Activity June 15*

• Retail Order Period

June 16*

• Pricing

June 30*

• Closing

CONCLUSION

19 * Preliminary and Subject to Change.