Clatskanie PUD board

The Clatskanie PUD board of directors voted to approve motions for debt planning and refinancing strategies at their regular board meeting Wednesday night.

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New bond debt interest rates paired with the next steps in a series of debt savings plans could save Clatskanie PUD close to $1 million in interest costs.

The PUD’s board of directors approved motions to begin debt strategy plans and refinance current bank loans at their regular board meeting 7 p.m. Wednesday.

These next moves will allow the district to make a $4 million dollar principal payment on continued debts, pay off $10 million in debt between 2017 and 2021 and avoid double-digit rate increases on customers.

“We’re reducing our interest rate from an average of about 4 percent to an average of about 2.2 percent,” said Bob Wiggins, Clatskanie PUD board president.

The Chief previously reported that the current debt sits at about $20 million, with the PUD’s overall assets at around $40 million. But a drop in market prices affecting revenue gains and closeout of a 25-year contract that’s helped fund their debt burden could force the PUD to implement larger rate increases.

Even under normal conditions, Clatskanie PUD forecasts that they’ll get about $2.8 million above the 90-day cash-on-hand threshold to maintain stable operations by 2021.

This means they would need another $1.2 million from residential and commercial customers over the next five years to make a $4 million principal payment on debts at this time.

Clatskanie PUD managers outlined several long-term and short-term debt saving strategies for the board to later decide on at their regular April meeting. Approving Wednesday’s agenda item allows PUD managers to begin work on strategies they can further present to the board.

“It’s providing us with the guidance to say ‘okay, we accept this strategy so the things we bring to you will be based on that strategy on how we go forward budget-wise and rate-wise,” said Clatskanie PUD General Manager Marc Farmer.

Though they’ll still have what Haas described as “bank debt,” she said they’ll now have payments with more favorable terms so they can maintain their principal and successfully pay off their debts.

“We’ll now have the new refinanced bonds,” Haas said.

When asked about the refinanced debt, Finance Manager Barb Haas said Clatskanie PUD could save an estimated $1 million on interest costs.

Haas and Farmer said they believe the debt should be paid off by 2026.

Clatskanie PUD customers currently pay 5.11 cents per kilowatt, which continues to be the lowest residential rate in the state.

Staff and board members agree that rate increases cannot be avoided in the future, though they say they’re looking for “proactive” versus “reactive” ways to avoid double-digit rate increases over time.

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