facilities improvements projects overview

Facilities Improvements Projects Overview

Facilities ImprovementsP r o j e c t s O v e r v i e w

1. Facilities Master Plan Program

2. Local Facilities Master Plan

3. Ephrata Service Center

4. Moses Lake Service Center

5. Ephrata Headquarters

6. Energy Services Contractor (ESCO)

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amIn 2019 we initiated a Facilities Master Plan.

• Anticipated completion 2021.

The Master Plan Program includes (4) components:

1. Facilities Condition Assessment (FCA) documents physical condition, deferred maintenance, and purpose viability.

2. Efficiency Study (ESC & MLSC) establishes operational and regulatory deficiencies.3. Local Master Plans (LMP) confirms stakeholder recommendations for maintaining our

assets and improving operations for the short-term.• The LMP is a short-term facilities roadmap.• Focus is critical needs to maintain safety, efficiency, and property value.

4. Facilities Master Plan (FMP) determines the direction of existing and new facilities needed to support our operations.• The FMP is a long-term facilities roadmap.• Future facilities needs, configurations, and operations.• New Normal is a part of this planning process.

Facilities Master Plan:

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Master Plan Status:FCA is complete.

• Preventive Maintenance updated and being used to make both staffing and assignment decisions.

• 5-Year Capital Maintenance Plan is complete and being used in budget and Local Master Plan scope.

Efficiency Study at the (2) primary Service Centers is complete.• Informed LMP scope and is providing design criteria for future facility planning.• Service Center operational data gathering is complete.• Financial analysis of existing vs new EHQ determined that a new Administration facility

will be included in the FMP.• Administrative operational data gathering complete.

Local Master Plan is complete (ESC, MLSC, EHQ, MLLO).• Recommendation has been provided for each location.• ESC and MLSC Service Centers are the highest priority and ready to move forward.• EHQ is in design and pricing phase.• MLLO scope is under review to determine best value and align with future needs.

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Local Master Plan:Key Criteria of the Local Master Plan includes:

• Timeline for continued operation of existing facilities 5–7 years.• Timeline for Facilities Master Plan outcome to be operational 7–10 years.• Need to extend the effective life of ESC, MLSC, EHQ, MLLO for 7+ years.• Improvements do not resolve all issues

Focus is asset condition, code compliance, and operational needs.

Study Findings Determined:• As a result, our facilities are outdated, crowded, inefficient, and not up to the safety

and operational standards of the District.• Regardless of outcome of the Facilities Master Plan, these (4) facilities require

improvements to address operational impacts and deferred maintenance.• Multiple improvement scenarios and components were reviewed and determined to

not meet criteria. Full building remodel and expansion. Site geotechnical issue correction and surface replacement. Site layout and additional facilities (e.g. staff parking on adjacent property, new

fuel facilities, new offices facilities, covered equipment storage).

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nKey issues identified include:

• Sites have limited and poorly located staff parking, inadequate lighting, substandard layout, and need safe walking paths to and from offices and vehicles.

• Buildings lack offices, breakrooms, and conference rooms; leading to over crowding and morale issues.

• Restrooms and exit pathways do not meet current code requirements.• Storage spaces are at capacity; layout of warehouses and yards are inefficient.• Interior environment conditions do not meet District standards and can reach

unsafe levels.• Building finish materials have obvious deferred maintenance and do not meet

District standards.• Equipment storage is limited and high investment assets are exposed to the

extreme environmental conditions, increased maintenance, and safety concerns.

• Dispersed work crews creates ineffective communication and coordination between teams.

Local Master Plan:

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nProject Rationale:

• Beyond capacity of our facilities to support our operations. Warehouse and material storage capacity Crew office and support space capacity

• Growth in system without adequate facilities investment (Since 1996) 80% growth in power delivery 3.5% growth in facilities

Local Master Plan:

• Financial Comparison FMP annual investment (30-years) is

anticipated to be approximately $7.3m/year.

Similar investment in existing facilities (60% of future SF) would be approximately $4.4m/year = $30.6m (Over a 7-year period)

Proposed investment for ESC and MLSC = $24.7M (Over a 7-year period)

Building system improvements historically lead to lower O&M spending (10-20% over a 10-year period)

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Project Costs:

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(ESC

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Project Implementation Approach:Energy Savings Performance Contracting (ESPC)

• Department of Enterprise Services (DES) program to provide contracting and project management services for projects that include energy conversation.

• Facilities’ projects have several energy conservation components – Insulation / Lighting / Water / HVAC Equipment & Controls

Advantages of ESPC project delivery• Early contractor selection & involvement of the contractor in the design process

(similar to Design/Build).• Risk management through guaranteed project costs and performance.

An Interagency Agreement is in-place with DES to manage the projects• A contractor has been selected – McKinstry• Projects are being managed by the EPMO group.

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Energy Services Contractor:

Next Steps:

• Investment Grade audit – determine potential energy savings opportunities

(complete).

• Determine project goals and performance criteria (complete).

• Coordination of project remodel design with identified energy components

(complete).

• Project GMP proposal from contractor & DES approval (complete).

• Go / No-Go from District (complete).

Funding authorization approval by Commission.

Questions?

2021 Q1 Budget to ActualsMay 11, 2021

2021 Q1 BvA Outline

1)BvA Reporting• Process, Granularity, & Responsibility

2)Q1 Overview

3)O&M• Overview• Division View• Functional View• Cost-Type View• Variances

4) Labor• Headcount• Overtime• Direct Labor• Divisional View

5) Capital• 2020 vs 2021• Portfolio View• Variances

6) Enterprise

2021 Directs Year-End Projection OverviewBudget

Spent To-DateProjected Year-End

Variance $

Projected Year-End

Variance %Direct Labor 25% $0.2M 0%

Direct O&M 18% -$0.8M -1%

Direct Capital 17% $8.3M 7%

Total 20% $7.8M 3%

Comparison with Prior Years

• Q1 2020 O&M spending was at 12% of its annual budget target and Q1 2019 O&M spending was at 18%.

• Q1 2020 Labor spending was at 19% of its annual budget target and Q1 2019 Labor spending was at 22%.

• Q1 2020 Capital spending was at 14% of its annual budget target and Q1 2019 Capital spending was at 11%.

80.4M

19.9M

80.6M

$61.7M

$11.1M

$60.9M

$113.1M

$18.7M

$121.4M

$255.2M

$49.8M

$263.0M

Budget Year-to-Date Projection

Labor O&M Capital

2021 Q1 Budget to ActualsProjected Variance $7.8M

O&M by Division

$1.8M $1.9M$4.9M $4.3M

$22.1M

$3.9M

$21.7M

$32.9M

$5.9M

$33.1M

$61.7M

$11.1M

$60.9M

Budget Year-To-Date Projection

Board/GM/Attorney/Fiber CCO CFO COO

O&M by Division

0.1%

-0.9%

-0.7%

0.3%

COO $.2MCFO -$.4MCCO -$.6MBoard/GM/Attorney/Fiber $.1M

O&M Variance by Division-$0.8M or -1.2%

• Q1 2019 O&M spending was at 18% of its annual budget target and finished the year at 94%.

• Q1 2020 O&M spending was at 12% of its annual budget target and finished the year at 85%.

• Q1 2021 O&M spending is at 18% of its annual budget target and projected to finish the year at 98.8%.

O&M by Function – Through March

6.9M43%

1.6M9%

7.8M48%

Admin & GeneralPower DeliveryPower Production

O&M Budget thru March $16,289,565

5.6M50%

1.8M16%

3.8M34%


O&M Actual thru March$11,117,919

-8.5%1.2%

-24.4%

Power Production -$4.0MPower Delivery $.2MAdmin & General -$1.4M

O&M Variance thru March-$5.2M or -31.7%

• Fish & Wildlife down $2.8M spending expected to hit Q1, but not getting posted until Q2.

• Approximately $1.2M delayed spending to later in year due to continuing COVID restrictions in areas such as Maintenance & Operations and Facilities.

O&M by Function - Projection and Variance

29.7M48%

6.8M11%

25.2M41%


O&M Budget by Function $61,674,904

30.0M49%

7.0M12%

24.0M39%


O&M Projection by Function $60,908,687

0.5%0.2%

-2.0%

Power Production -$1.2MPower Delivery $.1MAdmin & General $.3M

O&M Variance by Function-$0.8M or -1.2%

• Engineering down $328k for court delays regarding Fish Bypass.

• Q1 variance of -$5.2M is expected to be reduced to -$0.8M by year end.

O&M by Cost Type – Through March

47%

11%10%

28%

4%

Purchased Services $7.6MOperating Materials and Equipment $1.8MInformation Technology $1.7MGeneral & Administration $4.5MRisk, Transportation, Utilities $.7M

O&M Budget Thru March$16,289,565

40%

17%

18%

16%

9%

Purchased Services $4.5MOperating Materials and Equipment $1.9MInformation Technology $2.0MGeneral & Administration $1.8MRisk, Transportation, Utilities $1.0M

O&M Actuals Thru March$11,117,919

1.9%

-16.9%

1.8%

-19.1%

Purchased Services -$3.1MOperating Materials and Equipment $.1MInformation Technology $.3MGeneral & Administration -$2.8MRisk, Transportation, Utilities $.3M

O&M Variance Thru March-$5.2M or -31.7%

• Purchased Services $3.1M under budget.

• G&A - Fish & Wildlife $2.8M shift from Q1 to Q2.

O&M by Cost Type – Projection and Variance

50%

13%

11%

18%

8%


O&M Projection by Cost Type $60,908,687

-0.3%-0.3%

0.9%

0.3%

-1.8%

Purchased Services -$1.1MOperating Materials and Equipment $.2MInformation Technology $.5MGeneral & Administration -$.2MRisk, Transportation, Utilities -$.2M

O&M Variance by Cost Type-$0.8M or -1.2%

52%

12%

10%

18%

8%


O&M Budget by Cost Type $61,674,904

• IT Hardware costs up $400k, including costs for Fortinet.

• Purchased Services under spend in Q1 at -$3.1M not expected to fully catch up by year end, finishing at -$1.0M.

O&M – Categories with Greatest Variances

$290k

-$382k

$450k

-$542k

$873k

Seminars / Conferences Fees

Legal Services

IT Hardware

Environmental Services

Misc. Purchased Services

Top 5 O&M Variances by Cost Category

• COVID-19 Antigen testing of $910k that was not budgeted.

• Seminars/Conference Fees budget was reduced by nearly $440k (70%) from requested amount, but more trainings are continuing than expected would be with COVID-19 restrictions.

Headcount

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5 5 510 8 7

11 11 12

3630

38

6254

62

Budget Current Projection

FTE Headcount by Division


6 6 671 69 70

139 140 138

449 455 452

665 670 666


FTR Headcount by Division


• Year end 2020 FTR count was 659, so 11 FTR have been added over Q1.

• There were 15 posted positions to be filled at end of Q1.

Overtime

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$.5M $.1M $.6M

$6.M

$2.2M

$6.8M

$6.6M

$2.3M

$7.4M


Overtime by Division


615,583

3,576,011

2,424,440

659,592

4,297,201

2,459,248

Admin & General

Power Delivery

Power Production

Projection Budget

Overtime by Function

• Line Department projected $320k over budget.

• PD Dispatch also projected $320k over budget.

Direct Labor – O&M and Capital Through March

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80%

20%

O&M $15,503,547CAP $3,881,001

Direct Labor - Budget thru March$19,384,548

88%

12%

O&M $17,631,067CAP $2,315,227

Direct Labor - Actual thru March$19,946,294

$2,127,520

-$1,565,774

O&M CAP

Direct Labor Variance thru March $561,746

• Q1 2021 Overtime was $500k over budget.

• Shift of Labor % split of 20% in Budget to Capital to 12% Actual in Q1 results in $1.7M shift in labor expense.

Direct Labor – O&M and Capital

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680%

20%

O&M $64,323,925CAP $16,081,000

Direct Labor - 2021 Budget$80,404,925

87%

13%

O&M $69,783,278CAP $10,855,780

Direct Labor - 2021 Projection$80,639,058

$5,459,353

-$5,225,220

O&M CAP

Projected Direct Labor Variance $234,133

• FTR headcount expected to be within 1 of budget.

• Overtime projected to be $800k over budget.

• Shift of Labor % split of 20% in Budget to Capital to 13% Projected Year End results in $5.3M shift in labor expense.

Direct Labor By Division Through March

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2%9%

18%

71%

Board/GM/Attorney/Fiber $300,640CCO $1,807,302CFO $3,537,164COO $13,739,442

Direct Labor - Budget Thru March $19,384,548

2%9%

18%

71%

Board/GM/Attorney/Fiber $315,247CCO $1,810,203CFO $3,585,291COO $14,235,553

Direct Labor - Actual Thru March $19,946,294

2.6%

0.2%

0.0%0.1%

Board/GM/Attorney/Fiber $14,607CCO $2,901CFO $48,127COO $496,111

Labor Variance Through March $561,746

• Majority of Overtime lands in COO.

Direct Labor By Division

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2% 10%

18%

70%

Board/GM/Attorney/Fiber $1,275,198CCO $7,732,923CFO $14,891,245COO $56,505,559

Direct Labor - 2021 Budget$80,404,925

1%10%

18%

71%

Board/GM/Attorney/Fiber $1,247,023CCO $7,773,985CFO $14,651,442COO $56,966,608

Direct Labor - 2021 Projection $80,639,058

197%

-102%

18%

-12%

Board/GM/Attorney/Fiber -$28,175CCO $41,062CFO -$239,803COO $461,049

Projected Direct Labor Variance$234,133

• Majority of Overtime lands in COO.

• CFO division position vacancy increased.

Capital – Year-End Directs Projection Overview

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Current direct Capital Portfolio projections based on Q1 2021 results are expected to outperform 2021 Budget expectations by $8.3M.

• This is largely driven by increases in Run and Grow work (+$6.1M and +$3.7M) with offsets of -$1.5M in the Transform category.

• The Fitness/Purchase capital work is now included in the Run category (~+$4M of the +$6.1M Run variance)

• Current total expected Capital Project cost – including loaded labor ($19.9M) – for 2021 is $141.3M

$91.2 , 81%

$17.6 , 15%

$4.4 , 4%

Budget 2021 = $113.1M

Run Grow Transform

$97.3 , 80%

$21.3 , 18%

$2.9 , 2%

Current Q1 = $121.4M

Run Grow Transform

$6.1 , 54%$3.7 , 33%

$(1.5), -13%

Current vs Budget = $8.3M

Run Grow Transform

Capital – Project Phase & Performance

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Project Porfolio Group ($M)

2021 Project Budget

2021 Capital Portfolio Budget

PCF Discount

IS/Facilities 33.6$ 15.8$ 53%Power Delivery 59.1$ 37.1$ 37%Power Production 66.5$ 42.4$ 36%Technolgoy 11.8$ 3.1$ 74%Fiber/Other 21.9$ 14.8$ 32%Total 192.8$ 113.1$ 41%

11%

2%

20%67%

2021 Budget - Spend by Phase (%)

Discovery

Collect/Select

Initation/Planning

Executing/Closing

14%

2%

21%64%

Q1 2021 - Spend by Phase (%)

Discovery

Collect/Select

Initation/Planning

Executing/Closing

Since the 2021 Budget was adopted, information accuracy has increased.• The PCF discount has decreased by 10%.• 2021 Budget PCF adj = 41%• 2020 Q1 PCF adj = 33% vs current 31%

Project Porfolio Group ($M)

Q1 2021 Project Budget*

Q1 2021 Capital YEP

PCF Discount

IS/Facilities 35.0$ 18.8$ 46%Power Delivery 68.7$ 46.4$ 32%Power Production 43.5$ 34.3$ 21%Technolgoy 12.3$ 2.9$ 77%Fiber/Other 25.8$ 19.0$ 26%Total 185.3$ 121.4$ 34%

Capital – Portfolio Variances

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Current 2021 expectations are varied across sub-portfolios.• Operations sees the largest variance, though largely offsetting

o Power Delivery is impacted by 2020 Schedule slip (+$7.7M) with some pricing related impacts (+$4.1M)o Current Power Production expectations are to underperform versus budget by -$8.0M

• Similar to 2020, expectations for Fiber related work, both the Expansion project and Connectivity work, should outperform the budget (+$4.4M).

• Facilities is impacted by 2020 Schedule slip (+$1.1M) with some Scope and pricing impacts (+$1.9M)• Technology is flat compared to budget

Portfolio Var = $8.3M Schedule = $8.5M Scope = -$3.2M Budget/Price = $3.MPower Production $(8.0) $(2.2) $(2.7) $(3.2)Power Delivery $9.3 $7.7 $(2.4) $4.1Fiber/Other $4.2 $2.4 $0.7 $1.1IS/Facilities $3.0 $1.1 $1.0 $0.9Technolgoy $(0.2) $(0.5) $0.2 $0.1

$(10.0)

$-

$10.0

$20.0

2021 Q1 Capital Project Variance Explanation ($M)

Loaded Year End Projection

• 2021 Budget labor split 80% O&M / 20% Capital

• Year-End labor split projection 87% O&M / 13% Capital

• Labor split change resulted in $9.7M Labor & Benefits applied to O&M instead of Capital

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Questions?

Construction and Maintenance UpdateApril 2021

Power Delivery – Construction and Maintenance Mission

Mission:

To safely operate and maintain the investment entrusted to us by our customers.

Vision Statement 2020-2025 (5-year dynamic scope):

Our vision is to be an industry expert in the safe and reliable operation of the transmission and distribution grid, including fiber communications. In partnership with other PUD stakeholders, we will strategically develop a safe and cost-effective approach to construction and maintenance that will allow us to work proactively, demonstrating excellence in service. We will strengthen the management of PUD assets to improve the reliability of the power grid and fiber network.

WCOE 08/2019 2

Working Safely through the Virus

Isolation of crews continues in order to ensure reliability (ESC, MLSC, RCSC)

Port of Ephrata – Transmission Line crew (8)1625 E. Wheeler Road – Line crew (8)Internal services office – Substation Maintenance Crew (7)Quincy Local Office – 2 Electronics Techs, 1 Fiber TechMoses Lake Local Office – 2 Electronics Techs, 1 Fiber Tech

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Power Quality Effort

Power Quality team launched in January of 2021 for Distribution Grid

C&M, PDE collaborative effort

Repaired 34 switched, 6 fixed cap banks = 29MVAR PF correction!

Identified and working on solution for 17 substation feeder imbalances

Upgraded several Voltage Regulator sites with data monitoring/recording options for PQ visibility

Irrigation pumping sites are being tested. 138 sites identified as “not tested.”Others found have been upgraded during the winter without PUD knowledge.

M&R staff working with PQ to test addition of AMI monitoring

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Power Quality

Power Quality Effort

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• Power System Electricians: 3 phase regulator issues/plans/corrections

• Inspection of pump sites in last month has revealed many issues – for the PUD and our customers

• Issues discovered with feeds, work in conjunction with 10-year distribution plan and Power Delivery Engineering

• K5 feeder (out of Wahluke Substation, NE of Mattawa)

Power Quality

Fiber build out work continuesGrant PUD Announces Fiber build-out areas for 2021

GPUD Online blog (Wednesday, 17 February 2021)

EPHRATA – Grant PUD Commissioners renewed their commitment to the build-out of Grant PUD's fiber optic network during the Jan. 26 commission meeting.

Line crews completed this year so far:

220502 Royal City #2

220370 Ancient Lakes

220461 Dodson Road

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Pole Fire Mitigation Effort

Pole fire mitigation (fiberglass bracket and polymer cut out)

Completed mitigation on 4 of the Districts worst feeders since last report:

Soap Lake Substation L-8

White Trail Substation WT-5

Dover Substation DR-14

Seep Lakes Substation SL-6

Nearly completed:

Royal Substation R-11 (80% complete)

***Update: Line Crews have completed “1,113” structures since January.

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Pole Fire Mitigation Effort

What is the financial cost for this work?

PUD workforce vs Contractor cost per hour

For 1,113 structures. Using current PUD employees saved the District over $62,000.00

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Pole Fire Mitigation Cost Comparison, February 2021Straight Time Hourly

Labor ($)

Overtime Hourly Labor, per contract rate for

contract crews, (x2) for internal crews ($)

Equipment, 1-Foreman Truck and 1-Bucket Truck ($)

Avg. Time Per Pole (Hr.)

Avg. Straight Time Cost Per

Pole ($)

Avg. Overtime Cost Per Pole

($)

Contract (Dock) Crews- Potelco Contract 130-09331HR

4 man crew $540.00 $734.00 Included 0.4 $216.00 $293.60

Internal Grant Crews*4 man crew ( 1 Foreman, 2 Journeymen, 1 Groundman/Apprentice) $324.44 $400.54 Included 0.4 $129.78 $160.22

4 man crew ( 1 Foreman, 2 Journeymen, 1 Groundman/Apprentice) + 0.62% overhead cost

60.1% of contract cost

54.57% of contract cost (just 2x ST rate, no overhead)

60.1% of contractor cost

54.57% of contractor cost

Risk Mitigation – Power lines

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Old Standard for vegetation clearance on power lines:

Distribution Standard = 3’

New Standard for vegetation clearance on power lines:

Distribution: 10’ (Jan. of 2022)

Transmission: 20’ from outer conductor

Why?

For fire risk, what else can we do?

Working Safely through the VirusOther projects moving forward successfully include:

Support for DB2 at Quincy Plains, Royal City, Mountain View, Burke, …

Integration of a Strategic Asset Management program within Power Delivery – C&M has begun. Russ Seiler – new supervisor for Asset Management Continued focus of alignment with Power Production Whole life cost analysis

New Power System Electrician focus and training program Casey Raab – Training Committee Lead New apprenticeship program PSE focused

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WCOE 08/2019 11

POWER SYSTEM ELECTRICIANS – PSE

Working with the Foreman, we have created territories for each of the substation crews.

Reasoning:• Increased ownership• Reduction in driving times• Ease of work order assignments• Accountability• Greater Efficiency• Increased experience on various equipment • Commitment of crews to assist one another

Needs going forward:• Initial need for tool redundancy• Journeyman cross training

Labor budget variance is due to:• Assisting in storm response with Snohomish PUD and Avista• Support for DB2 construction• Pole top fire mitigation efforts

Operating Materials costs high due to realignment of craft worker tools to meet PUD requirements.

https://app.powerbi.com/groups/me/reports/09e74a30-edcf-45fe-9b4d-53dd2ace86a6/ReportSectionca67fcb1f4bd97d22fd8?pbi_source=PowerPoint

https://app.powerbi.com/groups/me/reports/09e74a30-edcf-45fe-9b4d-53dd2ace86a6/ReportSection9b55166916e110545c9d?pbi_source=PowerPoint

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The C & M staff would like to thank

the Commissioners and Executive

Staff for their continued support.

Semi-Annual Report

Dmitriy Turchik, Manager of Internal Audit

Internal Audit Report

Meeting Agenda

Review 2021 audit plan

• Status of open audits• Review issued report

Emerging risks

Budget review

Additional discussion and questions

2021 Audit Plan Overtime Audit

Safety Assessments

Net Metered Load Loss

Crescent Bar Management Contract

HCMS Implementation

Leave Accrual and Usage

Inventory

CCS Implementation

Treasury Operations

Emerging risks

Status of 2021 Audit Plan – Open Audits Overtime Audit

• Report published

Safety Assessments

• Draft report under managements review

Net Metered Load Loss

• Draft report under managements review

Crescent Bar Management Contract

• Field work

HCMS Implementation

• Field work

Status of 2021 Audit Plan - continued

Leave Accrual and Usage

• Planning stages

Inventory

CCS Implementation

Treasury Operations

Consultation/Advisory Engagements

Emerging risks

• Small and attractive assets

• Internal controls environment during pandemic

https://app.powerbi.com/groups/me/reports/09e74a30-edcf-45fe-9b4d-53dd2ace86a6/ReportSectionca67fcb1f4bd97d22fd8?pbi_source=PowerPoint

https://app.powerbi.com/groups/me/reports/09e74a30-edcf-45fe-9b4d-53dd2ace86a6/ReportSection9b55166916e110545c9d?pbi_source=PowerPoint

Thank You

April 30, 2021 Audit Number: 2021-01

OVERTIME AUDIT

Grant County PUD

Overtime Audit • April 30, 2021 1

Executive Summary April 30, 2021 We are pleased to present the Internal Audit Department’s report on the Overtime Audit. During the audit, we examined the District’s policies, procedures, and practices to determine whether internal controls are adequately designed and effectively implemented to ensure District overtime is in accordance with state laws, regulations and provide adequate safeguarding of public resources from fraud, loss, and abuse. Our audit identified the following:

• For the period under our audit, the HR/Payroll Department did not have formally written procedures for processing payroll, including overtime. This could prevent timely detection, correction and prevention of errors and fraudulent activity.

• Certain errors are identified and corrected by Payroll Departments’ centralized review of timesheets, without notification to the employee and their supervisor. Documentation is not consistently maintained to support the adjustments to employee’s timesheets. In addition, these adjustments are not independently reviewed for accuracy and reasonableness.

• District policies do not specify when preapproval of overtime is required and if required, how preapproval of overtime is documented.

• District’s SharePoint process of transferring employees is not being consistently utilized when employees are temporarily assigned to different workgroups, which leads to lack of communication to HR/Payroll Department regarding employee’s temporary assignment. Without this notification the HR/Payroll Department is unable to update the designated approver of the employee’s timesheet in the system.

Based on the issues, we concluded that with development of stronger policies, procedures, and internal controls, the District will be better positioned to ensure overtime is in accordance with state laws, regulations and policies and proper oversight and monitoring is provided. Management’s response to our audit findings and recommendations, as well as target implementation dates, are included in the following report. During our audit testing, we encountered one employee where we observed irregularities in their overtime reporting and compensation. Further inquiry and analysis are being performed to determine the validity and the scope of the issue. Internal Audit Department will publish a separate report once this work is complete. We would like to thank the District staff for their cooperation and assistance during the audit. Dmitriy Turchik, CFE Manager of Internal Audit

2021 Federal & State Legislative Update

Andrew Munro, Senior Manager Cliff Sears, Senior Policy AnalystExternal Affairs & Communications Governmental/Regulatory Affairs

May 11, 2021 Commission Report

This update will cover:Introduction

1. State legislation – what passed, what didn’t?

a. Energy Related Legislation

b. Capital Budget for Broadband

c. Telecom Legislation

c. Other Focus Areas

2. Federal Issues:

a. Energy Legislation

b. Infrastructure funding opportunities

c. Tax exempt financing

Energy Related Legislation

Energy Related Legislation1. Cap and Trade (SB 5126):

a. Free allowance allocation based on “cost burden” of the

program; Cost burden potentially includes: • Administrative costs, compliance costs, higher costs of electricity when utility does not have a direct compliance obligation; rules to consider costs of electrification.

b. Positive amendments for EITE manufacturers to 2035, c. Allowances to protect against impairment of existing

contracts for either party (including the non-utility).

2. CETA fix on demonstration of use not in cap and trade. Deferred to rule making and future legislation if needed

3. Low Carbon Fuel Standards - 20% reduction by 2038 (HB 1091). After 10% reduction of carbon intensity by 2028, future reductions are subject to:

a. 15% production of biofuel and feed stocks in WA;b. 60M gallon facility permitted in WA or 10M gl. facility in

production;c. Reauthorization by the legislature before moving to the

next 10%. (Both 5126 and 1091 are deferred until transportation budget increase of $.05 / gallon gas tax).

CETA RulemakingEnergy Bills of Lesser Importance 4. “Clean Cars 2030” bill / Preparedness for a zero- emission transportation future (HB 1287): Requires EV planning as part of the integrated resources plan (IRP); building code update for EVs; and prohibits new gasoline and diesel fueled vehicles when 75% of all registered vehicles are subject to a vehicle mileage tax in lieu of a gas tax.

5. Reducing fluorinated gasses was modified to remove utility concerns. (HB 1050).

6. Hydrogen fuel cell electric vehicle pilot. (SB 5000) (passed).

7. Mitigating urban heat island effects through utility encouraged cool roof and tree planting programs. (HB 1114) (WPUDA supported bill).

8. B&O tax exemption on the conservation credits used for customer assistance or weatherization programs. (SB 5008). Passed.

9. No penalty for not meeting a biennial acquisition target for cost-effective conservation under special circumstances outside the utility's control (HB 1446).

10. Building decarbonization (SB 5093 / HB 1084), Extending tax credit for data centers (SB 5262); Gas taxes (HB 1513, SB 5373). – Did not pass.

1. $155,000 for infrastructure for the WanapumIndian Village.

2. $258,000 plus potentially additional funds for precision Ag pilot study from the Department of Ag.

3. $60M for Public Works Board for broadband.

4. $326M for State Broadband Office for broadband.

2021 Capital Budget for Broadband

2021 Telecom Legislation1. Retail Authority Bills:

a. HB 1336 – Unrestricted retail authority for all public entities (WPUDA / Kitsap sponsored). Concerns:

1. Initially by-passed State Broadband Office; 2. Ignored investment of private ISPs; 3. Put publics in direct competition with privates even

where existing service was provided; 4. Overstated value of retail authority in promoting

access when the limiting factor is funding. 5. Miscommunication around access to federal

grants v. subsidized program funds (e.g. FCC’s RDOF).

b. SB 5383 – Limited retail authority for PUD and Ports to unserved areas; No direct competition in existing service areas. (SBO, Wellman & Warnick). Passed.

2. SB 5383 also provides authority to serve outside of our county where we currently provide electric service (e.g. Wanapum Indian Village and Lincoln County).

Other Focus Areas 1. Natural Resources:

a. Utility wildland fire advisory committee (SB 5158) Wildland fire prevention funding (HB 1168) (both passed).b. Extends expiration date of the Invasive Species Council (SB 5063) (passed)c. Promotes net ecological gain concept in comprehensive planning via a study bill in the budget bill.

2. Human Resources:a. Expands coverage for paid family and medical leave programs. (HB 1173); b. New payroll deduction for LTC insurance premium beginning 1/1/2022 with opt out option by 11/1/2021 (HB 1323); c. Increasing worker protections (HB 1097).

3. Environmental and social justice task force recommendations, mostly applicable to state agencies. (SB 5141).

4. Energy Facility Site Evaluation Council.5. Moratorium on disconnects / ratepayer assistance.

Clean Energy for America Act – Incentives for Clean Energy & Transportation:

• Investment or production tax credits for any new zero emission facility, & ITC for energy storage and high-capacity transmission lines. • Technology-neutral tax credit for domestic production of clean transportation fuel.• Encourages transportation electrification through long-term incentives for battery and fuel cell electric vehicles and electric vehicle charging.

2.25 Trillion Infrastructure Funding:• A ten-year extension and phase down of a direct-pay ITC and PTC for clean energy generation and storage; • Establish an Energy Efficiency and Clean Electricity Standard aimed at cutting electricity bills and electricity pollution.• $1B – Grant PUD infrastructure projects (transmission, broadband, & dam safety).

Appropriations – Ear Marks: • Newhouse - around $2.5M per project / $5M total for broadband. • Murray – due May 14, 2021

Tax Exempt Financing: Restoring advance refunding, ITC / PTC direct payment credits, BABS (direct interest payment bonds).

Current Federal Initiatives- 2021

Powering our way of life.

QUESTIONS?

facilities improvements projects overview

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