Truckee Donner PUD GM: Keeping rates low as possible is a challenge
January 26, 2016
TRUCKEE, Calif. — With 2016 being an election year, the Sierra Sun is devoting time each week to conduct interviews with officials and board members who work for the many public districts and government agencies representing Truckee and North Lake Tahoe. This week, we feature a Q-and-A with Truckee Donner Public Utility District General Manager Michael Holley:
Sierra Sun: What's the top one or two biggest challenges the district faces in 2016?
Michael Holley: We operate to different utilities here, water and power utility, and there are some commonalities in terms of what the challenges are. The first of which is actually trying to find and retain high-quality employees. We're just like many utilities throughout the nation; we have an older workforce, and they're starting to retire off in larger numbers. And hiring younger employees who are qualified to do those jobs is becoming an increasingly difficult task for the district.
And then for the individual utilities, controlling rates, keeping rates as low as possible, is certainly a challenge for us all. But then the flipside of that is also keeping up with the capital replacement programs that we have. Utilities can always promise low rates, but if they're not investing in their infrastructure, it's really a false savings; it's just passing the buck to a later generation to have to take care of.
Sun: What improvements do you want to see with the district by 2020?
Holley: That's a good year, because that's the year I plan to retire (laughs). In terms of what we'd like to see, the financial part of the district is in good shape. It's really about keeping up with capital replacements, especially on the water side; doing main replacements and getting that back under control. On the electric side, it's making sure our purchase power portfolio is well-positioned for what the consumers are going to demand in terms of what they want, and also what the state's going to demand in terms of your power mix. So those things are all working in concert together.
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Sun: How does the district balance the needs of locals versus second-home owners and tourists when delivering service?
Holley: That's kind of an interesting question, because that's a big issue up here. About 60 percent of our costumer base are secondary homeowners. But when they're here they still have the same wants and needs that a regular homeowner does. When they wake up in the morning they want the lights to come on and water to come out of their tap. So reliability is something that we put a lot of effort into for both the water and power system, and that serves both the full-time population and the part-time population. So we don't put a lot of effort into trying to have separate programs for each, because really when they're here and using our commodity they want the same things.
Sun: In this modern era of smartphones and social media, how is the district changing the way it communicates important information with the community?
Holley: We have put a lot of effort into updating our website recently. But we actually have two effectively distinct classes of customer here at the district. We still have a costumer base who does not necessarily want to use our website. They want to walk into the front door and actually meet a live person at the counter and they have that one-to-one relationship with someone they've known for the last 10 years. And so that's a real important part of our business model, that face-to-face contact. And then we have other members of the population here in Truckee who just want to hit the website, pay their bill, do whatever they want to do, and move on. So we really have to provide both of those avenues for costumer service.
Sun: How would you describe the state of the district right now?
Holley: It's actually very good. We have about $18 million in board-designated reserves, which gives us quite a bit of stability should something happen. For example, a large storm or something come in and damage infrastructure we can afford to pay for that. Also, if the price of purchased power should suddenly spike up we can pay for that without having to go back to the customers and ask for a rate increase. And we can fund the capital projects that we need to fund. So financially, it's excellent.
Where the district is really challenged to keep up is the constant state of regulation. As you can imagine, water and power utilities are highly regulated, and accordingly so and appropriately so. But, everyone here who works at the district, at least in the field side, has to have some type of licensing. So if you want to go out and want to become a water worker in the future, you have to have at least one, probably two or three, different licenses to do that work. So that challenge in keeping up with regulations of that nature, it's pretty high. It's a tough challenge.
And the electric utility in particular, when we're thinking about buying a new power plant or buying into a new power plant, those decisions are made 10 to 20 years in advance of when that plant is going to be on the ground generating power. So we have to predict not only what our load is, but what the regulatory environment is going to be like at that time also. So that can be kind of difficult.
Sun: Is there anything else you want to add regarding the district and its future?
Holley: I think as far as the district goes, I think it brings a lot of opportunity for economic marketing into this area. Because we have such a high renewable-energy component in our portfolio — we're right now about 51 percent renewable. And that is something that a lot of businesses want to see; they want to be able to promote themselves as a green business. And you can't do that if you're in a particular area that is completely on coal. Even if you green it up with green tags or something, you're still just greening up a coal power. Here, we're effectively not running on any coal right now. We are 51 percent renewable, so I think it's very attractive economically for people who want to relocate a business here.