EPHRATA — The question comes up at Grant County PUD budget hearings, sometimes at commission meetings, and even commissioners have asked. Why does the PUD need all that money?

Utility district officials have proposed a series of rate increases, an overall 2 percent increase each year for 10 years, through 2024. (The rates for different classes vary, some more than 2 percent, some less.) In an earlier interview, commissioner Dale Walker said he wonders why the PUD needs the rate increases at a time when it ended 2015 with $72 million in net profit.

So – how much money does the PUD have and why does it need it? Why does the PUD need to raise rates when it’s got money sitting around? There are, PUD officials said, a couple of answers to those questions.

“In 2017, we are budgeting to have $162 million in system liquidity,” wrote Chuck Allen, PUD public information specialist. “The electric system liquidity is money that we have specifically budgeted as reserve funds and is money we use to help us with unforeseen expenses and contingencies.” That money is just for that, unforeseen expenses, and not budgeted for anything else.

“We are also budgeting to have 579 days cash on hand,” Allen wrote. “There is a difference between those two things.”

The “cash on hand” figure measures how many days the PUD could “pay for day-to-day operations before we would eventually run out of money without any additional revenue.” Most of that money, Allen said, actually is allocated to other projects.

The $162 million is there in case something goes wrong, Allen said, because things that can go wrong at a dam – like, say, the crack in Wanapum Dam discovered in 2014, which took about a year to repair – can get expensive. That’s a lot of money, but, as far as PUD officials are concerned, it “insulates our customers from rate surcharges” and is there to ensure there’s money to keep the system running in the case of an expensive emergency, Allen said.

There’s also the bond thing.

The bond thing currently is important because the PUD is involved in a multimillion-dollar project to upgrade the turbines and generators at Wanapum and Priest Rapids dams, a project that will take about two decades before it’s all complete. It’s expensive – the PUD has budgeted about $65 million for 2017 alone. The utility also has other projects, Allen said, including recreation improvements along the Columbia River and additional construction to accommodate growth.

“We have paid for most of these projects by issuing long-term, low-interest bonds.” And like everybody else, the PUD has to pay interest when it borrows money. Like everybody else they’re evaluated on their ability to pay it back, and pay interest accordingly.

There are entire businesses that do the evaluating, and when they look at the Grant PUD they see some things that would lead them to drop the PUD’s rating, Allen said. The large amount of cash offsets some of those liabilities, and that allows the PUD to get better interest rates on its bonds, he said. “If we were weak in our financial reserves, we would likely need to raise rates beyond our current rate-policy schedule to improve those (evaluation) metrics so we could maintain our current rating.”

Using its own money to pay for the upgrades probably would end up costing PUD customers in the long run, Allen said.

Cheryl Schweizer can be reached via email at [email protected].