PUD starts new year with big contracts

NEWPORT – As 2026 starts, Pend Oreille Public Utility District has two sizeable, multi-year contracts.

Starting Jan. 1, the PUD will sell all the power produced at Box Canyon Dam to Clark Public Utilities, a contract that will continue for 15 years, through the end of 2041. The contract calls for Clark to pay the PUD $22 million in base payments for 2026.

“We will also receive additional revenue from Clark based on generation, which we budgeted at $1.7 million,” PUD spokesperson Joe Hathaway said, an amount figured into the PUD’s $89.9 million budget recently passed for 2026. Box Canyon produces an average of 40-50 megawatts of power annually.

Data Center

Another big contract is a four-year contract with Merkle Standard Infrastructure LLC, a foreign limited liability corporation, which operates a data center at Usk. Among other things, the data center produces crypto currency. Since Allrise Capital bought the former Ponderay Newsprint Company site in a bankruptcy proceeding in 2021, operations of the data center and ownership of the Usk property has been through subsidiaries and joint ventures with different names, including Cascade Digital, Pend Oreille Industries and Merkle Standard. Allrise, an investment firm, is the parent company for the various LLCs that operate on the Usk site.

The four-year contract, which started in November, is longer than the last contract with Cascade Digital, LLC, a joint venture between Merkle Standard and Bitmain, the Chinese company that makes crypto mining computers. The previous contract started out as a six-month contract that was extended several times before the four-year contract was finalized, according to PUD minutes.

The latest contract with Merkle Standard Infrastructure, LLC, calls for the PUD to supply power for Merkle Standard Infrastructure, most of which will be purchased on the open market and prepaid, according to PUD financial director April Owen. The data center will also get some PUD power, as available, Hathaway said.

Owen said the PUD budgeted $33 million for the Merkle Standard Infrastructure contract for 2026. That includes a $150,000-$200,000 a month administrative fee for the PUD.

“It will vary with the amount of electricity they use,” Owen said.

In 2024 the PUD agreed to reduce the amount that would be required from the parent company, Allrise Capital, from $4.9 million to $1.5 million, according to PUD minutes. The guarantee is in the form of a performance assurance letter of credit from a bank. That amount will be $1.4 million for the current four-year contract, Hathaway said, although it could be increased if further collateral is needed.

Owen said there is less risk than in the past when the PUD had to agree to buy power from the Bonneville Power Administration for a full year. The PUD will not get any BPA power in 2026.

Since Merkle prepays for the electricity bought on the open market, the current letter of credit is adequate, she said.

Seattle City Light power

The PUD gets its cheapest energy from a mediated settlement with Seattle City Light that will continue until 2030. That power is purchased for $8 a megawatt and is enough to supply all PUD customers, excluding Merkle Standard, with an average of 30 megawatts of power used annually. The Seattle City Light agreement runs through 2030 and is based on power produced at Boundary Dam in north Pend Oreille County.

$100 million cash

The PUD has $100 million cash, Owen said.

“About $20 million of that is in restricted funds,” Owen said. “Most of it is bonds.”

The $100 million cash generates about $4 million annually in interest, Owen said, earning 4% to 4.5% per year. She expects the interest rates to decrease.

The PUD didn’t take on any new debt this year but has $115,815,025 in bond payments that come due between 2027 and 2048. The PUD made bond payments of $770,000, $2.29 million and $2.15 million Jan. 2.

Most of the PUD’s $89.9 million 2026 budget is for power supply. The PUD budgeted $32 million for power, $11 million for debt service, $3.6 million for taxes and $5.5 million for Protection, Mitigation and Enhancement measures that are required under the Box Canyon Dam Federal Energy Regulatory Commission license.

Administrative costs higher

The 2026 budget has about $1 million more in administrative and general expenses than the 2025 budget. About $200,000 of that is because of inflation, with the remainder focused on staffing and system investments. It includes previously budgeted positions for general counsel and a new position in Information Technology.

Other budget items include new software, a feasibility study, a website update and increased professional services related to power supply planning, according to a PUD budget document.

The PUD has 84 employees, although it is budgeted for 90 in 2026, including open positions. The 2026 budget includes the addition of one IT position, one custodian, the transition of a temporary employee to full-time and the addition of two temporary succession planning positions to allow overlap and training with outgoing employees. Overall, according to the PUD budget document, full time equivalent employees increased by two, with 23 in administration, 51 in operations, six in customer service, seven in engineering and three in natural resources.

The budget allocates $17.8 million for wages and benefits, with nonunion employees receiving a 2.8% cost of living increase. Non-union employees make up about 40% of the PUD workforce. The rest are represented by the International Brotherhood of Electrical Workers union. Their three-year contract expires in March and is currently being negotiated.

General Manager Chris Jones is the highest paid PUD employee. He earns a base salary of $220,000 annually, the same as when he was hired as GM in July. He also gets another $12,000 for a vehicle allowance, in lieu of mileage.