Safety Report May 2019 Incidents Reported Date Injury - - PowerPoint PPT Presentation

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Safety Report May 2019 Incidents Reported Date Injury Description: Causes: Prevention: Rubbed something into eye and tried to Be aware of irritating substances on hands, wash 4/3/19 Eye Dirty hands flush it, eye became irritated and

SLIDE 1

Safety Report May 2019

SLIDE 2

Incidents Reported

Date Injury Description: Causes: Prevention: 4/3/19 Eye Rubbed something into eye and tried to flush it, eye became irritated and sore Dirty hands Be aware of irritating substances on hands, wash hands before touching eyes or other sensitive areas. 4/4/19 Head Vest caught on rotating shaft Working around moving parts Ensure guards are installed around moving parts or stop work unless equipment can be locked out. 4/4/19 Finger Pinched finger in bin door Pinch point Be aware of hand placement around pinch points 4/9/19 Back & Elbow Entering a switching vault, had a hand on the metal lid for support while easing into the vault. Lid came crashing down on back and elbow Inattention to surroundings Do not support yourself on loose or unstable objects 4/16/19 Shoulder Hit car that failed to stop at a stop sign at 50-60 mph. Other car ran a stop sign Maintain awareness through intersections 4/18/19 Allergic Reaction Prescribed medication caused anaphylactic shock causing employee to pass out. Medication Consult health care provider

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Monthly and Year to Date

2018 April YTD Total Incidents Reported 6 16 Recordable Case(s) 1 3 Restricted Duty Case(s) 1 2 Lost Workday Case(s) 1 3

SLIDE 4

Vehicle Incidents

Date Vehicle Driver’s Account: Prevention

4/10/19 440 Unloading backhoe bucket with forklift and scraped side rail of 440 Attention to surroundings 4/15/19 432 Rock chip N/A 4/16/19 237 Hit car that failed to stop at a stop sign at 50-60 mph. Extra attention and caution traveling through intersections 4/15/19 456 Pole struck the top of cab leaving a small dent and scratch Use extra caution when moving or securing awkward loads 4/19/19 415 Employee forgot to put vehicle in park on a slope and vehicle rolled back 25-30 feet where it hit a district employee car causing damage to the right side of their vehicle Basic vehicle operation 4/23/19 412 While backing up, caught drivers mirror on disconnect that rises up from the pole, breaking mirror housing Attention to surroundings

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Closed Investigations

Date Description Safety Coordinator

3/27/19 Wrench was found left on station service breaker after maintenance was performed. Tyler O’Brion 4/4/19 Vest caught on rotating shaft pulling employee down and causing head injury Ron Roth

For more information contact the Safety Coordinator assigned to the investigation

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Close Calls

Date Location Description

4/2/19 Priest Rapids Recreation Area While traveling front tie down strap on the trailer holding the Kubota in place snapped. Sharp edge on the Kubota and the gravel road was the cause. Used a chain and binder to fix until getting back to the WMC. 4/3/19 Well House #7 Installing 16s meter. Metal tab on back fell off resulting in phase to phase fault. No injury. 4/4/19 ML Private Residence The District's Fiber contractor was installing fiber to a residence. The homeowner walked through the work area tripped and fell. Work area was marked with cones. 4/9/19 George Private Residence An employee of the District's Fiber Contractor was bit by a dog on the left bicep. First aid was administered on

site. Homeowner had been notified of planned work two weeks in advance.

4/15/19 Quincy Moving a downed pole, pole spun and struck the top of the truck leaving small dent and scratch 4/15/19 Priest Rapids Dam, P08 Turbine Pit The turbine bearing on P08 was being removed using two chain falls connected to the bottom of the thrust bracket by swivel eyes. As the bearing was being lifted one of the swivel eyes pulled out of the internal threads

n the bottom of the bracket. The chain fall and the rigging equipment fell into the turbine pit. No personnel

were hit by the falling equipment but were very close to being hit. All work has stopped in this area and an Investigation is underway. 4/17/19 SR 262 & Rd.10 S.W. Clearance perimeter was established and issued. Dispatch noticed a point (a Normal OPEN Air Switch) had been missed in the clearance perimeter. Could not reach clearance holder by radio or cell phone. Several minutes later we were able to contact the clearance holder and informed him of the situation, at this time he reported his work was complete and released the clearance as it was originally installed.

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Close Calls

Date Location Description

4/18/19 ESC Transpiration Shop Two crane contractors servicing overhead cranes directly above two vehicles that needed work in the bay. Our employees unknowingly walked into a conned off area. Coordination is needed when work needs to be performed in the same area. 4/22/19 MLLO Vestibule Current locking mechanisms on the vestibule doors do not meet life safety code requirements. There is no free egress from the customer or lobby or the vestibule once the doors are manually locked. Same goes for Quincy Local Office ands Royal City Local Office. 4/25/19 Server Room Side Entrance A district employee was noted as not adhering to the warning signs at the side entrance of the server

room. There are several warning signs for people not to enter or use this door. Door is continuously monitored

by outside security agency and has a silent trigger on it that must be cleared or have Police respond to. Door is there only for purposes of escape in a emergency from that space. 4/25/19 Priest Rapids Power House Inner sleeve from P8 was being moved and slid off the forks when forklift breaks were applied 4/29/19 Conference Room H Installing computer and cables, while under a shelf, reached up to grab a cable and almost grabbed a razor blade that was left sitting on the shelf.

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Close Call Reporting Changes

Starting in June after a Close Call report is entered into the system it will be sent to the employees

manager/supervisor and the Safety Department.

After the manager/supervisor reviews and approves, it will be globally distributed to all active Grant

PUD emails.

This change is intended to better communicate Close Call information throughout the District.

If you have any questions please do not hesitate to contact your Safety Coordinator.

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Level 1 – Serious Close Call Level 2 – First Aid Case(s) Level 4 –Restricted Duty Case(s) Level 5 – Lost Work Day Case(s) Level 6 – Fatality or Hospitalization

38 5 4 3 2 3

Injury/Illness INCIDENT RATES (0.0 is the Ultimate Goal!) 2018 (Year End) 2019

12 mo. Rolling AVG*

Total OSHA Recordable Case (Levels 3,4,5) Rate 2.8 3.3* Lost Time Case (Levels 4&5) Rate 1.2 1.3

Employee Safety

2019 incidents Year to Date Summary - May

2019

2018

41 10 41 4 4 11

Recordable Cases TTL.

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Leading & Lagging Indicators

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12 Month Rolling – Recordable Injury Rate 2018 vs. 2019

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Safety Policy Status:

Completed Policies Since Oct. 2018

SA-APP-001 Accident Prevention Program SA010109-POL Personal Protective Equipment SA111103-POL Confined/Enclosed Space SA111104-POL Substation Entry SA121204-POL Minimum Approach Distance SA121213-POL Hot Work A1 SA111101-POL Lead Exposure Program SA000002-POL Agency Inspections SA111111-POL Forklifts and PITs SA000015-POL Departmental Safety Meetings SA121213-POL Hot Work A0 SA000003-POL Heat Stress

* Request from Commissioners to see more details on completed policies vs. policies in process or awaiting review. Document # Title Comments

SA111108-POL Fall Protection Program

Permission to move on without further comments from Ty Ehrman. Review completed 4-24-19. Will be released when training is complete.

SA-11107-POL Trenching and Excavation

Permission to move on without further comments from Ty Ehrman. Review completed 4-24-19. Will be released when training is complete.

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Safety Policies Under Review:

Policies Under Review

Area Leads Start Date

Comments

SA000016-POL Safety Committees SST Will Identify TBD SA000005-POL Reporting Injuries SST Will Identify TBD SA010101-POL Fire Prevention Program SST Will Identify TBD SA020206-POL Evacuating A Grant PUD Facility SST Will Identify TBD SA111102-POL Hazard Communications SST Will Identify TBD SA111100-POL Handling & Use of Sulfur Hexafluoride (SF6) SST Will Identify TBD SA111111-POL Flame Resistant and Arc Rated Clothing SST Will Identify TBD SA121200-POL Using Tape/Rope/Signage as a Safety Barricade SST Will Identify TBD SA111123-POL Crane, Derrick, Hoist SST Will Identify 5/6/19 Under 3rd party Review SA111112-POL Hearing Conservation Program SST Will Identify 4/1/19 Under 3rd party Review SA111101-POL Asbestos Program SST Will Identify TBD Under 3rd party Review SA111120-POL Respiratory Protection Program SST Will Identify TBD Under 3rd party Review SA111114-POL Lead Exposure Control Program SST Will Identify TBD Under 3rd party Review

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Powering our way of life.

Thank You

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20% Wholesale Price Increase
20% Wholesale Price Decrease
No Retail Load Increase Post-2019
No Retail Load Increase Post-2019 and -20% Wholesale Price Decrease
Zero Rate Increases
Fiber buildout completed by 2023
Scenarios and Debt Service Coverage (Appendix E)
Debt Service Coverage (DSC) is adversely affected in all scenarios through 2024 except

higher wholesale energy prices.

No Load growth scenario when combined with low wholesale energy prices creates the

largest negative impact to DSC, indicating that growing profitable loads is a key controllable business driver.

Scenarios and Excess Liquidity (Appendix F)
Excess liquidity dropping below $0 in any year would require the District to raise rates,

cut expenses and/or borrow more to avoid consuming working capital and reserves.

Minimum cash accumulation scenario adds $111 million from 2019 through 2024.
The highest threat to excess liquidity is No Load Growth when combined with low

wholesale energy prices. Conclusions and Path Forward:

Growing profitable loads is a key controllable business success driver.
Lower wholesale prices are a threat in the 2019-2024 period, particularly when combined with

no or low load growth.

Accumulating excess cash instead of utilitizing a debt reduction strategy, results in lower

earnings, lower DSC, and inhibits meeting the Return on Assets metric. Recommendation:

For your information.

SLIDE 17

EXHIBIT A – Summary of Budget Items (in thousands of dollars) Exhibit A - Summary of Budget Items Budget 2019 2019 2020 2021 2022 2023 2024 TOTAL O&M 122,104 126,234 126,117 129,828 131,294 133,608 139,825 TAXES 17,713 17,812 18,693 19,829 20,564 21,187 21,581 ELECTRIC CAPITAL 63,276 56,868 61,307 43,094 36,132 29,370 29,974 PRP CAPITAL 81,278 78,048 99,983 62,145 78,158 82,703 84,932 DEBT SERVICE (net of rebates) 87,544 87,498 88,497 91,345 91,530 87,361 89,105 TOTAL EXPENDITURES 371,913 366,460 394,597 346,243 357,677 354,230 365,417 Expenditure offsets for deduction Contributions in Aid of Construction (3,652) (3,652) (1,202) (1,207) (1,212) (1,218) (1,223) Sales to Power Purchasers at Cost (26,365) (29,819) (22,699) (13,835) (14,289) (14,056) (14,731) Net Power (+ Expense, - Revenue) (49,383) (58,375) (62,000) (74,933) (82,481) (74,086) (68,661) Conservation Loans (125) (125) (125) (125) (125) (125) (125) TOTAL EXPENDITURE OFFSETS (79,526) (91,971) (86,025) (90,100) (98,108) (89,485) (84,740) TOTAL BUDGETED EXPENDITURES 292,388 274,489 308,571 256,142 259,569 264,746 280,676

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EXHIBIT B – Consolidated Operational Performance (in thousands of dollars)

Exhibit B Budget Forecast CONSOLIDATED OPERATIONAL PERFORMANCE 2019 2019 2020 2021 2022 2023 2024 Sales to Power Purchasers at Cost 26,365 29,819 22,699 13,835 14,289 14,056 14,731 Retail Energy Sales 211,334 213,101 227,371 244,908 256,266 265,809 271,582 Net Power (Net Wholesale+Other Power Revenue) 49,383 58,375 62,000 74,933 82,481 74,086 68,661 Fiber Optic Network Sales 8,900 8,900 9,643 10,238 10,672 10,995 11,231 Other Revenues 1,809 1,809 1,825 1,841 1,857 1,873 1,890 Operating Expenses (122,104) (126,234) (126,117) (129,828) (131,294) (133,608) (139,825) Taxes (17,713) (17,812) (18,693) (19,829) (20,564) (21,187) (21,581) Net Operating Income(Loss) Before Depreciation 157,975 167,958 178,727 196,098 213,708 212,024 206,689 Depreciation and amortization (73,481) (72,928) (76,277) (76,447) (75,168) (76,798) (78,182) Net Operating Income (Loss) 84,493 95,031 102,450 119,651 138,541 135,226 128,507 Other Revenues (Expenses) Interest, debt and other income (30,188) (27,810) (27,663) (32,496) (31,119) (29,503) (27,957) CIAC 3,652 3,652 1,202 1,207 1,212 1,218 1,223 Change in Net Position 57,957 70,873 75,989 88,362 108,634 106,941 101,774 Budget Forecast 2019 2019 2020 2021 2022 2023 2024 NET INCOME 57,957 70,873 75,989 88,362 108,634 106,941 101,774 LIQUIDITY (measured at year end) Elect System Liquidity (Rev + R&C) 111,386 112,320 115,682 118,178 120,617 122,960 125,351 Excess Liquidity 59,041 80,621 113,689 150,546 198,541 244,093 288,817 Days Cash On Hand 576 611 697 425 536 584 622 LEVERAGE Consolidated DSC 1.91 2.04 2.10 2.25 2.37 2.37 2.43 Consolidated Debt/Plant Ratio 60% 59% 59% 58% 57% 56% 56% PROFITABILITY

Cons. Return on Net Assets (chg. in net assets / net plant)

2.7% 3.3% 3.4% 3.9% 4.7% 4.6% 4.3% Retail Op Ratio (assumes baseline capital) 107% 106% 104% 104% 101% 97% 98%

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EXHIBIT C- District Annual Financial Metric Targets Metric Target 2019 2020 2021 2022 2023 2024 Liquid Cash >$155M > 250 days Maintain above target Maintain above target Maintain above target Maintain above target Maintain above target Maintain above target Consolidated Debt Service Coverage >1.80x Maintain above target Maintain above target Maintain above target Maintain above target Maintain above target Maintain above target Debt to Net Plant <60% Debt 59% Maintain below target Maintain below target Maintain below target Maintain below target Maintain below target Return on Net Assets >4% 3.3% 3.4% 3.9% 4.7% Maintain below target Maintain below target Retail Operating Ratio <100% 106% 104% 104% 101% 97% Maintain below target Red denotes not achieving metric in current forecast Yellow denotes achieving interim metric, but not final metric target

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EXHIBIT D- Comparison between 2019 Budget and Q1 2019 Financial Forecast

Q1 2019 Base - Final

Target 2019 2020 2021 2022 2023 2024 NET INCOME 70,873 75,989 88,362 108,634 106,941 101,774 LIQUIDITY (measured at year end) Elect System Liquidity (Rev + R&C) $155 MM 112,320 115,682 118,178 120,617 122,960 125,351 Excess Liquidity 80,621 113,689 150,546 198,541 244,093 288,817 Days Cash On Hand > 250 611 697 425 536 584 622 LEVERAGE Consolidated DSC >1.8x 2.04 2.10 2.25 2.37 2.37 2.43 Consolidated Debt/Plant Ratio ≤ 60% 58.79% 58.85% 58.24% 57.43% 56.24% 55.58% PROFITABILITY Rate of Return (chg. in net assets / net plant) >4% 3.28% 3.39% 3.89% 4.70% 4.56% 4.27% Retail Op Ratio (assumes baseline capital) ≤ 100% 106.15% 104.20% 104.02% 100.58% 97.07% 98.12%

2019 Budget FINAL

Target 2019 2020 2021 2022 2023 2024 NET INCOME 57,957 55,265 62,632 64,473 65,448 65,720 LIQUIDITY (measured at year end) Elect System Liquidity (Rev + R&C) $155 MM 111,386 114,781 117,598 120,550 123,526 126,578 Finance Plan Reserve 59,041 60,988 62,879 67,529 73,595 80,218 Days Cash On Hand > 250 576 562 387 429 428 419 LEVERAGE Consolidated DSC >1.8x 1.91 1.89 1.99 1.96 1.99 2.07 Consolidated Debt/Plant Ratio ≤ 60% 59.71% 59.29% 58.26% 57.44% 56.32% 55.58% PROFITABILITY Rate of Return (chg. in net assets / net plant) >4% 2.67% 2.45% 2.74% 2.77% 2.77% 2.73% Retail Op Ratio (assumes baseline capital) ≤ 100% 106.82% 106.39% 107.45% 105.81% 102.34% 102.86%

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EXHIBIT D- Comparison between 2019 Budget and Q1 2019 Financial Forecast (con’t)

Difference

Target 2019 2020 2021 2022 2023 2024 NET INCOME 12,916 20,724 25,730 44,162 41,493 36,053 LIQUIDITY (measured at year end) Elect System Liquidity (Rev + R&C) $155 MM 934 901 580 67 (565) (1,227) Excess Liquidity 21,580 52,701 87,667 131,012 170,499 208,599 Days Cash On Hand > 250 36 135 38 107 156 203 LEVERAGE Consolidated DSC >1.8x 0.13 0.21 0.26 0.41 0.39 0.36 Consolidated Debt/Plant Ratio ≤ 60%

0.92%
0.45%
0.02%
0.01%
0.08%
0.01%

PROFITABILITY Rate of Return (chg in net assets / net plant) >4% 0.61% 0.94% 1.15% 1.93% 1.79% 1.54% Retail Op Ratio (assumes baseline capital) ≤ 100%

0.66%
2.19%
3.43%
5.23%
5.28%
4.74%

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EXHIBIT E- Scenarios: Debt Service Coverage Ratios

1.60 1.70 1.80 1.90 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2019 2020 2021 2022 2023 2024

Debt Service Coverage by Year and Scenario (Q1 2019)

Target Q1 2019 Base - Final Q1 2019 Scenario: +20% Price Q1 2019 Scenario: -20% Price Q1 2019 Scenario: No Load Growth Post-2019 Q1 2019 Scenario: -20% Prices and No Load Growth Q1 2019 Scenario: Zero Rate Increases Q1 2019 Base - Fiber By 2023

Debt Service Coverage (DSC) 2019 2020 2021 2022 2023 2024 Target 1.80 1.80 1.80 1.80 1.80 1.80 Q1 2019 Base - Final 2.04 2.10 2.25 2.37 2.37 2.43 Q1 2019 Scenario: +20% Price 2.00 2.14 2.33 2.49 2.49 2.54 Q1 2019 Scenario: -20% Price 2.08 2.06 2.17 2.24 2.26 2.33 Q1 2019 Scenario: No Load Growth Post-2019 1.97 2.08 2.16 2.30 2.33 2.40 Q1 2019 Scenario: -20% Prices and No Load Growth 2.02 2.02 2.05 2.12 2.14 2.22 Q1 2019 Scenario: Zero Rate Increases 2.04 2.07 2.19 2.31 2.31 2.36 Q1 2019 Base - Fiber By 2023 2.04 2.10 2.24 2.35 2.35 2.40

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EXHIBIT F- Scenarios: Excess Liquidity

$70.0 $120.0 $170.0 $220.0 $270.0 $320.0 2019 2020 2021 2022 2023 2024

Excess Liquidity by Year and Scenario (Q1 2019)

Q1 2019 Base - Final Q1 2019 Scenario: +20% Price Q1 2019 Scenario: -20% Price Q1 2019 Scenario: No Load Growth Post-2019 Q1 2019 Scenario: -20% Prices and No Load Growth Q1 2019 Scenario: Zero Rate Increases Q1 2019 Base - Fiber By 2023

Millions Excess Liquidity - figures in millions of USD 2019 2020 2021 2022 2023 2024 Q1 2019 Base - Final 80.6 $ 113.7 $ 150.5 $ 198.5 $ 244.1 $ 288.8 $ Q1 2019 Scenario: +20% Price 76.7 $ 113.5 $ 157.9 $ 218.7 $ 275.5 $ 330.6 $ Q1 2019 Scenario: -20% Price 84.6 $ 113.9 $ 143.1 $ 178.4 $ 212.7 $ 247.0 $ Q1 2019 Scenario: No Load Growth Post-2019 74.4 $ 105.0 $ 133.0 $ 174.5 $ 215.9 $ 257.6 $ Q1 2019 Scenario: -20% Prices and No Load Growth 78.5 $ 103.5 $ 120.7 $ 143.8 $ 165.9 $ 189.4 $ Q1 2019 Scenario: Zero Rate Increases 80.6 $ 110.5 $ 141.5 $ 183.4 $ 222.4 $ 260.3 $ Q1 2019 Base - Fiber By 2023 80.6 $ 99.2 $ 137.0 $ 177.2 $ 215.6 $ 256.2 $

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EXHIBIT G- Scenarios: Return On Net Assets

2.50% 2.75% 3.00% 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 2019 2020 2021 2022 2023 2024

Return on Net Assets by Year and Scenario (Q1 2019)

Return on Net Assets (RONA) 2019 2020 2021 2022 2023 2024 Target 3.60% 3.80% 4.00% 4.00% 4.00% 4.00% Q1 2019 Base - Final 3.28% 3.39% 3.89% 4.70% 4.56% 4.27% Q1 2019 Scenario: +20% Price 3.10% 3.55% 4.22% 5.25% 5.04% 4.70% Q1 2019 Scenario: -20% Price 3.47% 3.22% 3.55% 4.15% 4.08% 3.83% Q1 2019 Scenario: No Load Growth Post-2019 3.00% 3.28% 3.50% 4.42% 4.38% 4.14% Q1 2019 Scenario: -20% Prices and No Load Growth 3.18% 3.03% 3.03% 3.62% 3.56% 3.38% Q1 2019 Scenario: Zero Rate Increases 3.28% 3.24% 3.63% 4.43% 4.28% 3.98% Q1 2019 Base - Fiber By 2023 3.28% 3.33% 3.79% 4.55% 4.35% 4.08%

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Powering our way of life.

May 2019, Thru Quarter Ending 03/31/19

Treasury Quarterly Report

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I. Cash & Investment Management

II. Accounts Payable
III. Debt Management

Treasury Scope of Operations

SLIDE 27

Cash & Investment Management

District financial assets are managed in accordance to policy, state law, and internal strategy
Resolution 8712 sets banking and cash management authority and reporting requirements
Resolution 8745 sets authority for investment policy updates, roles and reporting requirements
District policy updated as needed and reflects authorities set within the state of Washington, IOC reviews, and monitors

performance against strategy

Incumbency Certificate (01/08/19) approved annually by Commission for District Officers (used for financial matters)
WA state RCW defines legal requirements and Treasurer’s authorities
State Investment Policy sets parameters under WA state law for authorized investment, banking, and cash management

protocol which are mirrored in internal protocol

Key portfolio notes
Derived from the above, the portfolio is managed within concentration and diversification boundaries and targeted ranges
Diversification mitigates risk to the District holdings, per policy decisions are made on the basis of legality, safety, liquidity

and yield (in order)

Portfolio categories are benchmarked against the industry for performance comparisons

SLIDE 28

P O R T F O L I O

Ending cash/investments (market value)

$511.4M

Decrease from prior period of $33M
Par value of portfolio at 3/31 = $500M,

$12.5M is market/accrual adjustments

Cash & Investments -Quarter Review

Upcoming significant cash events:
May: Internal cash transfer of $110M from

Elec Rev Fund to PRP Construction

July: Bi-annual debt service payment $45M

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P O R T F O L I O

Cash & Investments -Quarter Review

Diversification for investment type is measured against the total par amount of the portfolio per policy. 2019 reporting measures against the full portfolio including cash and short term investments. Diversification within the investment types for which broker/dealers are used (long term investments) are measured within that respective subtotal.

Key policy components

Prudence - investments are

made with the intention to hold to maturity, not for speculation 1. Legality 2. Safety 3. Liquidity 4. Return

District policy is to diversify by

security type, investment type, and maturity

Policy specifies max

concentration by type

Strategy sets an optimal

target range by type

Report Footnotes: (1) WSIB combined <= 25%, (2) includes large energy deposits, (3 & 4) as of purchase date, (5) <= 50% per B/D, (6) Aggregate <2.5% combined

Diversification

By Type:

Type Policy Max Target Range Current (%) Par

Treasuries 100% 20%-40% 22.5% 112,200 $ Agencies 50% 5%-15% 13.4% 67,033 Supras 50% 5%-15% 12.2% 60,990 Muni Bonds 50% 25%-40% 36.7% 183,270 Corp Notes 25%(1) 5%-10% 4.5% 22,525 CP 25%(1) 5%-10% 4.8% 24,000 Securities Subtotal Par 94% 470,018 $ WA LGIP 100% Varies (2) 3.4% 17,138 REPO 100% < $9,000 0.8% 3,800 Cash N/A < $3,000 1.6% 7,952 Total Cash & Investments Par 100% 498,908 $ 12,532 $ Total Cash & Investments 511,440 $

By Broker/Dealer:

Par (%)(5)

Vining Sparks 135,038 $ 29% Stifel, Nicholas 90,832 19% Wells Fargo 75,913 16% Piper Jaffray 52,945 11% UBS Securities 42,100 9% Oppenheimer 32,175 7% Keybanc 24,815 5% Others (6) 16,200 3% Securities Subtotal Par 470,018 $ 100%

Broker | Dealer

Shown in thousands $000 Shown in thousands $000 Accrual and Market Adjustments

Long Term Investments

SLIDE 30

P O R T F O L I O

Cash & Investments -Quarter Review

Key policy components

Return targeted to achieve a market average considering

economic cycles, risk constraints, arbitrage, and cash flows

A minimum of 20% of the total portfolio will be comprised
f investments maturing within 1 year
Special provisions for bond related funds
Benchmarking is done to provide information against similarly

diversified portfolio categories

The Sharpe Ratio is monitored as a measurement of the

performance of the portfolio adjusting for risk.

Maturities within 1 Year

Par $ Par % 1 Year or less * $ 187,688 39.9% > than 1 Year $ 282,330 60.1% Grand Total $ 470,018 100.0%

Policy constraint (1) 20% | $94

Portfolio Sharpe Ratio – thru 3/31/19 1.17 Benchmark Sharpe Ratio- thru 3/31/19 1.30

*Sharpe Ratio = Difference of the portfolio’s return and risk free return (3 month Treasury Bill) by the standard deviation of the portfolio’s return.

SLIDE 31

P O R T F O L I O

Cash & Investments -Quarter Review

Portfolio Status YTD Current Period Prior Year Same Qtr. Book Yield 2.69% 2.05% PB Yield 2.47% 1.80% Effective Duration 1.59 1.86 PB Duration 2.53 2.31

Book income includes cash flows (interest earnings) plus adjustments for discounts/ premium

a b (a+b) a b (a+b)

Realized

(Cash)

Unrealized (Mark-to-

Market)

Total Return Realized

(Cash)

Unrealized (Mark-to-

Market)

Total Return 2019 $'s 3.3 $ 2.8 $ 6.2 $ 14.0 $ 2.8 $ 16.8 $ *Projected 2019 Results 2019 %'s 3.31% 2.69% 0.62% 3.31% *Projected 2019 Results 2018 $'s 2.4 $ (2.4) $ (0.0) $ 12.6 $ (3.0) $ 9.6 $ 2018 %'s 1.45% 2.60%

0.64%

1.96% Q1 Par Value YE Par Value 2019 498.9 $ 2019 498.9 $ 2018 505.8 $ 2018 530.0 $ Year-To-Date Full Year (projected 2019)

Investment Return - YTD and Annual

shown in millions

SLIDE 32

The Fed Funds are currently set at a max of 2.50 (range of 2.25-2.50)
The overnight rate underwent 4 hikes in 2018 (0.25 ea.), which

followed a steady incline of increases the 4 quarters prior to.

While not certain, the most recent press releases speak to stability

in the rate over the upcoming FOMC meetings.

Over the past year, Treasuries have experienced a flattening and

decline away from the traditional yield curve.

District policy and strategy focuses outcomes based on fund principles

and not on market expectations.

M A R K E T

Cash & Investments -Quarter Review

The District’s Asset/Liability Matching program is designed to mitigate fluctuations in market results for a portion of the cash/investment portfolio by hedging interest earnings and interest expense. *The above graph assumes a reduction in future liquidity per implementation of pending recommendation; interest and yields are based upon current market conditions and current terms issued bonds.

Interest Matching - ALM

US Treasuries Yields: 1 mo. to 30 yr.

ALM Statistics thru TYTD Q1, 2019

Liquidity in Elec Rev/R&C Fund (Par) $286.5M Interest Earnings on above funds 2.61% / $3.1M Short Term Debt Program (Par) $150M Interest Expense on Short Term Debt Program 2.07%/$0.8M

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Banking and other updates
The District closed the Columbia Bank Account in March of 2019 due to the local office deposits being serviced

by the vault service (armored car)

Transition of authorized District staff
Continuous improvement efforts to consolidate accounts, evaluation of banking agreements
Successful implementation of ResNexus (recreation booking/payment system)
Implementation of automated bank reconciliation program that improves accuracy, improves internal controls,

and creates internal efficiencies

Worked with Customer Accounting to set up American Express as a payment option for customers

B A A N K I N G

Banking Quarter Review

SLIDE 34

Accounts Payable

District processes a large amount of
utflows annually
Capital, O&M
Taxes, Debt Service
(Payroll is processed thru

Treasury via a different process)

Significant intentional progress has

been made to reduce risk, increase efficiency, and reduce manual efforts

The District updated the approach

to vendor terms, taking discounts beginning in Q1. This is expected to create significant value for the District.

District is kicking off a cross

departmental Procure to Pay project to focus on additional efficiencies

Vendor Payments ACH vs Check 2017-Current Q1 - Dollars 2017 2018 2019 Q1 ACH/Wire (Electronic) 353,541,860 330,306,791 118,230,676 Check 19,413,739 13,010,747 3,773,647 ACH% 95% 96% 97% Vendor Payments ACH vs Check 2017-Current Q1 – Item Count 2017 2018 2019 Q1 ACH/Wire (Electronic) 6,551 7,239 1,690 Check 2,999 1,690 569 ACH% 68% 74% 75%

Elect $ Check $

Methods of Payment- Dollars

2017 2018 Elect- Qty Check - Qty

Methods of Payment- Quantity

2017 2018 90% 92% 94% 96% 98% 100% 2019 (YTD) 2018 FY 2017 FY

% of Dollars Processed Electronically

SLIDE 35

Debt Management

Quarter End Statistics:

Total outstanding external debt: $1.3B
Last debt issuance (new money) was Q4 of 2017
Next debt issuance is anticipated late 2020 or early

2021

Total par Junior Lien Bonds (JLB) internal repayment of

PRP cash financed capital (to Electric) = $216.2M

May 2019 $110M transfer to fund capital for the

next 9 months

Debt to Equity Ratio
2018 year end: 62%

Total Consolidate Outstanding Debt $1,269,395,000

SLIDE 36

Debt- Refunding

District policy on refunding for savings:
Aggregate 3% savings with a 50% escrow

efficiency

Tax legislation in 2017 greatly reduced refunding options

for the District

Tax exempt- must within 90 days of call date
Currently no qualified exempt candidates
Exempt bonds can be refunded ahead of call

date as taxable via a qualified defeasance escrow

District is evaluating other market opportunities to add

value to refunding options paired with long term financial strategies

*above calculations assume delivery as of 06/2019 (taxable refunding)

Series Amount Callable Meeting Criteria PV Savings Efficiency Call Date PV Savings PRP 2010-A 4,275,000 4% 98% 1/1/2020 223,023 PRP 2012-A 12,725,000 7% 67% 7/1/2022 688,337 PRP 2013-A 58,950,000 5% 48% 7/1/2023 3,238,483 PRP 2013-Z 20,585,000 10% 64% 7/1/2023 2,156,289 ES 2013-J 54,340,000 5% 47% 7/1/2023 2,681,118 PRP 2014-A 6,225,000 3% 36% 7/1/2024 206,666 PRP 2014-B 6,070,000 4% 37% 7/1/2024 212,388

SLIDE 37

Debt Program Activity

The District refunded the ES 2016-L short term variable

debt note in April of 2019

27 month maturity (ahead of LIBOR index transition)

and to maintain staggered remarketing/more favorable issuance time

Estimated savings to District of ~ $1.4M-$2.2M

compared to other short term options (at time of decision)

A portion of this included ~ $185k reduced

transaction costs and additional staff efficiencies

The District’s short term debt program is intended to hedge
verall market conditions (interest/expense) from a “net

interest” perspective

Strategies include diversification of portfolio, market

averaging/timing, par balanced to liquid cash program

The current short term debt program consists of three products of

$50 million each = $150 million program

1. ES 2017-M: Senior Lien- Fixed – 9/20 maturity 2. ES 2017-N: Subordinate Lien- Variable/Libor – 12/20 maturity 3. *ES 2019-P: Subordinate Lien- Variable/Libor – 7/21 maturity *refunded in April 2019

SLIDE 38

Debt Service Payments

Debt Service includes principal payments (due Jan

1st on fixed rate debt) annually

With exception the CREBS principal of $242M

is self managed in sinking funds up to the maturity dates

Short term debt (both fixed and variable)

contain specific provisions on principal repayment

Interest payments are due on Jan 1st/ July 1st for

fixed rate date and monthly on variable rate debt

CREB’s and BAB’s interest rebates return to

the District following the Jan/July interest payments

Current sequestration rate of 6.2%,

estimated 2019 rebate = $10.5M

The District targets 1.8x consolidated minimum debt

service coverage as a financial metric

Specific coverage and other requirements for

individual liens/notes

SLIDE 39

Debt Management- Credit Ratings

The District maintains ratings from the three

national agencies

Electric and PRP are rated as

separate charge of lien

Ratings are updated when public debt is

issued or when the agency takes action

S&P and Fitch have recently updated their

criteria which will be reflected in our next rating

The last District discussion with the

agencies was in October of 2018

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Powering our way of life.

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Public Utility District No. 2 of Grant County

Quarterly Treasurer's Report

Historical Cash and Investments Summary | Liquidity and Restricted

($ in thousands) Cash Cash & Investm Investments nts 3/31/ 31/2017 2017 6/ 6/30/ 30/2017 2017 9/ 9/30/ 30/2017 2017 12/ 12/31/ 31/2017 2017 3/ 3/31/ 31/2018 2018 6/ 6/30/ 30/2018 2018 9/30/ 30/2018 2018 12/ 2/31/ 31/2018 018 3/31/ 1/2019 2019 Liquidity‐ES R&C Fund (1) 126,813.2 $ 127,805.2 $ 128,510.9 $ 122,030.7 $ 121,692.6 $ 122,023.7 $ 122,318.8 $ 124,201.3 $ 126,043.9 $ Liquidity‐ES Revenue Fund (2) (4) 114,933.8 112,107.3 130,326.7 52,113.8 82,825.2 104,154.7 126,127.2 133,651.3 152,637.6 Other DCOH Funds (3) 68,918.3 51,466.1 48,138.1 51,182.4 46,819.3 44,041.2 33,671.9 35,469.5 45,822.5 Liquidity and Other DCOH Funds 310,665.2 $ 291,378.7 $ 306,975.7 $ 225,326.9 $ 251,337.1 $ 270,219.7 $ 282,117.9 $ 293,322.1 $ 324,503.9 $ Restricted‐Construction Funds (4) 74,617.3 57,732.4 64,886.9 137,822.1 108,223.3 72,069.8 51,896.7 27,422.9 11,607.7 Restricted‐DS Reserve Funds 61,613.7 62,040.7 62,313.3 54,768.7 54,589.9 54,749.2 54,827.9 55,636.0 56,618.9 Restricted‐DS P&I Funds 28,771.5 51,114.2 53,015.3 74,216.2 29,739.2 53,834.1 54,303.7 87,998.4 30,475.4 Restricted‐DS CREBs Sinking Funds 50,600.9 58,939.7 55,452.8 63,120.6 59,327.3 66,922.4 63,360.1 61,450.4 69,991.5 Restricted‐Habitat Funds 15,659.2 15,473.0 15,348.8 15,211.9 17,394.5 16,920.8 16,563.1 16,224.4 18,242.2 All Restricted Funds 231,262.6 $ 245,299.9 $ 251,017.0 $ 345,139.5 $ 269,274.2 $ 264,496.4 $ 240,951.5 $ 248,732.1 $ 186,935.7 $ Total Total 541,927.8 $ 536,678.5 $ 557,992.7 $ 570,466.4 $ 520,611.3 $ 534,716.0 $ 523,069.4 $ 542,054.2 $ 511,439.6 $

(1) Electric System R&C Fund $120M + interest earnings. (2) Electric System Revenue Fund $35M. Excess funds above liquidity target used for equity financing of PRP capital (Junior Lien Bonds, see Note 4). (3) Other funds used in Days Cash On Hand metric include PRP Revenue, PRP Supplemental R&C, Service System, and Customer Deposits. (4) Construction funds comprised of bond issues during the above time frame: $25.9M (Q2, 2017) and $100.0M (Q4, 2017). Electric System $50.0M (Q2, 2016) and $50.0M (Q3, 2017).

Beginning balances in Construction funds were related to bond issuances dated prior to above time frame.

$541.9 $536.7 $558.0 $570.5 $520.6 $534.7 $523.1 $542.1 $511.4 $‐ $100 $200 $300 $400 $500 $600 $700 3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019

$ in millions All Restricted Funds Other DCOH Funds (3) Liquidity‐ES Revenue Fund (2) (4) Liquidity‐ES R&C Fund (1) Total

SLIDE 49

4/17/2019 1:32 PM Cash Investments Total Electric and Service Systems Detail of Restricted Funds 1002 - ES Reserve & Contingency 1,112,512 124,931,342 126,043,854 1009 - ES Fiscal Agent 11,237 11,237 1101 - ES 2013J Debt Service Reserve 4,270 6,239,073 6,243,343 1102 - ES 2017O Debt Service Reserve, 4,736 5,361,750 5,366,485 1252 - ES Fiber Construction 142,496 928,914 1,071,409 1303 - ES 2016L Principal/Interest 397,002 397,002 1304 - ES 2017M Principal/Interest 400,446 400,446 1499 - ES Set-Aside Interest 2,843 1,904,695 1,907,538 4040 - SS Insurance Reserve 30,073 1,097,794 1,127,866 Total Restricted Funds 2,105,614 140,463,567 142,569,181 Detail of Unrestricted Funds 1001 - ES Revenue 4,549,870 148,087,688 152,637,558 1008 - ES Customer Deposits 47,107 13,918,358 13,965,465 4030 - SS Operating 510,475 10,807,080 11,317,555 Total Unrestricted Funds 5,107,453 172,813,125 177,920,578 Total Electric and Service System Funds 7,213,067 313,276,692 320,489,759 Priest Rapids Project Detail of Restricted Funds 7003 - PRP RR&C 45,825 12,083,955 12,129,780 7005 - PRP 2010 Debt Service Reserve 13,531 23,696,713 23,710,245 7106 - PRP 2012 Debt Service Reserve 5,820 5,466,066 5,471,886 7107 - PRP 2013A Debt Service Reserve 11,656 4,063,954 4,075,610 7108 - PRP 2013Z Debt Service Reserve 4,739 1,661,129 1,665,868 7109 - PRP 2014A Debt Service Reserve 4,142 7,410,204 7,414,345 7110 - PRP 2014B Debt Service Reserve 458 2,670,619 2,671,078 7033 - PRP 10M Principal/Interest 15,693 46,972,283 46,987,976 7250 - PRP BF Const Fnd 268,649 10,267,687 10,536,335 7307 - PRP 12M Principal/Interest 3,540 13,547,290 13,550,830 7316 - PRP 2015M Principal/Interest 4,434 9,448,272 9,452,706 7399 - PRP Set-Aside Principal 32,247 8,536,277 8,568,524 7499 - PRP Set-Aside Interest 11,176 19,150,960 19,162,136 7601 - Habitat No Net Impact 32,986 6,475,561 6,508,547 7602 - Habitat Supplemental 38,327 7,311,096 7,349,422 7603 - Habitat 44,708 2,706,342 2,751,050 7604 - Habitat Native Resident Fish 22,120 1,366,024 1,388,144 7605 - Habitat Wildlife Mgmt Plan 16,005 229,028 245,034 PRP Principal & Interest Sinking Funds 28,531 28,531 Total Restricted Funds 604,587 183,063,460 183,668,047 Detail of Unrestricted Funds 7001 - PRP Revenue 134,471 7,147,353 7,281,824 Total Unrestricted Funds 134,471 7,147,353 7,281,824 Total PRP Funds 739,057 190,210,813 190,949,871 Total Consolidated Restricted Funds 2,710,201 323,527,027 326,237,227 Total Consolidated Unrestricted Funds 5,241,923 179,960,479 185,202,402 Total District Consolidated Funds 7,952,124 503,487,505 511,439,629 PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY Cash & Investment Report As of Sunday, March 31, 2019

SLIDE 50

Public Utility District No. 2 of Grant County

Treasury Operations

Investing Strategy Guidelines & Month End Report

As of March 31, 2019 Diversification

($ in thousands)

By Type: Ratings: By Issuer: By Broker/Dealer:

Type Policy Max Target Range Current (%) Par Policy Min(3) Target Min Policy Max Target Max(4) Target Exception Par (%)(5)

Treasuries 100% 20%‐40% 22.5% 112,200 $ N/A TSY N/A N/A No Vining Sparks 135,038 $ 29% Agencies 50% 5%‐15% 13.4% 67,033 N/A N/A N/A 20% No Stifel, Nicholas 90,832 19% Supras 50% 5%‐15% 12.2% 60,990 N/A AA+ N/A 20% No Wells Fargo 75,913 16% Muni Bonds 50% 25%‐40% 36.7% 183,270 A‐ AA‐ N/A 5% No Piper Jaffray 52,945 11% Corp Notes 25%(1) 5%‐10% 4.5% 22,525 A‐ AA‐ 3% N/A No UBS Securities 42,100 9% CP 25%(1) 5%‐10% 4.8% 24,000 A1/P1 A1/P1 3% N/A No Oppenheimer 32,175 7% Securities Subtotal Par 94% 470,018 $ Keybanc 24,815 5% WA LGIP 100% Varies (2) 3.4% 17,138 N/A TSY N/A N/A N/A Others (6) 16,200 3% REPO 100% < $9,000 0.8% 3,800 N/A TSY N/A N/A N/A Securities Subtotal Par 470,018 $ 100% Cash N/A < $3,000 1.6% 7,952 N/A N/A N/A N/A N/A Total Cash & Investments Par 100% 498,908 $ 12,532 $

Accrual based accounting adjustments for GAAP reporting (mark‐to‐market and accrued interest)

Total Cash & Investments 511,440 $

($ in thousands)

Effective Duration: Market Value & Yield: Performance Benchmark: Strategy:

Purpose Policy Max Target Range Eff Dur Market Value Book Yield(8) Mkt Yield PB Yield PB Dur Operating Funds

6 Yrs(7) 0.5 ‐ 1.0 0.47 164,446 2.54% 2.48% 2.52% 0.52

Construction Funds

6 Yrs(7) 0.2 ‐ 1.0 0.30 6,489 1.94% 2.38% 2.52% 0.52

DS Set‐Aside Funds

6 Yrs(7) 0.1 ‐ 1.0 0.22 29,164 2.45% 2.44% 2.52% 0.52

Other R&C Funds

N/A 1.0 ‐ 2.0 1.62 12,695 2.35% 2.52% 2.74% 1.87

Habitat Funds

6 Yrs(7) 0.5 ‐ 1.5 0.35 17,005 2.49% 2.54% 2.74% 1.87

ES R&C Fund

N/A 2.5 ‐ 3.5 1.92 124,977 2.70% 2.66% 2.34% 3.75

DS Reserve Funds

N/A 3.0 ‐ 5.0 2.73 54,923 2.92% 2.66% 2.34% 3.75

2010 CREBs Sinking Fund

N/A 4.0 ‐ 6.0 3.55 46,350 3.21% 2.53% 2.56% 5.45

2012 CREBs Sinking Fund

N/A 5.0 ‐ 7.0 3.44 13,157 3.24% 2.61% 2.56% 5.45

2015 CREBs Sinking Fund

N/A 6.0 ‐ 8.0 5.01 9,511 2.79% 2.84% 2.56% 5.45 Total 1.59 478,718 $ 2.69% 2.56% 2.47% 2.53

(7) Eff dur < 6 yrs at purchase; (8) Weighted Ave Yield‐to‐Worst (9) ML indices source: Bank of America Merrill Lynch unless pre‐approved by IOC.

Daily Cash Positioning

($ in thousands)

Portfolio Income & Total Return

($ in thousands)

2019 YTD Prior Month YTD Prior Year

Cash/Repo | Target

5,000 $

Repo Min Rate

0.70%

Book Income

3,344 $ 2,056 $ 12,608 $

BofA Sweep | Cushion

1,000

Repo Min Maturity

1 day

Market Gain/(Loss)

2,806 289 (2,962)

Repo Min (2‐5 days)

1,000

Repo Max Maturity

5 days

Total Income

6,150 2,346 9,646

Repo Min (1 day)

2,000

Total Return

3.31% 2.75% 1.96%

(2) $5.0M + Large Energy Deposits date as of purchase date (6) Others comprised of various B/D's each with less than 2.5%

Broker | Dealer

(1) WSIB policy, combined < 25% (3) As of purchase (4) Based on total portfolio size (5) Per policy, no more than 50% per B/D

Duration, Yield, Benchmark & Strategy

Indices(9) | Weights % Duration | Maturity Approach Bullet | Callables Makeup ML 0‐1 Treasury | 40% ML 0‐1 Agency | 60% Weights updated 11/2017 Laddered. Bullets and callables. Forecasted spenddowns. Primarily bullets to meet cash flows. Not to exceed debt service due dates. Primarily bullets to meet cash flows. ML 5‐7 Gov't | 15% ML 5‐7 AAA/AA Corp | 85% Weights updated 11/2017 Within targeted range. < 1/2027 maturity. Bullets and callables (cushion/kickers). Within targeted range. < 1/2032 maturity. Bullets and callables (cushion/kickers). Within targeted range. < 1/2040 maturity. Bullets and callables (cushion/kickers). ML 1‐3 Gov't | 60% ML 1‐3 AAA/AA Corp | 40% Weights updated 11/2017 Laddered. Bullets and callables. Laddered or forecasted spenddowns. Bullets and callables. ML 3‐5 Gov't | 25% ML 3‐5 AAA/AA Corp | 75% Weights updated 11/2017 Barbell (1‐2 yrs & 5‐7 yrs). Bullets and callables (cushion/kickers). Barbell (1‐2 yrs & 5‐7 yrs). < final maturity. Bullets and callables (cushion/kickers).

SLIDE 51

Public Utility District No. 2 of Grant County

Treasury Operations

Investment Portfolio Summary Report

Portfolio Snapshot

($ in thousands)

Current Month End Prior Month End Prior Year End Prior YTD —— 3/31/2019 —— —— 3/31/2019 —— — 2/28/2019 — — 2/28/2019 — — 12/31/2018 — 12/31/2018 — — 3/31/2018 — 3/31/2018 —

Par Value 470,018 $ 462,182 $ 441,735 $ 485,759 $ Market Value 478,717 $ 468,562 $ 448,578 $ 495,926 $ Mark‐to‐Market Adjustment (3,306) $ (5,823) $ (6,111) $ (5,547) $ YTD Unrealized Gain(Loss) 2,806 $ 289 $ (2,960) $ (2,396) $ YTD Book Income 3,344 $ 2,056 $ 12,608 $ 2,371 $ YTD Total Return $ 6,150 $ 2,345 $ 9,648 $ (24) $ Annualized Total Return % 3.31% 2.75% 1.96% 1.45% Market Yield % 2.56% 2.77% 2.77% 2.33% Portfolio Book Yield % 2.69% 2.67% 2.60% 2.05% Benchmark Yield % 2.47% 2.45% 2.38% 1.80% Portfolio Sharpe Ratio (1) 1.17 0.96 0.05 0.20 Benchmark Sharpe Ratio 1.30 0.93 ‐0.25 ‐0.62 Portfolio Effective Duration (2) 1.60 1.82 1.80 1.86 Benchmark Effective Duration 2.55 2.55 2.60 2.31 Portfolio WAL (3) 2.06 2.08 2.03 1.97

Market Rates

Fed Funds (Lower Bound) 2.25% 2.25% 2.25% 1.25% Overnight Repurchase 2.15% 2.15% 2.15% 1.40% WA LGIP 2.52% 2.51% 2.37% 1.58% US Treasury — 1 Year 2.40% 2.54% 2.63% 2.09% US Treasury — 2 Year 2.27% 2.52% 2.48% 2.27% US Treasury — 5 Year 2.23% 2.52% 2.51% 2.56% US Treasury — 10 Year 2.41% 2.73% 2.69% 2.74%

(1) Sharpe Ratio: Measures the performance of a portfolio by adjusting for its risk. Divides the difference of the portfolio's return and a risk-free return (3 mo T-Bill) by the standard deviation of the portfolio's return. (2) Effective Duration: Measures the sensitivity of a bonds market price to parallel shifts in the yield curve. Indicates a % change in price or value with a 100 bps parallel shift in interest rates. (3) Weighted Average Life: The weighted average time to receipt of principal payments. For callable bonds, the average life is based on the call date if the bond is currently trading to the call.

Source: https://www.wsj.com/market-data/bonds

US Treasuries Yields: 1 mo to 30 yr

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Public Utility District No. 2 of Grant County

Debt Management

Outstanding Consolidated Debt Summary - as of March 31, 2019

Series Outstanding Par Amount Mode Tax Status Purpose Coupon Range Call Date Outstanding Call Amount Serial/Term Final Maturity 2016L 50,000,000 $ Variable Tax Exempt New Money 43.5bps plus LIBOR 4/1/2019 50,000,000 $ Term 4/1/2019 2017M 50,000,000 $ Variable Tax Exempt New Money 47.5bps plus LIBOR 9/18/2020 50,000,000 $ Term 9/18/2020 Total 100,000,000 $ 100,000,000 $ Total Subordinate Debt 100,000,000 $ 100,000,000 $ Series Outstanding Par Amount Mode Tax Status Purpose Coupon Range Call Date Outstanding Call Amount Serial/Term Final Maturity 2013J 67,625,000 $ Fixed Tax Exempt Refunding 5.00% 7/1/2023 67,625,000 $ Serial 1/1/2041 2017N 49,865,000 $ Fixed Tax Exempt Refunding 2.00% 1/1/2020 49,865,000 $ Put 1/1/2044 2017O 64,545,000 $ Fixed Tax Exempt Adv Refunding 5.00% 1/1/2028 48,925,000 $ Serial/Term 1/1/2047 Total 182,035,000 $ 166,415,000 $ Series Outstanding Par Amount Mode Tax Status Coupon Range Call Date Outstanding Call Amount Serial/Term Final Maturity 2003Z 3,645,000 $ Fixed Taxable New Money 5.48% Non Callable Term 1/1/2021 2006Z 80,070,000 $ Fixed Taxable New Money/Refunding 5.15% - 5.42% Make-Whole Term 1/1/2043 Total 83,715,000 $

Series Outstanding Par Amount Mode Tax Status Coupon Range Call Date Outstanding Call Amount Serial/Term Final Maturity 2003Z 3,340,000 $ Fixed Taxable New Money 0.0548 Non Callable Term 1/1/2021 2005Z 21,890,000 $ Fixed Taxable New Money/Refunding 5.29% - 5.50% Make-Whole Term 1/1/2033 2006Z 27,425,000 $ Fixed Taxable New Money/Refunding 5.15% - 5.33% Make-Whole Term 1/1/2036 Total 52,655,000 $

Series Outstanding Par Amount Mode Tax Status Coupon Range Call Date Outstanding Call Amount Serial/Term Final Maturity 2010A 8,175,000 $ Fixed Tax Exempt New Money/Refunding 3.00% - 5.00% 1/1/2020 6,265,000 $ Serial 1/1/2020 2010L 167,725,000 $ Fixed BAB New Money 4.361% - 5.83% Non Callable Serial/Term 1/1/2040 2010M 90,000,000 $ Fixed CREB New Money 5.63% Non Callable Term 1/1/2027 2010Z 31,225,000 $ Fixed Taxable New Money/Refunding 3.90% - 5.83% Make-Whole Serial/Term 1/1/2040 2012A 35,715,000 $ Fixed Tax Exempt Refunding 5.00% 1/1/2022 22,440,000 $ Serial/Term 1/1/2035 2012B 7,115,000 $ Fixed AMT Refunding 5.00% 1/1/2022 1,905,000 $ Serial 1/1/2032 2012M 42,395,000 $ Fixed CREB New Money 3.91% Non Callable Term 1/1/2032 2012Z 11,225,000 $ Fixed Taxable Refunding 1.49% - 5.00% Make-Whole Serial/Term 1/1/2035 2013A 69,690,000 $ Fixed Tax Exempt New Money 4.00% - 5.00% 7/1/2023 65,635,000 $ Serial/Term 1/1/2043 2013Z 27,245,000 $ Fixed Taxable New Money 1.55% - 5.63% 1/1/2024 24,590,000 $ Serial/Term 1/1/2043 2014A 133,620,000 $ Fixed Tax Exempt New Money/Refunding 3.00% - 5.00% 7/1/2024 110,360,000 $ Serial/Term 1/1/2044 2014B 47,720,000 $ Fixed AMT Refunding 3.00% - 5.00% 7/1/2024 39,040,000 $ Serial/Term 1/1/2038 2015A 67,205,000 $ Fixed Tax Exempt Refunding 2.00% - 5.00% 1/1/2026 47,250,000 $ Serial/Term 1/1/2043 2015B 14,950,000 $ Fixed AMT Refunding 3.00% - 5.00% 1/1/2026 7,630,000 $ Serial 1/1/2033 2015M 90,000,000 $ Fixed CREB New Money 0.04584 Non Callable Serial 1/1/2040 2017B 6,985,000 $ Fixed AMT Refunding 0.0265 1/1/2028 2,570,000 $ Serial 12/1/2031 Total 850,990,000 $ 327,685,000 $ Total Senior Debt 1,169,395,000 $ 494,100,000 $ Statistics: Percentage of Outstanding Par Amount Outstanding Par Amount Variable Rate, Subordinate Debt 7.88% 100,000,000 $ Senior Debt: Tax Exempt, Fixed Rate Bonds 39.11% 496,440,000 $ Taxable, Fixed Rate Bonds (includes AMT) 22.28% 282,835,000 $ CREBs/BABs (taxable with qualified tax exemption) 30.73% 390,120,000 $ 100.00% 1,269,395,000 $ 1,169,395,000.00 $ Weighted Avg. Coupon Interest Rate* 4.93% (senior outstanding debt only) Weighted Avg. Life of Portfolio as of 3/31/2019 (yrs.)* 12.85 (senior outstanding debt only) (*) excludes CREBs and BABs subsidy payments received from the IRS, CREBs bullet payments, JLB bonds and Variable Rate bonds; Includes CREBs sinking funds Definitions: Serial Bonds - bonds that gradually mature and are payable at regular intervals Term Bonds - bonds whose principal is payable in bulk at maturity (referred to as bullet bonds) Mode - Fixed rate: same interest rate for the life of the bond Senior Debt - debt that is first in priority to be paid back to bond holders in the event of a bankruptcy or insolvency Subordinate Debt debt that is second in priority to any senior debt to be paid back to bond holders in the event of a bankruptcy or insolvency

Senior Debt

Electric System (ES)

Subordinate Debt

Variable rate: an interest rate that is adjusted at specific intervals during the life of the bond; based upon the Index Floating Rate Spread Electric System (ES) Wanapum (WAN) Priest Rapids (PR) Priest Rapids Project (PRP)

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Public Utility District No. 2 of Grant County

Debt Management

Outstanding Consolidated Debt Summary - as of March 31, 2019

$100,000,000

Total Consolidated Outstanding Debt

Total Subordinate Outstanding Debt Total Senior Outstanding Debt $1,269,395,000 $1,169,395,000

Total Senior Debt $1,169,395,000 92% Total Subordinate Debt $100,000,000 8%

Total Consolidated Outstanding Debt (total outstanding debt included in the consolidated financial statements)

Total Senior Debt Total Subordinate Debt Senior Debt - debt that is first in priority to be paid back to bond holders in the event of a bankruptcy or insolvency Subordinate Debt - debt that is second in priority to be paid back to bond holders in the event of a bankruptcy or insolvency Electric System (ES) $182,035,000 16% Wanapum (WAN) $83,715,000 7% Priest Rapids (PR) $52,655,000 4% Priest Rapids Project (PRP) $850,990,000 73%

Senior Outstanding Debt Summary by System

Electric System (ES) Wanapum (WAN) Priest Rapids (PR) Priest Rapids Project (PRP) Tax Exempt, Fixed Rate Bonds $496,440,000 43% Taxable, Fixed Rate Bonds (includes AMT) $282,835,000 24% CREBs/BABs (taxable with qualified tax exemption) $390,120,000 33%

Senior Outstanding Debt Statistics

Tax Exempt, Fixed Rate Bonds Taxable, Fixed Rate Bonds (includes AMT) CREBs/BABs (taxable with qualified tax exemption) Electric System Series 2016L $50,000,000 50% Electric System Series 2017M $50,000,000 50%

Subordinate Outstanding Debt

2016L 2017M

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Public Utility District No. 2 of Grant County

Debt Management

Outstanding Internal Financing (Junior Lien Bond) Debt Summary as of March 31, 2019

Series Outstanding Par Amount Mode Tax Status* Purpose Coupon Range Call Date Outstanding Call Amount Serial/Term Final Maturity 2014JLB 41,245,000 $ Fixed Taxable New Money 2.38% - 4.25% Anytime 41,245,000 $ Serial/Term 1/1/2044 2015JLB 27,040,000 $ Fixed Taxable New Money 5.034% Anytime 27,040,000 $ Term 1/1/2045 2015JLB B 7,625,000 $ Fixed Taxable New Money 5.213% Anytime 7,625,000 $ Term 1/1/2045 2016JLB 29,925,000 $ Fixed Taxable New Money 2.85% - 4.92% Anytime 29,925,000 $ Serial/Term 1/1/2046 2017A JLB 25,290,000 $ Fixed Taxable New Money 2.87% - 5.00% Anytime 25,290,000 $ Serial/Term 1/1/2047 2017B JLB 85,035,000 $ Fixed Taxable New Money 2.90% - 4.93% Anytime 85,035,000 $ Term 1/1/2048 Total 216,160,000 $ 216,160,000 $ Total Junior Lien Debt 216,160,000 $ 216,160,000 $

Statistics:

Percentage of Outstanding Par Amount Outstanding Par Amount

Taxable, Fixed Rate Bonds

100.00% 216,160,000

Total Internal Financing-Junior Lien Bonds

100.00% 216,160,000 Definitions: Serial Bonds - bonds that gradually mature and are payable at regular intervals Term Bonds - bonds whose principal is payable in bulk at maturity (referred to as bullet bonds) Mode - Fixed rate: same interest rate for the life of the bond Internal Financing-JLB - an investment held by the Elec System repaid by PRP annually over 30 years Variable rate: an interest rate that is adjusted at specific intervals during the life of the bond; based upon the Index Floating Rate Spread plus the

Internal Financing-Junior Lien Bonds

Priest Rapids Project (PRP)

* The District does not pay federal income tax and does not need tax-exempt interest. Taxable debt avoids complying with all tax requirements plus reimbursement rules Internal Financing - JLB $216,160,000 15% Outstanding Consolidated Debt $1,269,395,000 85%

Total Consolidated Debt versus Internal Financing-JLBs

Internal Financing - JLB Outstanding Consolidated Debt 3

SLIDE 59

Public Utility District No. 2 of Grant County

Debt Management

Callable Senior Debt Status as of March 31, 2019

Series Par Amount Year Callable Series Par Amount Callable Series Par Amount Type ES2016L 50,000,000 $ 2019 PR2005Z 21,890,000 $ Any time prior to maturity PR2003Z 3,340,000 $ Non-Callable PRP2010A 6,265,000 $ 2020 PR2006Z 27,425,000 $ Any time prior to maturity WAN2003Z 3,645,000 $ Non-Callable ES2017M 50,000,000 $ 2020 WAN2006Z 80,070,000 $ Any time prior to maturity PRP2010A 1,910,000 $ Non-Callable PRP2012A 22,440,000 $ 2023 PRP2010Z 31,225,000 $ Any time prior to maturity PRP2010L 167,725,000 $ Non-Callable PRP2012B (AMT) 1,905,000 $ 2023 PRP2012Z 11,225,000 $ Any time prior to maturity PRP2010M 90,000,000 $ Non-Callable PRP2013A 65,635,000 $ 2024 PRP2013Z 2,655,000 $ Any time prior to maturity PRP2012A 13,275,000 $ Non-Callable PRP2013Z 24,590,000 $ 2024 PRP2012B 5,210,000 $ Non-Callable ES2013J 67,625,000 $ 2024 PRP2012M 42,395,000 $ Non-Callable PRP2014A 110,360,000 $ 2025 PRP2013A 4,055,000 $ Non-Callable PRP2014B (AMT) 39,040,000 $ 2025 PRP2014A 23,260,000 $ Non-Callable PRP2015A 47,250,000 $ 2026 PRP2014B 8,680,000 $ Non-Callable PRP2015B 7,630,000 $ 2026 PRP2015A 19,955,000 $ Non-Callable PRP2017B 2,570,000 $ 2028 PRP2015B 7,320,000 $ Non-Callable ES2017N 49,865,000 $ 2020 PRP2015M 90,000,000 $ Non-Callable ES2017O 48,925,000 $ 2029 PRP2017B 4,415,000 $ Non-Callable ES2017O 15,620,000 Non-Callable 594,100,000 $ 174,490,000 $ 500,805,000 $ Callable Bonds: Bonds that can be redeemed before their maturity date. Make-Whole Bonds: Bonds that are callable anytime prior to their maturity date with a redemption price equal to 100% of the principal amount due plus any make-whole premium due. Make-Whole Premium:

a. the present value of each interest payment that would have been payable up to the bonds maturity date
b. the present value of the principal amount that would have been payable on the maturity date

Current Refunding: Bonds that are refunded within 90 days or less of their call date. Advance Refunding: Bonds that are refunded with more than 90 days to their call date. As of 12/31/2017, advance refunding will no longer be allowed per the Tax Reform Bill. Callable Debt NonCallable Make - Whole (Callable) 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000

Non-Callable Amounts Series Amount Non-Callable By Series

Callable $594,100,000 47% Non-Callable $500,805,000 39% Make -Whole $174,490,000 14%

Total Callable VS. Non-Callable Debt

Callable Non-Callable Make -Whole 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Year Callable

Series Year Callable By Series

20,000 40,000 60,000 80,000 100,000 120,000 Amount Callable (000's)

Series Amount Callable per Series

Callable Make-Whole

SLIDE 60

Public Utility District No. 2 of Grant County

Debt Management

Callable Senior Debt Refunding Candidates as of March 29, 2019

Grant County Public Utility District - Refunding Summary of Callable Candidates Rates as of March 29, 2019 Assumes SLGS funded escrow, $5/bond COI and delivery date of June 15, 2019 *Refunding Criteria is minimum 3% PV savings Project Series Tax Exempt Candidates Candidates Meeting Criteria* PV Savings of Candidates Meeting Criteria Taxable Candidates Candidates Meeting Criteria* PV Savings of Candidates Meeting Criteria Priest Rapids Project 2010-A 6,265,000 4,275,000 223,023 Priest Rapids Project 2012-A

22,440,000

12,725,000 688,337 Priest Rapids Project 2012-B

1,905,000
Priest Rapids Project

2013-A

69,690,000

58,950,000 3,238,483 Electric System 2013-J

67,625,000

54,340,000 2,681,118 Priest Rapids Project 2013-Z

24,590,000

20,585,000 2,156,289 Priest Rapids Project 2014-A 110,360,000 6,225,000 206,666 Priest Rapids Project 2014-B

39,040,000

6,070,000 212,388 Priest Rapids Project 2015-A

51,655,000
Priest Rapids Project

2015-B 7,630,000 Electric System 2017-O

48,925,000
Total
450,125,000

163,170,000 9,406,304 Series Amount Callable Meeting Criteria PV Savings* Efficiency** Call Date PRP 2010-A 4,275,000 4% 98% 1/1/2020 PRP 2012-A 12,725,000 7% 67% 7/1/2022 PRP 2013-A 58,950,000 5% 48% 7/1/2023 PRP 2013-Z 20,585,000 10% 64% 7/1/2023 ES 2013-J 54,340,000 5% 47% 7/1/2023 PRP 2014-A 6,225,000 3% 36% 7/1/2024 PRP 2014-B 6,070,000 4% 37% 7/1/2024 (negative arbitrage is the amount earned on the investment of the bond proceeds that is less than what is owed to the bond holders) * Savings are calculated as the difference between the coupon rate of a bond and the current market rates. ** Efficiency calculation = PV savings/PV savings + negative arbitrage

0% 20% 40% 60% 80% 100% 120% 0% 2% 4% 6% 8% 10% 12%

PRP 2010-A PRP 2012-A PRP 2013-A PRP 2013-Z ES 2013-J PRP 2014-A PRP 2014-B

Senior Debt Refunding Candidates

PV Savings* Efficiency**

SLIDE 61

Public Utility District No. 2 of Grant County

Debt Management

Historical Market Index Rates as of March 31, 2019

SIFMA: Tax-exempt variable rate debt reset weekly on Wednesday. District pays obligations monthly. LIBOR: Taxable variable rate debt reset monthly for the following month. District pays obligations monthly. MMD Yields 3/29/2019 2Q19 3Q19 4Q19 1Q20 2Y 1.49% 1.55% 1.70% 1.70% 1.75% 5Y 1.57% 1.65% 1.75% 1.75% 1.80% 10Y 1.86% 2.00% 2.15% 2.20% 2.20% 30Y 2.60% 2.75% 2.90% 2.90% 2.95% Taxable Yields Fed Funds 2.41% 2.40% 2.40% 2.40% 2.40% 3-Month LIBOR 2.60% 2.60% 2.55% 2.65% 2.55% The municipal market relies on the 30 year Municipal Market Data (MMD) benchmark curve. The District's current rating is AA and pricing for future issuances are based off of the AAA MMD curve. The District's interest rates are fixed based on this index at the time of issuance and do not float as rates get updated. Projected

Source: US Fixed Income Markets Weekly - Municipals, US Fixed Income Markets Weekly - US Interest Rate Forecast, as of 3/29/2019; Thomas Reuters Municpal Market Data, Bloomberg as of 3/29/2019, current rates as of 3/29/2019

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2015 2016 2017 2018 2019 PERCENT YEARS

Historical Market Rates

SIFMA Index (%) 30 Yr AAA MMD (%) LIBOR (%) 6

SLIDE 62

Public Utility District No. 2 of Grant County

Debt Management

District Debt Service Requirements

Make-Whole Make-Whole Make-Whole 47,250,000.00 7010000

In July 2018, the IRS announced that the sequestration rate for 2019 will be 6.2%. These rates change periodically when updates are received by the federal government. Electric System Variable Debt: variable rate debt service schedules are updated annually each January using the effective interest rate at the end of the prior year. CREBs/BABs: Sinking fund deposits are made in 1/12 monthly deposits for the bullet payments of $90M, $42.395M and $90M due in years 2027, 2032 and 2040

respectively. The sinking funds are analyzed and updated 2x annually. Debt service payments are gross interest obligations and do not include federal interest rate

subsidy payments received for the 2010, 2012 and 2015 CREBs funds. CREBs and BABs are tax credit bonds which have a 70% and 35% interest rate subsidy respectively. The federal government has the ability to sequester a portion of the

rebate. The following sequester percentages have been applied each year: 2013 - 8.7%, 2014 - 7.2%, 2015 - 7.3%, 2016 - 6.8%, 2017 - 6.9%, 2018 - 6.6%.

$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2019 2024 2029 2034 2039 2044 Millions

Annual Required Debt Service Due Bond Holders

(includes Internal Financing-JLBs and CREBs/BABs bullet payments) Elec System Wanapum PR PRP CREBs/BABs Bullets

$0 $20 $40 $60 $80 $100 $120 2019 2024 2029 2034 2039 2044 Millions

Total Annual Debt Service with Projected Sinking Fund Deposits

(includes Internal Financing-JLBs) Elec System Wanapum PR PRP CREBs/BABs SF

$0 $2 $4 $6 $8 $10 $12 7/1/19 12/31/22 12/31/25 12/31/28 12/31/31 12/31/34 12/31/37 1/1/2040 Millions

Forecasted Federal Interest Rebates after sequestration

PRP2010 BABs PRP2010 CREBs PRP2012 CREBs PRP2015 CREBs 7

SLIDE 63

Public Utility District No. 2 of Grant County

Debt Management

Finance Plan ‐ January 30, 2019



Priest Rapids Project - $80 million in forecasted capital expenditures ─ Internal Equity Financing (JLBs)

▪ $25M from 2017 issuance ▪ $55M from 2019 issuance

─ New money issuance based on finance plan analysis



Electric System - $61.7 million in forecasted capital expenditures ─ $61.7 million revenue financed ─ $ 8.9 million forecasted fiber expenditures for 2019 ─ No New Money issuances expected



Funding Strategies TBD ─ A portion of capital expenditures will be financed with a combination of both debt and equity



Refundings ─ Electric System 2016L Variable Rate Program - Scheduled to be remarketed April 19, 2019



Priest Rapids Project - $99.4million in forecasted capital expenditures ─ Internal Equity Financing (JLBs)

▪ $55M from 2019 issuance ▪ $44.4M from 2020 issuance

─ New money issuance based on finance plan analysis



Electric System - $61.8 million in forecasted capital expenditures at the Electric System ─ $61.8 million revenue financed ─ No New Money issuances expected



Funding Strategies TBD ─ A portion of capital expenditures will be financed with a combination of both debt and equity



Refunding ─ Electric System 2017M Variable Rate Program Remarketing (Sept) ─ Electric System 2017N Variable Rate Program Remarketing (December)

2020 2019

SLIDE 64

Public Utility District No. 2 of Grant County

Debt Management

Fixed Rate Negotiated Deal Underwriter Pool

✸ JP Morgan Chase Bank ✸ Citibank ✸ Goldman Sachs ✸ Barclays Bank ✸ Key Bank ✸ RBC - Royal Bank of Canada

Date

2015 2016 2017 2017 2017 2017 Electric System Revenue Refunding Bond Series 2017-N Negotiated Market Sale, Short-term 3-year Put Bond, Refunded Electric System Series 2014K Senior Manager - Goldman Sachs Electric System Revenue Refunding Bond Series 2017-O Negotiated Market Sale Advance Refunded Electric System Series 2011-I Senior Manager - JP Morgan Co-Senior Manager - Goldman Sachs Co-Manager - Citigroup Wells Fargo Electric System Revenue Bond Series 2017-M - Direct Purchase, Variable Rate Bond

April 2015, the District conducted an RFQ process to set a pool of banks that would be eligible for selection on future negotiated transactions.

Underwriter Team

Senior Manager - JP Morgan Co-Senior Manager - Citigroup Co-Manager - Goldman Sachs PRP Series B (AMT) Revenue Refunding Bond - Direct Purchase, Fixed Rate Bond Key Bank

Transaction

PRP Series A,B Revenue and Refunding Bonds and Series M CREBs Revenue Bonds- Negotiated Market Sale Electric System Revenue Bond Series 2016 L - Direct Purchase, Variable Rate Bond Bank of America

SLIDE 65

Public Utility District No. 2 of Grant County

Debt Management

Grant PUD Top Bond Holders

SLIDE 66

SLIDE 67

Bonnie Overfield

To: Bonnie Overfield Subject: RE: IOC: Updated Investment Policy | Approved by IOC, now ready for GM review and approval

From: Bonnie Overfield Sent: Monday, May 13, 2019 10:13 AM To: Bonnie Overfield <Boverfi@gcpud.org> Subject: RE: IOC: Updated Investment Policy | Approved by IOC, now ready for GM review and approval Bonnie Overfield Senior Manager of Finance & Treasurer

Grant County Public Utility District boverfi@gcpud.org (509) 754-7218 office

From: Randalynn Hovland Sent: Thursday, May 9, 2019 10:52 AM To: Bonnie Overfield <Boverfi@gcpud.org> Subject: RE: IOC: Updated Investment Policy | Approved by IOC, now ready for GM review and approval Attached is the signed memo. Hard copy with full packet is on its way to Tina!  Bonnie Overfield Senior Manager of Finance & Treasurer

Grant County Public Utility District boverfi@gcpud.org (509) 754-7218 office

From: Bonnie Overfield Sent: Thursday, April 18, 2019 8:09 AM To: Kevin Nordt (Knordt@gcpud.org) <Knordt@gcpud.org> Cc: Jeffrey Bishop <jbishop@gcpud.org>; Dru McMackin <Dmcmack@gcpud.org>; Randalynn Hovland <Rhovla1@gcpud.org> Subject: FW: IOC: Updated Investment Policy | Approved by IOC, now ready for GM review and approval Kevin‐

SLIDE 68

Attached is the updated Investment Policy that the IOC is recommending to approve. Jeff, Dru and myself have been working on these changes for the past several months and we approved the version on March 20 (see attached signed memo). As you recall in 2014 the attached resolution provides for the IOC with GM approval to make changes to the policy as needed going forward. We are requesting that you review the updated policy and approve when you are able to, the affected changes are noted below in Dru’s summary. Most of these are updated wording clarifications, we did add an annual process to review broker/dealers and a certification of staff performing investment execution to ensure no related party interests. Please let any of us three know if you have questions (Jeff, Bonnie, Dru). If you are in agreement to approve please reply with an approval or initial the memo for our records. We will provide an update and summary review at the May FAC meeting. Thanks, Bonnie Bonnie Overfield Senior Manager of Finance & Treasurer

Grant County Public Utility District boverfi@gcpud.org (509) 754-7218 office

From: Dru McMackin Sent: Wednesday, April 17, 2019 3:29 PM To: Bonnie Overfield <Boverfi@gcpud.org> Subject: IOC: Updated Investment Policy | Approved by IOC, now ready for GM review and approval The Investment Oversight Committee (IOC) has done a routine review of the District’s Investment Policy and recommends updates. Please see bullets further below summarizing the updates that the IOC is pleased to bring forth. A signed policy update memo from the IOC is attached. The IOC has approved the attached final draft of the District’s Investment Policy. Per District resolution 8745 (attached), the GM also needs to review and approve. Once approved, corresponding updates will be provided to the FAC and commission. The .docx version reflects updates in track changes whereas the PDF is a clean updated version. Updated Sections Summary:

Delegation of Authority – Clarifies the Investment Oversight Committee engagement on providing support for overall portfolio strategy in addition to

the development and monitoring of the investment program. Also, clarifies reference of authorized staff for investment execution per the Treasurer’s approval.

SLIDE 69

Prudence – Added emphasis that the investment program does not speculate or time the market.
Ethics and Conflicts of Interest – Added an annual independence disclosure form for investment officers and staff to disclose any material financial

interests or investment positions that could impact the performance of the investment portfolio.

Authorized Financial Dealers and Institutions – Added an annual review of WA registrations for broker/dealer investment firms and representatives.
Authorized Investments – To update and clarify authorized investments pursuant to WA state RCW’s. Includes removing mutual and money market

funds pursuant to RCW 39.59.030 was has been repealed.

Performance Standards – Added reference to Investment Oversight Committee actively reviewing overall portfolio strategy.
Reporting – Added reference to benchmark performance reporting.
Investment Policy Adoption and Modification – Update to replace FMOC with FAC.
Appendix Glossary – Added Sharpe Ratio definition.

Please let me know if you have any questions, comments/suggestions, or need anything further. Thank you,

SLIDE 70

MEMORANDUM

TO:

VIA:

FROM:

SUBJECT:

For

Your

Information

March 20, 2019

Board

Commissioners Kevin Nordt, General

Manage

Jeffrey

Bishop, Chief Finance Officer Bonnie

Overfield, Director

Finance /Treasurer

Dru McMackin,

Financial Analyst

^'lA_

Investment

Policy

Updated

March 20,2019

Purpose:

provide a

copy

the

District's

Investment

Policy as

updated

March 20, 2019,

pursuant to

District Resolution 8745.

Background:

The

Investment Oversight Committee has done a routine review the

District's

Investment

Policy

and recommends updates

the following

sections:

^ Delegation

Authority

Clarifies

the Investment Oversight Committee

engagement

providing support for

verall

portfolio strategy

in addition

to the development and monitoring

the investment program.

Also,

clarifies

reference

authorized

staff

for investment execution per the Treasurer's approval.

Prudence

Added

emphasis

that the investment

program does not speculate

time the market. Ethics

and

Conflicts

Interest

Added

an annual independence

disclosure

form

for investment

fficers

and

staff

disclose

any

material financial interests

investment

positions that could

impact the performance

the investment

portfolio.

Authorized Financial Dealers

and

Institutions

Added

an annual

review

registrations for broker/dealer investment firms and representatives.

Authorized Investments

update and

clarify

authorized investments pursuant to

state

RCW's.

Includes

removing mutual and

money

market funds pursuant to

RCW

39.59.030

was

has been repealed. v' Performance

Standards

Added

reference to Investment Oversight

Committee

actively reviewing

verall

portfolio strategy. Y' Reporting

Added

reference to

benchmark performance

reporting. Y' Investment

Policy Adoption

and

Modification

Update

to replace

FMOC

with FAC.

Appendix Glossary

Added

Sharpe

Ratio definition. Recommendation:

For your informalion.

SLIDE 71

INVESTMENT POLICY

Resolution 8745

March 20, 2019

SLIDE 72

Table of Contents

Policy Statement 1 Scope 1 Delegation of Authority 1 Prudence 2 Ethics and Conflicts of Interest 2 Objectives 3 Authorized Financial Dealers and Institutions 3 Authorized Investments 4 Collateralization 5 Safekeeping and Custody 5 Diversification 5 Maturities 6 Internal Controls 6 Performance Standards 7 Reporting 7

Investment Policy Adoption and Modification 7 Appendix: Glossary 8

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1 | P a g e

Policy Statement

It is the policy of the Public Utility District No. 2 of Grant County (the District, herein) to invest public funds in a manner which will provide the highest investment return after ensuring safety thresholds are satisfied while meeting the daily cash flow demands of the District. The priority of investment criteria for the District is legality first, followed by safety, then liquidity and lastly investment return. The investment guidelines and practices of the District must conform to all applicable Federal and State

f Washington laws and regulations, bond covenants, bond insurance policies, and prudent money

management philosophy. The overall program shall be designed and managed with a degree of professionalism that is worthy of public trust.

Scope

These investment guidelines apply to all financial assets of the District except: The policy for the Washington State Public Employees' Retirement System will be as determined by the appropriate Board of Administration and is not covered by this guideline statement. District employees' deferred compensation assets will be invested as directed by the individual employee within the allowable options defined by the administrator and programs as approved by the District. Monies set aside for advance and current refundings of District bond obligations will be invested in accordance with the appropriate bond documents and Federal and State law and not necessarily in compliance with this guideline statement. Financial instruments used to hedge commodity risk covered under the Energy Risk Management Policy. If applicable, investments of the District shall be in compliance with bond resolutions and other debt constraints, Federal and State of Washington law, and related legal interpretations. Should such requirements be more restrictive than this policy, the financial assets will be invested in accordance with the more restrictive regulations. Monies subject to the 1986 Tax Reform Act, and subsequent arbitration regulations, shall be invested in compliance with the appropriate regulations.

Delegation of Authority

Authority to manage the District's investment program is derived from the Revised Code of the State

f Washington, as well as various District resolutions. The Treasurer of the District has direct

management responsibility for implementing the investment program. The investment program shall

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2 | P a g e

be developed, strategized and monitored by an Investment Oversight Committee comprised of District staff as designated by the Chief Finance Officer. The Investment Oversight Committee shall oversee the establishment of procedures for the operation of the investment program consistent with this investment policy and portfolio strategy. Procedures will include specific investment tasks and explicit delegation of authority to persons responsible for activities necessary to carry out the investment program. No person shall engage in an investment transaction except for those staff as approved by the Treasurer and in accordance to the terms of this policy and the procedures as established by the Investment Oversight Committee. The Treasurer shall be responsible for all transactions undertaken and shall implement a system of controls to regulate the activities of subordinate officials and District employees.

Prudence

Investments shall be made with judgment and care, under circumstances then prevailing, which a person of prudence, discretion and intelligence would exercise in the management of their own affairs. Securities shall not be purchased or sold for speculation (i.e. market timing), but for investment, considering the probable safety of capital as well as the probable income to be derived. Purchases and sales in accordance with the Policy Statement priorities of legality first, followed by safety, then liquidity and lastly investment return. The standard of prudence to be used by investment decision makers shall be the "prudent person" standard and be applied in the context of managing an overall portfolio. Investment decision makers acting in accordance with written procedures and the investment policy and exercising due diligence, in so far as allowed by State Law, shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. All participants in the investment program shall seek to act responsibly as custodians of the public

trust. The investment portfolio is subject to public scrutiny and evaluation. The investment program

shall be designed and administered with a degree of professionalism worthy of the public trust. Investment decision makers shall refrain from knowingly entering into transactions which might impair public confidence in the District.

Ethics and Conflicts of Interest

Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Annually, such employees and investment decision makers shall disclose to the Treasurer any material financial interest in financial institutions that conduct business within the county, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the District's portfolio. Investment decision makers and employees will at all times comply with the District's Code of Ethics as it pertains to the investment process.

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3 | P a g e

Objectives

The primary objectives, in order of priority, of the District investment activities are:

Legality The District's investments will be in accordance with all statutes governing the investment

f public funds as well as applicable provisions of bond resolutions.

Safety Investments of the District shall be undertaken in a manner that seeks to ensure the

preservation of capital in the overall portfolio. To attain this objective, diversification is an important

cornerstone. The District seeks to optimize protection afforded by the FDIC and Public Deposit

Protection Commission on its demand depository accounts.

Liquidity The District's portfolio will remain sufficiently liquid to enable the District to meet all

perating requirements which might be reasonably anticipated. Investment maturities shall be

matched to anticipated cash flow requirements whenever possible.

Return on Investment The District's investment portfolio shall be designed with the objective of

attaining a market rate of return throughout the budgetary and economic cycles, taking into account the District's investment risk constraints, arbitrage limitations and the cash flow characteristics of the portfolio.

Authorized Financial Dealers and Institutions

The Treasurer will maintain a list of financial institutions authorized to provide investment services to the District. The list will include broker/dealers to provide investment services in the State of Washington and to the District. The selection process for inclusion in this list is determined by the Investment Oversight Committee in separate written procedures, but includes such items as proof of Washington registration and acceptable financial condition. The Treasurer, or designee, will conduct an annual review of the Washington registration of the broker/dealer firm and designated representatives of the District’s account as well as the financial condition of the broker dealer firm. Employees of any firm or financial institutions offering securities or investments to the District are expected to be trained in the precautions appropriate to the public sector, be knowledgeable of permissible investments and other State of Washington regulations, and be familiar with the District's investment objectives, policies and constraints. Dealers providing investments services to the District are expected to make reasonable efforts to preclude imprudent transactions involving the District's funds. No public deposit shall be made except in a qualified public depository as established by Revised Code

f the State of Washington, except for bond funds which have been authorized by bond resolution to

be deposited in out-of-state financial institutions.

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4 | P a g e

Authorized Investments

The District is currently empowered by the Revised Code of the State of Washington to invest in the following types of authorized investments: Investment deposits with qualified public depositories. Obligations of the US Government and its agencies as specified in RCW 39.59.040. Banker's Acceptances purchased on the secondary market. District policy is underlying bank rating must be either Al or PI. Commercial Paper pursuant with RCW 39.59.040 and with the Washington State Investment board policy on Commercial Paper. Corporate Notes in accordance with RCW 39.59.040 and with the Washington State Investment Board policy on Corporate Notes. Supranational Institutions with the United States government as its largest shareholder in accordance with RCW 39.59.040. Bonds of the State of Washington, or local governments within the State of Washington, which have at the time of investment one of the three highest credit ratings of a nationally recognized rating agency. General obligation bonds of a state other than the State of Washington and general obligation bonds

f a local government of a state other than the State of Washington, which bonds have at the time of

investment one of the three highest credit ratings of a nationally recognized rating agency. State of Washington Local Government Investment Pool. Repurchase agreements, with direct US Government obligations as collateral, provided the collateral is held in safekeeping on a delivery-versus-payment basis and that a Master Repurchase Agreement is signed with the primary dealer. Non-negotiable Certificates of Deposit of financial institutions which are qualified public depositories as defined by RCW 39.58.010 and in accordance with the restrictions therein.

Collateralization

Collateralization is required on all repurchase agreements. Collaterization level, measured by market value of principal and accrued interest, must be at least 102 percent of the repurchase amount.

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5 | P a g e

Securities purchased in the repurchase agreement must be direct obligations of the U.S. Government. If the term of the repurchase exceeds 10 calendar days, the terms of the specific transaction must be approved by the Treasurer and collaterization level may be set higher than 102 percent. The Treasurer may also approve specific transactions wherein repurchase agreement securities purchased are other than direct government obligation; however, the securities purchased must be of a type eligible as authorized investments. Securities purchased must be held by a trust department of a third party custodian chosen by the District and acting as the District's safekeeping agent. For each financial institution the District negotiates a repurchase agreement, there must be a signed Master Repurchase Agreement and District monies are to be released on a delivery-versus-payment basis only. A clearly marked evidence of

wnership (safekeeping receipt) must be supplied in the District's name. The right of securities

substitution is granted subject to District approval of each individual substitution transaction.

Safekeeping and Custody

All security transactions, including collateral for repurchase agreements, entered into by the District shall be conducted on a delivery-versus-payment basis. Securities will be held by a third party custodian designated by the District and evidenced by safekeeping receipts.

Diversification

The District will diversify its investments by security type, institution and maturity. The District's investment portfolio will be restricted by investment type. It is expected that diversification levels are as follows: With the exception of direct US Government obligations, repurchase agreements collaterized by the same, and the state investment pool; the investment portfolio shall not be more than:  Fifty percent (50%) invested in Supranational Institutions.  Fifty percent (50%) invested in Government Sponsored Agencies.  Fifty percent (50%) invested in Municipal Bonds.  Twenty-five percent (25%) invested in Banker's Acceptances from banks outside the United States.  Twenty-five percent (25%) invested in Commercial Paper and Corporate Notes (combined). No more than fifty percent (50%) of the total portfolio par value purchased from a single financial institution

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r dealer.

Maturities

The District's expects to hold most investments to maturity. To the extent possible, the District will attempt to match its investments with anticipated cash flow requirements for certain funds such as

perating, construction, habitat and current year debt service set aside accounts. Other funds such as

reserve and contingency, debt service reserves, and long-term sinking fund accounts are invested within targeted effective duration parameters as determined by the Investment Oversight Committee. Investment sales are expected to occur only if cash flow needs change from as originally anticipated. However, the District may sell investments early to meet unexpected cash flow needs, mitigate risk associated with a security type or issuer, or to capture increased yield or income when appropriate. To further mitigate risk of selling investments early to meet unexpected cash flow needs, a minimum of twenty percent (20%) of the total portfolio will be comprised of investments maturing within a year. With the exception of debt service reserve funds, long-term principal sinking funds, and reserve and contingency funds, the District will not invest in securities with an effective duration of more than six years from the date of purchase unless authorized by the Investment Oversight Committee for specific transactions. The District may collaterize its repurchase agreements with investments not to exceed thirty years to maturity. Reserve funds may be invested in securities not to exceed the maximum due date of the bond issue. Bond resolutions may specify maximum maturity for certain funds and, if more restrictive than this policy, shall be adhered to. Refunded debt monies will be invested in maturities as required to comply with the refunding parameters and agreements.

Internal Controls

The District shall obtain an annual financial statement audit by an independent party. The audit will be conducted by either the State Auditor or an external, nationally recognized audit firm. Periodic internal reviews may also be made by District employees. These reviews will provide internal control by assuring compliance with policies, procedures and prudent industry practices. Day-to-day procedures concerning investment management and accounting are a management function

utside the scope of this policy. The Treasurer will be responsible for implementing controls designed

to prevent loss of public funds due to fraud, error, misrepresentation or imprudent actions by employees

r officers.

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Performance Standards

The investment portfolio will be managed in accordance with the parameters specified within this

policy. The investment portfolio will be designed to obtain a market average rate of return during

budgetary and economic cycles, taking into consideration the District's investment risk constraints, arbitrage requirements, and cash flow needs. A series of appropriate benchmarks reflective of the actual securities being purchased, the risks undertaken, and which have a similar weighted average maturity as the portfolio will be used as a composite benchmark to evaluate overall performance. Yield considerations are secondary to legality, safety and liquidity concerns. The investment program does seek to obtain the best possible return consistent with prudent investment principles and the risk limitations identified herein. Overall portfolio strategy is actively reviewed and discussed by the Investment Oversight Committee.

Reporting

The Treasurer or his/her designee is charged with the responsibility to prepare monthly reports for the District’s Investment Oversight Committee, on the investment activity and positions of the District. At a minimum, such reporting shall include month end asset allocation by issuer type, purchases by broker/dealer, effective durations, yields, and par amounts at a summarized level within the portfolio. In addition, realized and unrealized portfolio income (total return), and benchmark performance shall be

reported. The Investment Oversight Committee targets to meet monthly.

Investment Policy Adoption and Modification

Per District Resolution 8745, the Board of Commissioners delegates authority to update future policies as needed and approved by the General Manager and Investment Oversight Committee with corresponding updates provided to the Financial Advisory Committee (FAC) and the Board of Commissioners. In the event any State of Washington, Federal legislation, bond resolution, contract or regulation sets forth restrictions more severe than contained herein, such restrictions shall be deemed to be immediately incorporated into this policy.

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Appendix: Glossary

ACCRUED INTEREST – The interest accumulated on a bond since issue date or the last coupon

payment. The buyer of the bond pays the market price and accrued interest, which is payable to the seller.

AMORTIZATION – In portfolio accounting, periodic charges made against interest income on premium

bonds in anticipation of receipt of the call price at call or of par value at maturity.

ASSET – Available property, as for payment of debts. AVERAGE MATURITY – A weighted average of the expiration dates for a portfolio of debt securities.

An income fund's volatility can be managed by shortening or lengthening the average maturity of its portfolio.

BANKERS ACCEPTANCES (BAs) – A short-term debt instrument issued by a firm that is guaranteed

by a commercial bank. These instruments are similar to Treasury Bills and are frequently used in money markets funds. BAs trade at a discount from face value on the secondary market. The date of maturity typically ranges between 30 and 180 days from the date of issue.

BASIS POINT – A measure of an interest rate, i.e., 1/100 of 1 percent, or .0001. BENCHMARK – A standard against which the performance of a security, fund or investment manager

can be measured. Generally, broad market and market-segment indexes are used for this purpose.

BID – The indicated price at which a buyer is willing to purchase a security or commodity. When

selling a security a bid is obtained. (See Offer)

BOND – A long-term debt security, or IOU, issued by a government or corporation that generally pays

a stated rate of interest and returns the face value on the maturity date.

BOOK ENTRY SECURITIES – U.S. government and federal agency securities that do not exist in

definitive (paper) form; they exist only in computerized files maintained by the Federal Reserve Bank.

BOOK VALUE – The amount at which an asset is carried on the books of the owner. The book value of

an asset does not necessarily have a significant relationship to market value.

BROKER – A broker brings buyers and sellers together for a commission paid by the initiator of the

transaction or by both sides.

CALLABLE SECURITY – A security with an embedded call provision that allows the issuer to

repurchase or redeem the security by a specified date. Since the holder of a callable security is exposed to the risk of the security being repurchased, the callable security is generally less expensive than comparable securities that do not have a call provision.

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CERTIFICATES OF DEPOSIT (CDs) – Certificates issued against funds deposited in a bank for a

definite period of time and earning a specified rate of return. CDs bear rates of interest in line with money market rates current at the time of issuance.

COLLATERAL – Property (as securities) pledged by a borrower to protect the interest of the lender. COMMERCIAL PAPER – An unsecured, short-term debt instrument issued by a corporation. Maturities

n commercial paper rarely range longer than 270 days.

COMPETITIVE BID PROCESS – A process by which three or more institutions are contacted to obtain

prices/yields for specific securities.

CORPORATE NOTES – Debt obligations issued by corporations. Investors would consider this type of

investment as they are designed to provide higher interest rates than many other alternatives like FDIC- insured savings accounts, short term certificates of deposit, and money market funds.

CREDIT QUALITY – The measurement of the financial strength of a bond issuer. This measurement

helps an investor to understand an issuer’s ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies.

CREDIT RISK – The risk that another party to an investment transaction will not fulfill its obligations.

Credit risk can be associated with the issuer of a security, a financial institution holding the entity's deposit, or a third party holding securities or collateral. Credit risk exposure can be affected by a concentration of deposits or investments in any one investment type or with any one party.

CUSTODIAN – An independent third party (usually bank or trust company) that holds securities in

safekeeping as an agent for the county.

DEALER – A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling

for his own account.

DELIVERY – The providing of a security in an acceptable form to the District or to an agent acting on

behalf of the District and independent of the seller. Acceptable forms can be physical securities or the transfer of book entry securities. The important distinction is that the transfer accomplishes absolute

wnership control by the District.

DELIVERY VS PAYMENT – There are two methods of delivery of securities: Delivery vs. payment

and delivery vs. receipt (also called free). Delivery vs. payment is delivery of securities with an exchange

f money for the securities. Delivery vs. receipt is delivery of securities with an exchange of a signed

receipt for the securities.

DISCOUNT – The price of a bond that is lower than par. The discount equals the difference between the

price paid for a security and the security’s par value.

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DIVERSIFICATION – Distribution of available funds among a variety of securities and institutions so

as to minimize market risk.

DURATION – A measure of the sensitivity of the price of a fixed-income investment to a change in

interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. The greater the duration, the greater the interest- rate risk or reward for bond prices.

EFFECTIVE DURATION – The duration for a bond with an embedded option when the value is

calculated to include the expected change in cash flow caused by the option as interest rates change. This measures the responsiveness of a bond's price to interest rate changes, and illustrates the fact that the embedded option will also affect the bond's price.

FACE VALUE – The value of a bond stated on the bond certificate; thus, the redemption value at

maturity. Most bonds have a face value, or par, of $1,000.

FEDERAL FUNDS RATE – The rate of interest at which Fed Funds are traded between banks. Fed

Funds are excess reserves held by banks that desire to invest or lend them to banks needing reserves. The particular rate is heavily influenced through the open market operations of the Federal Reserve

Board. Also referred to as the "Fed Funds rate."

FEDERAL RESERVE SYSTEM – The central bank of the United States which has regulated credit in

the economy since its inception in 1913. Includes the Federal Reserve Bank, 14 district banks and the member banks of the Federal Reserve, and is governed by the Federal Board.

GOVERNMENT SPONSORED ENTERPRISE (AGENCIES) – A privately held corporation with

public purposes created by the U.S. Congress to reduce the cost of capital for certain borrowing sectors

f the economy. GSE’s carry the implicit backing of the U.S. government but are not direct obligations
f the U.S. government. Examples of GSEs include: Federal Home Loan Bank, Federal Home Loan

Mortgage Corporation, Federal Farm Credit Bank and Federal National Mortgage Association. Securities issued by GSEs are known as agency securities.

LIQUIDATION – Conversion into cash. LIQUIDITY – Refers to the ease and speed with which an asset can be converted into cash without a

substantial loss in value.

LOSS – The excess of the cost or book value of an asset over selling price. LOCAL GOVERNMENT INVESTMENT POOL (LGIP) – The aggregate of all funds from political

subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment.

MARK‐TO‐MARKET – An adjustment in the valuation of a securities portfolio to reflect the current

market values of the respective securities in the portfolio.

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MARKETABILITY – Ability to sell large blocks of money market instruments quickly and at

competitive prices.

MARKET RISK – The risk associated with declines or rises in interest rates which cause an investment

in a fixed-income security to increase or decrease in value. The risk that the market value of an investment, collateral protecting a deposit, or securities underlying a repurchase agreement will decline.

MARKET VALUE – The price at which a security is trading and could presumably be sold. MASTER REPURCHASE AGREEMENT – An agreement between the investor and the dealer or

financial institute. This agreement defines the nature of the transactions, identifies the relationship between the parties, establishes normal practices regarding ownership and custody of the collateral securities during the term of the investment, provides for remedies in the event of a default by either party and otherwise clarifies issues of ownership.

MATURITY – The time when a security becomes due and at which time the principal and interest or

final coupon payment is paid to the investor.

OFFER – The indicated price at which a seller is willing to sell a security or commodity. (See BID)

When buying a security an offer is obtained.

PAR VALUE – The nominal or face value of a debt security; that is, the value at maturity. PORTFOLIO – Collection of securities held by an investor. PREMIUM – The amount by which a bond sells above its par value. PRIMARY DEALERS – Primary government dealers are a group of banks and investment dealers

authorized to buy and sell government securities in direct dealings with the Federal Reserve Bank of New York in the executing of Federal Open Market Operations. Such dealers must be qualified in terms

f reputation, capacity and adequacy of staff and facilities.

PRUDENCE – The ability to govern and discipline oneself by the use of reason; shrewdness in the

management of affairs; able to use skill and good judgment in the use of resources. Also refers to the suitability of investments for the risk and return profile and the time horizon of a given investor.

REPURCHASE AGREEMENT (REPO) – The Repo is a contractual transaction between an investor

and an issuing financial institution (not a secured loan). The investor exchanges cash for temporary

wnership of specific securities, with an agreement between the parties that on a future date, the financial

institution will repurchase the securities at a prearranged price.

SAFEKEEPING – A service to customers rendered by banks for a fee whereby all securities and

valuables of all types and descriptions are held in the bank's vaults for protection, or in the case of book entry securities, are held and recorded in the customer's name and are inaccessible to anyone else.

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SECURITIES – Bonds, notes, mortgages, or other forms of negotiable or non-negotiable instruments. SETTLEMENT DATES – The day on which payment is due for a securities purchase. SHARPE RATIO – A measure that indicates the average return minus the risk-free return divided by the

standard deviation of return on an investment.

SPREAD – (a) Difference between the best buying price and the best selling price

for any given

security. (b) Difference between yields on or prices of two securities of differing quality or differing
maturities. (c) In underwriting, difference between price realized by the issuer and price paid by the

investor.

SUPRANATIONAL INSTITUTIONS – International development institutions that provide financial,

advisory services, and/or other financial services to their member countries to achieve overall goal of improving living standards through sustainable economic growth.

THIRD‐PARTY SAFEKEEPING – A safekeeping arrangement whereby the investor has full control

ver the securities being held and the dealer or bank investment department has no access to the securities

being held.

TREASURY BILLS – Treasury bills are short-term debt obligations of the U.S. government. They offer

maximum safety of principal since they are backed by the full faith and credit of the U.S. government. Treasury bills, commonly called "T-Bills," account for the bulk of government financing, and are the major vehicle used by the Federal Reserve System in the money market to implement national monetary

policy. T-Bills are sold in three, six, nine, and twelve-month bills. Because treasury bills are considered

to be very low risk, these instruments generally yield the lowest returns in the major money market instruments.

TREASURY NOTES – A marketable U.S. government debt security with a fixed interest rate and a

maturity between one and ten years. Treasury notes are considered low-risk, since they are backed by the full faith and credit of the U.S. government. Because they are lower risk and highly liquid they are generally deliver a lower return than other securities having comparable maturities.

UNDERLYING SECURITIES – Securities transferred in accordance with a repurchase agreement. WEIGHTED AVERAGE MATURITY (WAM) – A weighted average of the expiration dates for a

portfolio of debt securities. An income fund’s volatility can be managed by shortening or lengthening the average maturity of its portfolio.

YIELD – The rate at which an investment pays out interest or dividend income, expressed in percentage

terms and calculated by dividing the amount paid by the price of the security and annualizing the result.

SLIDE 85

Powering our way of life.

February 26, 2019

Energy Independence Act Summary (I-937)

SLIDE 86

Energy Independence Act or I-937

Washington’s Energy Independence Act (EIA), effective January 1, 2010, enacted a renewable portfolio standard commonly referred to as ‘Initiative 937” which requires Washington electric utilities serving 25,000+ customers

Undertake all cost-effective energy conservation; and
Obtain a specified portion of their electricity from new

renewable resources.

SLIDE 87

Partnership with Microsoft

Three projects saved a combined 71,579,211 kWh towards Grant PUDs I-937 target and future roll-over savings.

These projects were eligible for a total rebate of $480,000.
This is the lowest cost conservation that Grant PUD has ever

achieved at $0.0067/kWh saved.

Historically, Grant PUD has paid between $0.06 and

$0.10/kWh for projects similar to this.

The cost savings to Grant PUD are between 3.8 and 6.6 million

dollars based on historical rebate amounts.

SLIDE 88

Grant PUD’s Potential and Achieved Targets

Biennium Target MWh Total Target Met MWh Cost per MWh 2020 / 2021 36,792 (anticipated) 2018 / 2019 32,149 90,174 (unfinished) $10.35 2016 / 2017 27,419 35,223 (unaudited) $84.01 2014 / 2015 34,251 37,701 (audited) $95.65 2012 / 2013 99,843 118,695 (audited) $69.71 2010 / 2011 52,543 104,921 (audited) $76.46

SLIDE 89

Continued Partnership

Energy Services is excited to continue this partnership with Microsoft as they continue to expand their

campuses. This will achieve the most conservation

savings at the lowest cost to Grant PUD while giving back to the rest of the community.

SLIDE 90

Benefits of the Pay it Forward Partnership:

SLIDE 91

Pay it Forward Partnership explained:

SLIDE 92

Recommendation for dispersing funds:

$400,000 be provided to the Big Bend Foundation through the Columbia Basin Foundation to cover the costs of developing an industrial mechanic program in the college’s new Workforce Education Building.

SLIDE 93

Staff recommendation for dispersing funds:

$50,000 provided to the Columbia Basin Foundation to develop a fund that will provide financial grants to develop a program to provide Grant County-grown produce for families of school-age children in need.

SLIDE 94

Staff recommendation for dispersing funds:

$20,000 provided to the Columbia Basin Foundation to develop a fund that will provide grants to help Grant County school districts cover the transportation costs of bringing sixth-grade students to a hydro-power outreach educational event at Wanapum Dam.

SLIDE 95

Staff recommendation for dispersing funds:

$10,000 for Share the Warmth, a Grant PUD administered fund to help customers in need pay their power bills.

SLIDE 96

Powering our way of life.

SLIDE 97

Powering our way of life.

May 23rd 2019, Grant PUD Commission Meeting

Load Gr ad Growth i h in Gr Grant C Coun unty

SLIDE 98

Ove verview

Review of last Commission meeting
Continue to move forward on analysis of transmission expansion to facilitate growth
Long term benefits for core customers
Preview of discussion today
Generic rate impact – Dave Churchman
Current status of applications – Shane Lunderville
8768 Policy check in – Dave Churchman

SLIDE 99

Grant County Public Utility District Draft Transmission Expansion Levelized Rate Impacts Amortization Period - $140 m Investment Total Load 20-years 30-years 40-years MW $/kWh $/kWh $/kWh 400 MW 0.00377 0.00322 0.00299 500 MW 0.00301 0.00257 0.00239 550 MW 1/ 0.00274 0.00234 0.00218 650 MW 2/ 0.00232 0.00198 0.00184 800 MW 0.00188 0.00161 0.00150 900 MW 3/ 0.00167 0.00143 0.00133

1/ Represents the system average of approximately 550 MW. 2/ Represents the approximate system average of 550 MW plus the Current Application Pipeline of 100 MW for total of 650 MW. 3/ Represents the approximate system average of 550 MW plus the Current Application Pipeline of 100 MW plus the General Application Quene of 250 MW. Calculation Example: Average Cost Impact if transmission investment is recovered over 20-years and adds 350 MW of new load. Example: Average Cost Impact Monthly kWh Usage 1,000 Estimated Rate Increase $0.00167 Estimated Monthly Cost Impact $1.67 /1000 kWh

SLIDE 100

Powering our way of life.

By Shane Lunderville

Large S e Service ce App ppli licati tion S Statu tus

SLIDE 101

Applications

Current Status

SLIDE 102

SLIDE 103

Applications waiting for Fee

SLIDE 104

SLIDE 105

General Queue Evolving Industry Queue

SLIDE 106

SLIDE 107

Processing

SLIDE 108

Applications

Status of Pipeline

SLIDE 109

Entered Pipeline

Application

Service Options

Provisional (Ramp), Substation, Configuration

Sign Facility Agreements

Customer and Grant PUD Sign

Finalize Facility Plan

Final Contribution Costs, Schedule, and Scope

Draft Facility Plan

Scope, Schedule, Est. Costs

System Impact Study

Distribution, Transmission

HALTED Transmission Mitigation Needed

SLIDE 110

To this Point

Created and updated new Connection process
(Handbook, CSP update, Applications with Fee)
New Facility Agreements with boilerplate language
New Customer Contribution Cost Calculator
Processing 6 applications with completed System Studies and

Draft Facility Plans

SLIDE 111

Sep 2018

Opened for new Applications

Jan 2019

Started Draft Facility Plans

Apr 2019

Started Mitigation Options

Nov 2018

Service Options (Processing)

Apr 2019

System Studies Results

May 2019

Commission Workshop

Today

Next Steps

SLIDE 112

Timing Considerations

Customer Connect costs will be finalized once the Commission

provides guidance on transmission expansion.

SLIDE 113

Timing Considerations

Depending upon timing, Construction of Facilities for applications

in the pipeline will be included in Design Build 2.

SLIDE 114

Timing Considerations

5 of the 6 requests are waiting for final Facility Agreements.
3 of the 6 requests are delayed beyond the desired electrical

service date.

SLIDE 115

Proposed Next Steps

Send draft version of Facility Agreements with Facility Plan

without Costs and schedule to applicants. This would allow applicants to review and verify Electrical Service scope with requirements for both parties.

Execute Facility Agreements once Commission evaluation and

guidance on transmission expansion is complete. Unlikely to meet requested electric service start date for all customers.

SLIDE 116

Powering our way of life.

May 23rd 2019, Grant PUD Commission Meeting

Load Gr ad Growth i h in Gr Grant C Coun unty

SLIDE 117

Resolution 8768 8768

Section 6:
Changes in rate schedules should be designed to limit impact to customers due to

substantial structure change, aka "rate shock".

Rate class specific limits set at not less than 0.25x the average total Revenue

Requirement level increase and not more than 2.50x the average total Revenue Requirement level increase on an annual increase basis.

In a year that no general retail rate increase is put into effect, no increase will be

applied to any schedule.

SLIDE 118

Resolution 8768 8768

Section 9:
By December 31, 2023, the rate schedules shall be designed such that the

differential between the "cost to serve" and the "expected class revenue recovery" for each Rate Class shall not exceed +15%/-20.0%.

Annually the long term plan will be evaluated and, if appropriate, updated to

stay on course to meet established targets / policy.

SLIDE 119

Safety Report May 2019

Incidents Reported

Monthly and Year to Date

Vehicle Incidents

Closed Investigations

Close Calls

Close Calls

Close Call Reporting Changes

Leading & Lagging Indicators

Safety Policy Status:

Safety Policies Under Review:

Thank You

Treasury Quarterly Report

Treasury Scope of Operations

Cash & Investment Management

P O R T F O L I O

P O R T F O L I O

P O R T F O L I O

P O R T F O L I O

M A R K E T

B A A N K I N G

Accounts Payable

Debt Management

Debt- Refunding

Debt Program Activity

Debt Service Payments

Debt Management- Credit Ratings

Energy Independence Act Summary (I-937)

Energy Independence Act or I-937

Partnership with Microsoft

Grant PUD’s Potential and Achieved Targets

Continued Partnership

Benefits of the Pay it Forward Partnership:

Pay it Forward Partnership explained:

Recommendation for dispersing funds:

Staff recommendation for dispersing funds:

Staff recommendation for dispersing funds:

Staff recommendation for dispersing funds:

Load Gr ad Growth i h in Gr Grant C Coun unty

Ove verview

Large S e Service ce App ppli licati tion S Statu tus

Applications

Current Status

Applications waiting for Fee

General Queue Evolving Industry Queue

Processing

Applications

Status of Pipeline

To this Point

Timing Considerations

Timing Considerations

Timing Considerations

Proposed Next Steps

Load Gr ad Growth i h in Gr Grant C Coun unty

Resolution 8768 8768

Resolution 8768 8768

Long-term rate policy by rate class