Safety Report May 2020 Incidents Reported Date Injury - - PowerPoint PPT Presentation

Safety Report May 2020

Incidents Reported

Date Injury Description: Causes: Prevention: 4-15-2020 Shoulder He was working over head soldering a

• joint. While wiping away the hot solder

from the bottom of the joint it managed to make its way past his safety glasses and land on his eye lid and close to the eye. Overhead Work Use a wet rag rather than using a finger and wipe away not towards the face. 4-17-2020 Forehead Employee was changing out a propane tank on forklift. While installing the full tank he started feeling pain in his left hand, and a sensation of burning and numbness in the hand and fingers. Overexertion Stretch and flex or ask another employee for assistance.

Monthly and Year to Date

2020 April YTD Total Incidents Reported 2 11 Recordable Case(s) 1 2 Restricted Duty Case(s) 2 Lost Workday Case(s) 1

Vehicle Incidents

Date Vehicle Driver’s Account: Prevention

4-11-2020 424 ​An employee was backing down a driveway to open some fuses and lost sight of the mailboxes in the wide spot of driveway and backed over them. Stay alert, utilize defensive driving skills

Close Calls

Date Location Description

4-27-2020 Clover & Pilgrim Rd ​While preforming switching the crew closed a normal open, (looping) and continued switching orders, moving on to open NR112 so we could change the fuse size. After we completed the fuse change out and re-energized we were notified that a few customers were with out power during the fuse change out.

Level O - Other – Close Call Level 1 – Serious Close Call Level 2 – First Aid Case(s) Level 3 – Recordable Injury Case(s) Level 4 –Restricted Duty Case(s) Level 5 – Lost Work Day Case(s) Level 6 – Fatality or Hospitalization

19 2

Employee Safety

2020 incidents Year to Date Summary

2020

5

Recordable Cases TTL.

2019

67 7 11 8 5 7

20

Recordable Cases TTL.

Level O - Other – Close Call Level 1 – Serious Close Call Level 2 – First Aid Case(s) Level 3 – Recordable Injury Case(s) Level 4 –Restricted Duty Case(s) Level 5 – Lost Work Day Case(s) Level 6 – Fatality or Hospitalization

32 3 2 2 1

Leading & Lagging Indicators

SAVE THE DATE! 2nd Annual (VIRTUAL) SAFETY DAYS EVENT

When: GCPUD Virtual Safety Days June 18, 2020 TEAMS LIVE EVENT (Appointment to all coming soon) Time: 8am-9:30am (3-Keynote Speakers and CI Team 5 Demo/Update) This is a required event attended by all employees!

Powering our way of life.

Thank You!

1

M E M O R A N D U M May 19, 2020 TO: Jeffrey Bishop, Chief Financial Officer FROM: John Mertlich, Sr. Mgr Financial Planning & Analysis Jeremy Nolan, Lead Financial Analyst SUBJECT: 1st Quarter 2020 Financial Forecast Update Purpose: Provide Highlights of the Q1 Financial Forecast Metrics:

• The District has in place interim and long-term annual target milestones for five financial metrics

through 2025 (Exhibit C).

• Over the 5 year forecast (thru 2025) the current metrics indicate (Exhibits A & B):
• The following long-term targets are met through 2024 for:

▪ Liquid Cash >$105 Million, ▪ Debt to Net Plant < 60%, and ▪ Debt Service Coverage > 1.80x

• Return on Net Assets does not meet the interim or long-term targets thru 2025.
• Retail Operating Ratio (ROR) meets the interim target in 2020 and 2021. The ROR

meets the long-term target in 2024 and 2025.

• Comparisons between the 2020 Budget and Q1 2020 Forecast can be found in Exhibit D.
• Debt to Net Plant Illustrative Example – Historic Cost vs Fair Market Value comparison found in

Exhibit H.

• The current expectations around the impact of the COVID crisis are limited to the short term

effects associated with the state of Washington “shelter in place” orders. Due limited duration and scope, the current view is that the immediate crisis will have limited impact on the overall financial health of the District. However, significant uncertainty remains concerning the intermediate and long term macroeconomic impacts as a result of the COVID 19 Pandemic. Notes of Interest:

• Key forecast updates:
• Interest rates updated for current market impact on Interest Income and Variable Rate

Debt Service expense.

• Labor, O&M, and Capital updated for Q1 actual data and balance of year projection.

2

• Cash Optimization was executed in January 2020 and additional debt refunding in

March 2020.

• Load Forecast and Retail Revenue have been incorporated. The table below shows the aMW

load change and Retail Revenue change from 2020 Budget.

• Retail Revenue rate adjustment assumption is: 0% in 2020, and 0.1% annually

thereafter.

3

• Wholesale Price volatility along with volume of energy to sell has a large impact on the Financial

Forecast results for both Net Income and the Metrics: Wholesale prices have improved from the 2019 Q4 Financial Forecast, but are mostly down from the 2020 Budget. With the updated Load Forecast results shown above, District energy sales will shift from retail requirements to wholesale sales opportunities thru 2025. Lower wholesale prices negatively compound the effect of lower retail sales. The tables below compare the current Wholesale prices with the last quarterly Financial Forecast, 2019 Q4 and the 2020 Budget. Scenarios:

• All scenarios start with the Base assumptions
• Five Scenarios were run for the 2020 Q1 Forecast:
• Wholesale Price Increase (P85)
• Wholesale Price Decrease (P15)
• Low Load Growth at ½ Base
• Low Load Growth at ½ Base and Wholesale Price Decrease (P15)
• Low Water (P15)
• Scenarios and Debt Service Coverage (Exhibit E)
• Debt Service Coverage (DSC) is adversely affected in all scenarios through 2025 except

higher wholesale energy prices.

• Low Load growth scenario when combined with low wholesale energy prices and the

Low Water scenario create the two largest negative impact to DSC, indicating that growing profitable loads and reducing Water risk are key controllable business drivers.

• Scenarios and Debt to Net Plant (Exhibit F)
• Debt to Net Plant is adversely affected in all scenarios through 2025, except higher

wholesale energy prices.

• Cash Optimization executed in January 2020 reduced Debt to Net Plant below 2020

Budget target.

• Scenarios and Return on Net Assets (Exhibit G)
• Return on Net Assets is negatively affected by all scenarios through 2025, except higher

wholesale energy prices.

• Return on Net Assets fails to meet the interim or long-term target though 2025.

4

Conclusions and Path Forward:

• The reduced Load Forecast and associated Retail Revenue has negatively impacted the Net

Income thru 2025.

• Growing profitable loads is a key controllable business success driver.
• Lower wholesale prices combined with low load growth are a threat in the 2020-2025 period.

Recommendation:

• For your information.

5

EXHIBIT A – Summary of Budget Items (in thousands of dollars)

6

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

7

EXHIBIT C - District Annual Financial Metric Targets

8

EXHIBIT D - Comparison between 2020 Budget and Q1 2020 Financial Forecast

9

EXHIBIT D - Comparison between 2020 Budget and Q1 2020 Financial Forecast (con’t)

10

EXHIBIT E- Scenarios: Debt Service Coverage Ratios

11

EXHIBIT F - Scenarios: Debt to Plant

12

EXHIBIT G - Scenarios: Return on Net Assets

13

EXHIBIT H - Debt to Net Plant Ratio Illustrative Example – Historic Cost vs Fair Market Value

From: John Mertlich To: Jeffrey Bishop; Jeremy Nolan Cc: Tina Wentworth; Robbie Noga Subject: Re: Q1 2020 Financial Forecast Memo - For Commission Packet - Please Approve and Load Date: Wednesday, May 20, 2020 6:51:45 AM

Approved ... John Get Outlook for iOS

From: Jeffrey Bishop <jbishop@gcpud.org> Sent: Wednesday, May 20, 2020 6:50:37 AM To: Jeremy Nolan <Jnolan@gcpud.org> Cc: Tina Wentworth <Twentworth@gcpud.org>; John Mertlich <jmertlich@gcpud.org>; Robbie Noga <Rnoga@gcpud.org> Subject: RE: Q1 2020 Financial Forecast Memo - For Commission Packet - Please Approve and Load Ahh.. got it. Thanks Sounds like we are good to go. Jeff From: Jeremy Nolan <Jnolan@gcpud.org> Sent: Wednesday, May 20, 2020 6:48 AM To: Jeffrey Bishop <jbishop@gcpud.org> Cc: Tina Wentworth <Twentworth@gcpud.org>; John Mertlich <jmertlich@gcpud.org>; Robbie Noga <Rnoga@gcpud.org> Subject: Re: Q1 2020 Financial Forecast Memo - For Commission Packet - Please Approve and Load Hi Jeff, John had done his review and approval prior to my submitting. I asked for the email approvals because that had been requested with the prior submission in place of initialing by your names. Thank you, Jeremy Sent from my iPhone On May 20, 2020, at 6:45 AM, Jeffrey Bishop <jbishop@gcpud.org> wrote:  This looks good from my perspective Jeremy. I’m ready to submit as final subject to John’s feedback/review. Thank you for your efforts with pulling this update together.

From: Jeremy Nolan <Jnolan@gcpud.org> Sent: Tuesday, May 19, 2020 4:45 PM To: Tina Wentworth <Twentworth@gcpud.org>; John Mertlich <jmertlich@gcpud.org>; Jeffrey Bishop <jbishop@gcpud.org> Subject: Q1 2020 Financial Forecast Memo - For Commission Packet - Please Approve and Load Hello John, Jeff, and Tina, The Final Memo for the Q1 2020 Financial Forecast presentation to the Commission is attached. John and Jeff, please confirm your approval by email to Tina. Tina, please upload for the Commission Packet once John and Jeff have approved. Thank you, Jeremy

Jeremy Nolan

Lead Financial Analyst / Financial Planning & Analysis

• Ext. 2159

Grant County PUD jnolan@gcpud.org Phone: 509-754-7211

Powering our way of life.

May 2020

Treasury Quarterly Report

2

P O R T F O L I O

Cash & Investments -Quarter Review

Key Cash Flow Dates:

• Ending cash/investment

portfolio 3/31 $428.3M (market based)

• Jan 2nd outgoing bi-

annual debt service payment of $59.2M was made

• Jan 29th- $90.2M debt

transaction net wire / defeasance

• Mar 25th $4.9 million

debt transaction net wire

• July 1st upcoming bi-

annual debt service payment: $20.9 M

$520.6 $534.7 $523.1 $542.1 $511.4 $548.1 $543.1 $566.2 $428.3 $- $100 $200 $300 $400 $500 $600 $700 3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020

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

Cash & Investments 3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 Liquidity-ES R&C Fund (1) 121,692.6 $ 122,023.7 $ 122,318.8 $ 124,201.3 $ 126,043.9 $ 127,956.0 $ 129,622.4 $ 129,841.3 $ 106,096.3 $ Liquidity-ES Revenue Fund (2) (4) 82,825.2 104,154.7 126,127.2 133,651.3 152,637.6 46,539.4 58,689.4 72,734.1 40,693.8 Other DCOH Funds (3) 46,819.3 44,041.2 33,671.9 35,469.5 45,822.5 57,943.7 54,459.9 46,881.0 49,735.0 Liquidity and Other DCOH Funds 251,337.1 $ 270,219.7 $ 282,117.9 $ 293,322.1 $ 324,503.9 $ 232,439.1 $ 242,771.7 $ 249,456.4 $ 196,525.1 $ Restricted-Construction Funds (4) 108,223.3 72,069.8 51,896.7 27,422.9 11,607.7 107,080.3 90,957.5 74,368.7 54,421.5 Restricted-DS Reserve Funds 54,589.9 54,749.2 54,827.9 55,636.0 56,618.9 57,565.4 58,210.0 58,320.7 43,759.7 Restricted-DS P&I Funds 29,739.2 53,834.1 54,303.7 87,998.4 30,475.4 54,665.1 57,650.1 89,073.4 30,962.7 Restricted-DS CREBs Sinking Funds (5) 59,327.3 66,922.4 63,360.1 61,450.4 69,991.5 78,769.0 76,466.2 79,138.8 84,536.3 Restricted-Habitat Funds 17,394.5 16,920.8 16,563.1 16,224.4 18,242.2 17,588.3 17,056.5 15,888.5 18,063.4 All Restricted Funds 269,274.2 $ 264,496.4 $ 240,951.5 $ 248,732.1 $ 186,935.7 $ 315,667.9 $ 300,340.3 $ 316,790.1 $ 231,743.7 $ Total 520,611.3 $ 534,716.0 $ 523,069.4 $ 542,054.2 $ 511,439.6 $ 548,107.1 $ 543,112.0 $ 566,246.5 $ 428,268.8 $

Public Utility District No. 2 of Grant County

Quarterly Treasurer's Report Historical Cash and Investments Summary | Liquidity and Restricted

3

Cash & Investments -Quarter Review

Agency 11% Cash 1% Corporates 7% Muni 41% CP 1% Supranational 5% Treasury 7% WA ST LGIP 27%

Portfolio Security Composition

D I V E R S I F I C A T I O N

Portfolio as of 03/31/2020

• The District was within policy

limits for portfolio holdings

• The target range reflects

strategy ranges based upon current market environment and cash flow needs

• The state LGIP investment pool

has intentionally been leveraged to an increased percentage of holdings

• The District has partnered with

an independent Asset Advisor to provide a third party review

• f strategy, assist with

compliance and provide analytical support

Security Type Book Value ($ in Millions) Yield Portfolio Allocation Policy Max Target Range In Compliance Municipal Bonds

$ 177.1

3.869 41.8% 50% 25-40% YES WA State LGIP

$ 115.5

1.540 27.2% 100% Varies YES Agency 42.5 $ 2.206 10.0% 50% 5-15% YES Corporate Bond

$ 31.0

2.080 7.3% 25% 5-10% YES US Treasury

$ 30.1

1.670 7.1% 100% 20-40% YES Supranational

$ 20.2

1.703 4.8% 50% 5-15% YES Commerical Paper

$ 4.0

1.980 0.9% 25% 5-10% YES Bank Holdings (Cash)

$ 3.7

0.200 0.9% n/a < $3M avg YES $ 424.1 2.590 100%

4

• The Fed Funds target range was adjusted three times in 2019

and two times in 2020, the current range is 0.00-0.25%

• GCPUD’s policy and strategy focuses on diversification, market

averaging, and duration targets over a fixed income program following state requirements

M A R K E T

Cash & Investments -Quarter Review

Date 1 Mo 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 30 Yr 1/3/2017 0.52 0.53 0.65 0.89 1.22 1.5 1.94 2.36 2.45 3.04 1/2/2018 1.29 1.44 1.61 1.83 1.92 2.01 2.25 2.38 2.46 2.81 1/2/2019 2.4 2.42 2.51 2.6 2.5 2.47 2.49 2.56 2.66 2.97 1/2/2020 1.53 1.54 1.56 1.56 1.58 1.59 1.67 1.79 1.88 2.33 4/1/2020 0.03 0.09 0.14 0.16 0.23 0.28 0.37 0.51 0.62 1.27

5

Portfolio Diversification

The District’s portfolio at 03/31 was 27% invested in the state LGIP

• State LGIP March Yield

1.26%

• State LGIP 2020 Q1 Avg Yield

1.55%

• Aggregate Portfolio Proceeds Q1 Book Yield to Date

2.59%

• Effective Duration

2.36 years

• 2020 Budget = $8.8M interest income @ 2% earnings rate

Actual Projected 2019 2020

YTD Interest Proceeds * 3.40 $ 3.25 $ Annual Interest Proceeds * 16.50 $ 8.03 $ Change in Fair Value 5.20 $ 5.82 $ Total Interest Income (FS) 21.70 $ 13.85 $ Portfolio Book Value 571.1 $ 415.0 $ Market Value 565.5 $ 404.0 $ Book Yield (Interest Proceeds/ Book Value) 2.89% 1.94% *Interest Proceed s includes accrued interest

Investment Income (shown in millions)

6

Public Utility District No. 2 of Grant County

Debt Management

Outstanding Consolidated Debt Summary - as of March 31, 2020

• $

• $

Senior Debt

Subordinate Debt

• Weighted average coupon rate of fixed debt: 4.4%
• Effective cost of debt for entire portfolio (net of interest rebates and sinking

funds): 3.4%

• Weighted average life of portfolio 12.2 years
• Total Outstanding Debt represents debt due to external bondholders and does not

include intersystem borrowings (PRP JLB’s, shown on next slide)

7

Financing Portfolio

• The District finances capital with a mix of debt and revenue (equity)
• The Strategic Plan target for debt to net plant is ≤ 60% and drives

planning, in combination with liquidity above cash management needs

• The Q1 Debt to Net Plant Ratio was 56%
• Balance of Iinternal PRP Junior Lien Bonds (JLB) to the Electric

System = $400.7 million as of 03/31/2020

• The short term debt program makes up $150 million of the total portfolio

(12%), hedged in three “traunches” 1. ES 2017-M: Senior Lien- Fixed – 9/20 maturity, 2% fixed coupon 2. ES 2017-N: Subordinate Lien- Variable/Libor – 12/20 maturity, 47.5 + Libor 3. ES 2019-P: Subordinate Lien- Variable/Libor – 7/21 maturity, 37+ Libor

• The program goal of short term debt is to hedge net interest rate

volatility Public Utility District No. 2 of Grant County

Debt Management

Outstanding Internal Financing (Junior Lien Bond) Debt Summary as of March 31, 2020

Series Outstanding Par Amount Mode Tax Status* Purpose Coupon Range Call Date Outstanding Call Amount Serial/Term Final Maturity 2014JLB 40,170,000 $ Fixed Taxable New Money 2.38% - 4.25% Anytime 40,170,000 $ 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 29,380,000 $ Fixed Taxable New Money 2.85% - 4.92% Anytime 29,380,000 $ Serial/Term 1/1/2046 2017A JLB 24,810,000 $ Fixed Taxable New Money 2.87% - 5.00% Anytime 24,810,000 $ Serial/Term 1/1/2047 2017B JLB 83,560,000 $ Fixed Taxable New Money 2.90% - 4.93% Anytime 83,560,000 $ Serial/Term 1/1/2048 2019JLB 108,480,000 $ Fixed Taxable New Money 1.83% - 3.352% Anytime 108,480,000 $ Serial 1/1/2049 2020JLB 79,585,000 $ Fixed Taxable New Money 1.694% - 3.41% Anytime 79,585,000 $ Term 1/1/2050 Total 400,650,000 $ 400,650,000 $ Total Junior Lien Debt 400,650,000 $ 400,650,000 $

Internal Financing-Junior Lien Bonds

Priest Rapids Project (PRP)

LT Debt, 88% Short Term Program, 12% Elec Plant, 28% PRP, 72%

$- $500 $1,000 $1,500 $2,000 $2,500 Debt Plant

Debt/Net Plant as of 03/31/2020 56%

8

Debt

• Debt Service includes principal payments (due

Jan 1st on fixed rate debt) annually, interest paid July 1st and Jan 1st

• Variable rate interest due monthly
• CREB’s and BAB’s interest rebates sequestered

at 5.9% for 2020; estimated annual rebate 2020= $10.6M

• The net decrease in Debt Activity = $3.2 million
• In Jan and March the combined refunding transaction savings to the

District = $52.7 M

• The avoided future debt service on the defeased bonds = $190.7 million
• The total gross savings on future debt payments on these two

transactions = $243.4 million

• The Total Interest Cost (TIC) of the new refunding bonds priced at 3.0%

and 2.7% respectively for Jan/March transactions

• By Transaction NPV Refunding Bond Savings Results:
• Jan PRP = 11.3%
• Jan Elec = 9.4%
• March PRP = 6.5%
• The District’s saving’s policy is > 3% in aggregate
• The series were refunded over the original useful life, excess bond reserve funds of

$14.0M contributed to the net escrow reduction

2020 Budget 2020 Projection Variance

Net Debt Service (P&I less rebates) 85.2 $ 73.0 $ (12.2) $ Amortization of Premiums/Discounts (2.8) $ 5.3 $ 8.1 $ Debt Cost of Issuance 0.6 $ 1.5 $ 0.9 $

Net 2020 Debt Activity 83.0 $ 79.8 $ (3.2) $

Shown in $ millions

9

Debt Management- Credit Ratings

• During December 2019 and March 2020

the Utility received credit ratings from Fitch, Moody’s, and S&P for the 2020 issuances

• No change to previous annual review

ratings

• Electric System carries a slightly higher

rating than PRP for one rating

10

Appendix

• Treasury Personnel
• Banking Institutions
• Petty Cash Accounts

11 Last Updated On: 2/20/2020

12 *notes:

• US Bank is the safekeeping agent for the state
• f Washington
• Wells Fargo Trust is the safekeeping agent /

“custody” agent for Washington Trust for investments

• The Washington State Local Government

Investment Pool is authorized by the state of Washington to manage government funds (not needing separate authorization)

• The 3/6 change was to add a new broker to the

list, Mischler Financial Group, INC Last Updated On: 3/6/2020

13 Last Updated On: 4/16/2020

M E M O R A N D U M May 12, 2020 TO: Kevin Nordt, General Manager/CEO VIA: Jeff Bishop, Chief Financial Officer FROM: Michael Facey, Senior Manager Accounting SUBJECT: Unaudited Financial Statements First Quarter 2020 Purpose: Circulate year to date unaudited consolidated financial statements. Financial Highlights: All comparisons unless otherwise stated are year to date (January through March)

• f 2020 versus 2019.

 Statement of Revenues, Expenses and changes in net position:

• Total operating revenues of $83.7M were $2.4M (2.9%) higher than the same period in

the prior year driven by a $5.8M (31.5%) increase in Wholesale revenues; partially offset by a $2.8M (5.2%) decrease in retail revenues and a $0.9M (12.9%) decrease in Sales to power purchasers at cost. Residential and small commercial load decreased due to a combination of warmer weather and the stay at home order that took effect in March. This led to the decrease in retail revenues, but also drove the increase in wholesale revenues because the District receives market prices when actual retail load is lower than forecasted through the SENA agreement.

• Total operating expenses of $54.7M were $6.3M (13%) higher than the same period in

the prior year. The increase in operating expenses is largely due to Distribution expense ($4.9M or 159.8% increase), Administrative and general expense ($3.1M or 38.8% increase), Depreciation expense ($1M or 5.4% increase), Generation expense ($0.8M or 10.1% increase); partially offset by License compliance expense (2.2 or 66.6% decrease).

• Total change in net position of $26.3 is $7.4M (22%) lower than the same period in the

prior year. This decrease is largely due to the changes in operating revenues and expenses described above, $3.1M of insurance proceeds related to the Central Ephrata Substation claim, a $4.3M (81%) decrease in Contributions in aid of construction and the impacts of the bond transactions that occurred in January and March of 2020. The bond transactions drove a $3.2M (21.8%) decrease in interest expense, but also had debt issuance costs of $1.1M to execute the transactions and $3.5M in losses associated with the defeasance of $81.8M of outstanding bonds.  Statement of net position:

• Total cash and investments of $412.6M were $95.2M (18.8%) less than the same period

in the prior year due to the planned use of funds for the defeasance of bonds and to adjust to the new Electric System liquidity target of $105M. There was a corresponding decrease in outstanding debt of $90.2M (6.9%).

• Utility plant, net increased $68.2 or 3.2%.

Recommendation: For your information only.

PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY UNAUDITED STATEMENT OF NET POSITION March 31, 202020 AND 2019 2020 2019 Difference CURRENT ASSETS Cash 274,649 5,243,739 (4,969,090) Investments 62,255,894 176,881,648 (114,625,753) Restricted funds Cash 2,447,741 2,203,879 243,862 Investments 65,740,083 85,291,145 (19,551,063) Customer accounts receivable, net 27,174,017 26,144,986 1,029,031 Materials and supplies 18,638,708 18,306,360 332,348 Due from power purchasers

• 1,173,222

(1,173,222) Other current assets 1,255,577 1,117,156 138,421 Total current assets 177,786,669 316,362,135 (138,575,466) NONCURRENT ASSETS Investments 12,234,913 3,078,831 9,156,082 Restricted funds Cash

• 504,506

(504,506) Investments 281,908,468 238,235,881 43,672,587 Conservation loans 379,068 343,150 35,918 Demand-side management 160,950 362,708 (201,758) Preliminary expenses 4,086,665 4,440,805 (354,140) Total other noncurrent assets 298,770,064 246,965,882 51,804,182 Utility plant, net 2,167,936,293 2,099,779,637 68,156,657 Total noncurrent assets 2,466,706,358 2,346,745,519 119,960,839 DEFERRED OUTFLOWS Net pension, change in proportion 6,409,454 5,753,562 655,892 Other Post Employment Benefits 2,290,950

• 2,290,950

Unamortized refunding loss 36,677,380 4,155,488 32,521,892 Total deferred outflows 45,377,784 9,909,050 35,468,735 TOTAL ASSETS AND DEFERRED OUTLFOWS OF RESOURCES 2,689,870,811 2,673,016,703 16,854,107

PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY UNAUDITED STATEMENT OF NET POSITION March 31, 2020 AND 2019 2020 2019 Difference CURRENT LIABILITIES Accounts payable Trade 11,919,086 12,977,329 (1,058,243) Wages payable 10,495,003 8,126,286 2,368,717 Due to Power Purchasers 2,571,493 902,434 1,669,059 Accrued taxes 2,742,653 2,732,901 9,752 Customer deposits 6,542,006 13,953,324 (7,411,317) Accrued bond interest 11,297,307 14,479,573 (3,182,266) Unearned revenue 9,401,884 416,029 8,985,855 Habitat liability 17,959,455 18,236,219 (276,764) Other current liabilities 39,768 39,768

• Current portion of licensing obligations

2,343,889 2,283,494 60,395 Current portion of long-term debt 14,245,000 30,580,000 (16,335,000) Total current liabilities 89,557,544 104,727,357 (15,169,813) NONCURRENT LIABILITIES Revenue bonds, less current portion 1,191,110,000 1,238,815,000 (47,705,000) Unamortized (discount) premium, net 9,330,146 35,482,004 (26,151,858) Licensing obligations, less current portion 70,724,171 45,073,128 25,651,043 Pension obligations 24,837,391 32,686,126 (7,848,735) Accrued other postemployment benefits 9,705,904 6,977,140 2,728,764 Long-term unearned revenue 8,560,775 2,130,474 6,430,301 Total noncurrent liabilities 1,314,268,387 1,361,163,872 (46,895,485) DEFERRED INFLOWS Net pension, deferred inflow 14,701,254 13,692,570 1,008,685 Total deferred inflows 14,701,254 13,692,570 1,008,685 Total liabilities and deferred inflows of resources 1,418,527,185 1,479,583,798 (61,056,614) NET POSITION Invested in capital assets, net of related debt 986,585,231 773,488,509 213,096,723 Restricted 252,972,257 271,583,910 (18,611,653) Unrestricted 31,786,137 148,360,487 (116,574,350) Total net position 1,271,343,626 1,193,432,905 77,910,720 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION 2,689,870,811 2,673,016,704 16,854,107

PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY UNAUDITED STATEMENT OF REVENUES AND EXPENSES AND CHANGES IN NET POSITION

For the Three Months Ending March 31, 2020 and 2019

2020 2019 Difference OPERATING REVENUES Sales to power purchasers at cost 6,100,386 7,006,930 (906,544) Retail energy sales Residential 15,094,443 17,221,952 (2,127,509) Irrigation

• Commercial and industrial

35,008,155 35,429,269 (421,114) Governmental and others 407,060 626,671 (219,612) Sales to other utilities 24,231,476 18,423,214 5,808,262 Fiber optic network sales 2,462,024 2,247,398 214,627 Other 371,663 336,008 35,655 Total operating revenues 83,675,208 81,291,441 2,383,766 OPERATING EXPENSES Generation 8,342,975 7,577,527 765,448 Transmission 774,241 1,689,966 (915,725) Distribution 7,898,695 3,040,690 4,858,005 Customer and information services 840,067 986,711 (146,644) Fiber optic network operations 515,467 432,533 82,934 Administrative and general 11,120,251 8,010,923 3,109,327 License compliance and related agreements 1,111,777 3,333,084 (2,221,306) Depreciation and amortization 19,618,558 18,608,043 1,010,515 Taxes 4,522,798 4,783,897 (261,099) Total operating expenses 54,744,829 48,463,375 6,281,454 NET OPERATING INCOME 28,930,379 32,828,067 (3,897,688) OTHER REVENUES (EXPENSES) Interest and other income 9,546,833 6,760,718 2,786,115 Interest on revenue bonds and other, net of capitalized interest (11,606,526) (14,836,125) 3,229,599 Federal rebates on revenue bonds 2,634,420 2,637,882 (3,461) Amortization of debt discount/premium (3,105,743) 967,214 (4,072,956) Cost of debt issuance (1,124,259)

• (1,124,259)

Total other revenue (expenses) (3,655,274) (4,470,312) 815,038 CONTRIBUTIONS IN AID OF CONSTRUCTION 1,011,422 5,341,899 (4,330,477) CHANGE IN NET POSITION 26,286,527 33,699,653 (7,413,126) NET POSITION Beginning of year 1,245,057,099 1,159,733,252 85,323,847 End of year 1,271,343,626 1,193,432,905 77,910,721

Quarterly Commission Update 05/26/2020

Powering our way of life.

Project Management Office

2020 Q2 Review

• Purpose and Goal
• Structure and Personnel
• Safety Update
• Budget Update
• Q1 Accomplishment Updates
• Q2 Forecasted Work

Acronym List

• EPMO

Enterprise Project Management Office

• ET

Enterprise Technology

• PP

Power Production

• PD

Power Delivery

Department Purpose

Enterprise Project Management Office = Strategy Execution Office Purpose

• Provide a framework that will support all stakeholder and projects teams

to improve the probability of successful project delivery, ultimately creating greater business value to Grant PUD.

• Over time, the EPMO will become the source for guidance,

documentation and metrics for the practices involved in managing and implementing projects within Grant PUD.

Department Goal

Goal

• Cultivate a business driven EPMO that enables consistent, reliable data

and outcomes

• Standardized business driven project management framework
• Consistent and reliable project health data and outcomes
• Project resourcing and training
• Employ change management principles to allow greater adoption,

utilization and proficiency The success of the EPMO is derived exclusively from achieving greater business value to the utility.

Structure and Personnel

Senior Manager EPMO Julie Pyper Manager Power Production Projects Aaron Kuntz Administrative Assistant Project Managers Outage Coordinator Project Services Supervisor Dustin Bennett Project Coordinators Construction Inspectors Lead Project Manager Randy Weisheit Manager IT Projects Chris Roseburg Project Manager Project Coordinators Senior Training Coordinator Manager Power Delivery Russ Seiler Project Managers Project Coordinators Business Analyst Administrative Assistant

Safety Update: Safety Meeting Attendance

January

• 100%

February

• 97%

March

• 100%

Safety Update: Job Site Review s

Projects managers

• Minimum 2 per active project per month
• Folks are encouraged to do more
• Folks are encouraged to do them together

Inspectors

• Minimum of 1 per month for each non-EPMO managed project
• Coordinate with Project Manager for each EPMO managed project

Enterprise Technology projects

• Required on a project by project basis

Safety Update: Job Site Review s

Jan Feb Mar

TOTAL Required 10

9 6

TOTAL Completed 14

12 8

8 active projects in Q1

Safety Update

Q1 2020 Recordable incidents

• Zero

Q1 2020 Vehicle incidents

• Zero

Continued emphasis on job site reviews and contractor safety

2020 Budget to Actuals

Directs through March 25. * Partial Q1 labor actuals available.

2020 Budget Actuals through 3/31/2020 Budget Remaining % of Budget Spent CAP $55,394,129 $5,712,250 $49,681,879 10.31% O&M $109,325 $69,462 $39,863 63.54% Labor & Benefits* $1,432,946 $569,472 $863,474 39.74% TOTAL $56,936,400 $6,351,184 $50,585,216 11.15%

Q1 2020 Initiatives

Project Management Moving Forward  Step 1

• Formalize standard project management framework

Organizational Change Management

• Roadmap development
• Project support – 5 projects
• Identified program support – 8 programs

Project Management Quality Assurance

• Quality surveys continue for ET projects

Q1 2020 Enterprise Technology

Continued implementation of:

• myHR
• Office 365 Migration
• Oracle CCS
• ESRI GIS and Work Order Design

Q1 2020 Pow er Delivery

Continued implementation of:

• Wholesale Fiber Project
• Supporting our customer demand through this challenging time
• Started construction inspection – EPMO Support Services
• Design Build 2
• Change Order coming – as planned – in an upcoming meeting

Started planning:

• Quincy Transmission Expansion Project
• Allows for continued industrial growth

Q1 2020 Pow er Production

Continued implementation of:

• PR Turbine Generator Upgrade project
• Impacted by COVID-19 – international inspections and contracted

labor

• Pre-COVID-19 Unit Completion Date: 07/03/2020
• Current Unit Complete Date: 07/24/2020

Started planning:

• Additional projects to be managed by EPMO at PP

Q1 2020 Personnel

PMO Manager – Power Production

• Aaron Kuntz transferred from Priest Rapids

Project Coordinator – Support Services

• Nick Sackmann – started March 02, 2020

2020 Q2 Forecasted Work

Onboard Power Production Project Managers

• Allen Chatriand
• Mike Zabransky - Internal

Onboard Enterprise Technology Project Coordinator

• Kristi Van Diest – Internal

Continued implementation

• Project Management Moving Forward  Step 1
• Change Management Approach deployment
• Projects for the business lines
• Expand quality assurance to construction projects

2020 Q2 Forecasted Work

All EPMO Team meeting

• Early June

Start management of Facility projects in EPMO

• Moses Lake Service Center
• Ephrata Service Center
• Other major projects

Powering our way of life.

2019 Audit Results

May 26, 2020

Better Together: Moss Adam s & GCPUD 2

Public Utility District No. 2 of Grant County, Washington

Board of Commissioners

Dear Commissioners: Thank you for your engagement of Moss Adams LLP. We are pleased to have the opportunity to meet with you to discuss the results of our audit of the financial statements of the District as of and for the year ended December 31, 2019. The accompanying presentation, which is intended solely for the use

• f the Board of Commissioners and Management, and not intended to

be and should not be used by anyone other than these specified parties, presents important information regarding the District’s financial statements and our audit that we believe will be of interest to you. We conducted our audit with the objectivity and independence that you expect. We received the full support and assistance of District

• personnel. We are pleased to serve and be associated with the

District as its independent public accountants and look forward to our continued relationship.

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• 1. Audit Reports Issued
• 2. Areas of Audit Emphasis
• 3. Matters Required to be Communicated
• 4. Upcoming Accounting Pronouncements
• 5. Acknowledgements and Other Information

Agenda

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4

• Unmodified opinions on financial statements of Grant County Public Utility

District, which are presented fairly and in accordance with U.S. Generally Accepted Accounting Principles

• Audit and report on internal control and compliance over financial reporting

in accordance with Governm ent Auditing Standards

• No material weaknesses noted
• No significant deficiencies identified
• No compliance findings noted

Audit Reports Issued

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5

• Capital Assets & Construction in Process
• Consideration of capitalization policies and potential impairment, as well as testing of

additions, retirements, overhead application, and depreciation

• Operating Expenses and Related Payables
• Classification of amounts
• Internal controls over expenditures to vendors and employees
• Bond Activity
• Tests of revenue and refunding bonds, debt repayments, discounts and premiums, and

compliance with covenants

• Third-party confirmations with financial institutions
• Power Sales Transactions
• Tests of sales to power purchasers, including via third party confirmations
• Tests of wholesale power transactions
• Review of cash receipts and timing of revenue recognition

Areas of Audit Emphasis

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• Retail Energy Sales and Related Receivables
• Vouching of cash receipts and timing of revenue recognition
• Third-party confirmations with largest commercial power purchasers
• Net Position Classification
• Tests of classification of net investment in capital assets, restricted and unrestricted
• Inform ation Technology (IT) General Com puter Controls
• Our IT specialists tested the IT applications and general computer controls that support

the various financial reporting systems

• Financial Statem ent Footnote Disclosures
• Review of the footnote disclosures for completeness and accuracy in accordance with

authoritative disclosure checklists and our knowledge of industry best practices

Areas of Audit Emphasis (continued)

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Communications with Those Charged with Governance

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Our Responsibility Under U.S. Generally Accepted Auditing Standards and Government Auditing Standards

To express our opinion on whether the financial statements prepared by management with your

• versight are fairly presented, in all material

respects, and in accordance with U.S. GAAP. However, our audit does not relieve you or management of your responsibilities. To consider internal control over financial reporting as a basis for designing audit procedures but not for the purpose of expressing an opinion on its effectiveness or to provide assurance concerning such internal control. To perform an audit in accordance with generally accepted auditing standards issued by the AICPA and Government Auditing Standards issued by the Comptroller General of the United States, and design the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. To communicate findings that, in our judgment, are relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

1 2 3 4

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• Our audit was performed according to the planned scope
• Significant accounting policies are summarized in Note 1 to the financial

statements

• There were no changes to significant accounting policies for the year ended

December 31, 2019, except for discontinuation of capitalization of interest on self constructed assets due to implementation of GASB Statement no. 89 “Accounting for Interest Cost Incurred before the End of a Construction Period”

• No difficulties were encountered during the performance of our audit
• Financial statement disclosures were consistent, clear and understandable
• During the audit, there were no adjusting journal entries proposed or posted

Required Communications

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Better Together: Moss Adam s & GCPUD

• Potential Effect on the Financial Statements of Significant Risks, Exposures &

Uncertainties

• The District is subject to potential legal proceedings and claims that arise in the
• rdinary course of business, which are disclosed in the notes to the financial

statements in Note 1

• There were no disagreements with management
• Weekly meetings were held between Moss Adams and District management and

staff throughout the audit term

• Ability to continue as a going concern (no disclosure deemed necessary)
• Consideration of fraud in a financial statement audit
• We are not aware of any instances of fraud or noncompliance with laws and

regulations.

• Moss Adams is independent with respect to the District

Required Communications (continued)

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GASB Statement No. 83 Certain Asset Retirem ent Obligations – delayed until 2020* GASB Statement No. 84 Fiduciary Activities – delayed until 2020* GASB Statement No. 87 Leases – delayed until 2022*

* GASB Statement No. 95 Postponem ent of the Effective Dates of Certain Authoritative Guidance was issued on May 8, 2020. The standard provides temporary relief in light of the COVID-19

• pandemic. That objective is accomplished by postponing the effective dates of certain

pronouncements by one year.

Upcoming Accounting Pronouncements

• The audit progressed on time and in an orderly

fashion; requested schedules and draft financial statements were received on a timely basis.

• All District personnel across all departments were

courteous, responsive, and fulfilled all of our requests in a timely manner.

• ‘Tone at the Top’ and attitude from management was
• ne of helpfulness and openness in response to audit

requests and discussion points.

Thank you!

Acknowledgements

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