Chelan County PUD Quarterly Financial ReviewFor the Year Ended December 31 2017

(Note results are preliminary pending annual audit)

Board PresentationFebruary 20 2018

What we will cover today

2

Financial highlightsFirst quarter resultsFive-year look aheadKey messages

Update only no action required

Appendix Additional detailed information not covered today

Q1 2018 Key Highlights

3

Bottom-line results better than budget

Financial metrics meeting targets

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

OverviewRevenue Expense

bull Service Revenue better than budget year-to-date (YTD) due to more usage from the colder than average temperatures in Feb and Mar +$500000

bull Net Wholesale Revenue better than budget YTD as more surplus to sell from above average generation + $12M

bull Hydro Long-Term Contract Revenue below budget YTD with lower hydro costs for the cost-based contracts ($16M)

bull Other Operating Revenue better than budget YTD from FEMA proceeds and hydro contract charges + $11M

Total Revenues forecasted to be better than budget for the year +$2M

bull Operating Expenses below budget YTD but expected to catch up ($41M)

bull Non-Operating Net Expense better than budget YTD with higher customer contributions for construction and more interest earnings from the higher cash balances ($11M)

Total Net Expenses forecasted to be below budget for the year ($41M)

4

bull Combination of higher revenues and lower expenses result in a better Bottom Line YTD + $58M

Better bottom line forecast for the year of $778M +$6M

Bottom Line

OverviewCapital Cash

bull Capital expenditures overall are lagging the planned pace and below budget YTD ($56M)

bull Spending is ahead of pace YTD for Distribution and Rocky Reach and expected to be just under budget by year end

bull The Rock Island modernization timeline is under review with some projects likely to shift to 2019 partially offset by accelerations to 2018

Total Capital forecasted to hit $1338M which is below budget for

the year ($6M)

bull Positive bottom line and lower capital spending has increased cash and investments YTD by $178M

Total cash balance forecasted to be better than budget at

year end $4662M

5

Debtbull Total debt is the same as budget YTD

Total debt forecasted to equal budgeted $24M reduction with balance at year end $5135M

5162018 6

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Electric delivered cost per avg kWh better than budgetYTD centkWh result 483cent vs 532cent (actual vs budget)

Power production costs- 200cent vs 229cent (actual vs budget)Power distribution costs- 283cent vs 303cent (actual vs budget)

(Note Fully loaded cost is not a cost of service analysis which includes offsets)

Hydro production cost per avg MWh better than budgetYTD $MWh result $169 vs $178 (actual vs budget)

Actual vs Budget Rocky Reach $127 vs $129 (operating expense ~88 YTD)Rock Island $253 vs $273 (operating expense ~89 YTD) Lake Chelan $182 vs $223 (operating expense ~76 YTD)

5162018 7

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Water cost per 1000 gallons better than budgetYTD $1k gallons result $692 vs $705 (actual vs budget)

YTD operating expense 99 of budget

Wastewater cost per ERU better than budgetYTD $ERU result $194 vs $226 (actual vs budget)

YTD operating expense 86 of budget

Fiber cost per active premise higher than budgetYTD $premise result $121 vs $107 (actual vs budget)

YTD operating expense 113 of budget due to timing of core system support contract payment

8

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Service Revenue 66795 64693 103

Net Wholesale Revenue 108312 108001 100

Hydro LT Contract RevOther PP 118788 119795 99

Other Operating Revenue 21669 21129 103

Other Operating Expense (171097) (173846) 98

Depreciation amp Tax Expense (51828) (52016) 100

Operating Income(Loss) 92639 87755 106

Non-Operating Activity (14790) (15913) 93Bottom Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

2018 Bottom-Line Results

8

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Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

What we will cover today

2

Financial highlightsFirst quarter resultsFive-year look aheadKey messages

Update only no action required

Appendix Additional detailed information not covered today

Q1 2018 Key Highlights

3

Bottom-line results better than budget

Financial metrics meeting targets

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

OverviewRevenue Expense

bull Service Revenue better than budget year-to-date (YTD) due to more usage from the colder than average temperatures in Feb and Mar +$500000

bull Net Wholesale Revenue better than budget YTD as more surplus to sell from above average generation + $12M

bull Hydro Long-Term Contract Revenue below budget YTD with lower hydro costs for the cost-based contracts ($16M)

bull Other Operating Revenue better than budget YTD from FEMA proceeds and hydro contract charges + $11M

Total Revenues forecasted to be better than budget for the year +$2M

bull Operating Expenses below budget YTD but expected to catch up ($41M)

bull Non-Operating Net Expense better than budget YTD with higher customer contributions for construction and more interest earnings from the higher cash balances ($11M)

Total Net Expenses forecasted to be below budget for the year ($41M)

4

bull Combination of higher revenues and lower expenses result in a better Bottom Line YTD + $58M

Better bottom line forecast for the year of $778M +$6M

Bottom Line

OverviewCapital Cash

bull Capital expenditures overall are lagging the planned pace and below budget YTD ($56M)

bull Spending is ahead of pace YTD for Distribution and Rocky Reach and expected to be just under budget by year end

bull The Rock Island modernization timeline is under review with some projects likely to shift to 2019 partially offset by accelerations to 2018

Total Capital forecasted to hit $1338M which is below budget for

the year ($6M)

bull Positive bottom line and lower capital spending has increased cash and investments YTD by $178M

Total cash balance forecasted to be better than budget at

year end $4662M

5

Debtbull Total debt is the same as budget YTD

Total debt forecasted to equal budgeted $24M reduction with balance at year end $5135M

5162018 6

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Electric delivered cost per avg kWh better than budgetYTD centkWh result 483cent vs 532cent (actual vs budget)

Power production costs- 200cent vs 229cent (actual vs budget)Power distribution costs- 283cent vs 303cent (actual vs budget)

(Note Fully loaded cost is not a cost of service analysis which includes offsets)

Hydro production cost per avg MWh better than budgetYTD $MWh result $169 vs $178 (actual vs budget)

Actual vs Budget Rocky Reach $127 vs $129 (operating expense ~88 YTD)Rock Island $253 vs $273 (operating expense ~89 YTD) Lake Chelan $182 vs $223 (operating expense ~76 YTD)

5162018 7

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Water cost per 1000 gallons better than budgetYTD $1k gallons result $692 vs $705 (actual vs budget)

YTD operating expense 99 of budget

Wastewater cost per ERU better than budgetYTD $ERU result $194 vs $226 (actual vs budget)

YTD operating expense 86 of budget

Fiber cost per active premise higher than budgetYTD $premise result $121 vs $107 (actual vs budget)

YTD operating expense 113 of budget due to timing of core system support contract payment

8

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Service Revenue 66795 64693 103

Net Wholesale Revenue 108312 108001 100

Hydro LT Contract RevOther PP 118788 119795 99

Other Operating Revenue 21669 21129 103

Other Operating Expense (171097) (173846) 98

Depreciation amp Tax Expense (51828) (52016) 100

Operating Income(Loss) 92639 87755 106

Non-Operating Activity (14790) (15913) 93Bottom Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

2018 Bottom-Line Results

8

Cognos_Office_Connection_Cache

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

Q1 2018 Key Highlights

3

Bottom-line results better than budget

Financial metrics meeting targets

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

OverviewRevenue Expense

bull Service Revenue better than budget year-to-date (YTD) due to more usage from the colder than average temperatures in Feb and Mar +$500000

bull Net Wholesale Revenue better than budget YTD as more surplus to sell from above average generation + $12M

bull Hydro Long-Term Contract Revenue below budget YTD with lower hydro costs for the cost-based contracts ($16M)

bull Other Operating Revenue better than budget YTD from FEMA proceeds and hydro contract charges + $11M

Total Revenues forecasted to be better than budget for the year +$2M

bull Operating Expenses below budget YTD but expected to catch up ($41M)

bull Non-Operating Net Expense better than budget YTD with higher customer contributions for construction and more interest earnings from the higher cash balances ($11M)

Total Net Expenses forecasted to be below budget for the year ($41M)

4

bull Combination of higher revenues and lower expenses result in a better Bottom Line YTD + $58M

Better bottom line forecast for the year of $778M +$6M

Bottom Line

OverviewCapital Cash

bull Capital expenditures overall are lagging the planned pace and below budget YTD ($56M)

bull Spending is ahead of pace YTD for Distribution and Rocky Reach and expected to be just under budget by year end

bull The Rock Island modernization timeline is under review with some projects likely to shift to 2019 partially offset by accelerations to 2018

Total Capital forecasted to hit $1338M which is below budget for

the year ($6M)

bull Positive bottom line and lower capital spending has increased cash and investments YTD by $178M

Total cash balance forecasted to be better than budget at

year end $4662M

5

Debtbull Total debt is the same as budget YTD

Total debt forecasted to equal budgeted $24M reduction with balance at year end $5135M

5162018 6

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Electric delivered cost per avg kWh better than budgetYTD centkWh result 483cent vs 532cent (actual vs budget)

Power production costs- 200cent vs 229cent (actual vs budget)Power distribution costs- 283cent vs 303cent (actual vs budget)

(Note Fully loaded cost is not a cost of service analysis which includes offsets)

Hydro production cost per avg MWh better than budgetYTD $MWh result $169 vs $178 (actual vs budget)

Actual vs Budget Rocky Reach $127 vs $129 (operating expense ~88 YTD)Rock Island $253 vs $273 (operating expense ~89 YTD) Lake Chelan $182 vs $223 (operating expense ~76 YTD)

5162018 7

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Water cost per 1000 gallons better than budgetYTD $1k gallons result $692 vs $705 (actual vs budget)

YTD operating expense 99 of budget

Wastewater cost per ERU better than budgetYTD $ERU result $194 vs $226 (actual vs budget)

YTD operating expense 86 of budget

Fiber cost per active premise higher than budgetYTD $premise result $121 vs $107 (actual vs budget)

YTD operating expense 113 of budget due to timing of core system support contract payment

8

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Service Revenue 66795 64693 103

Net Wholesale Revenue 108312 108001 100

Hydro LT Contract RevOther PP 118788 119795 99

Other Operating Revenue 21669 21129 103

Other Operating Expense (171097) (173846) 98

Depreciation amp Tax Expense (51828) (52016) 100

Operating Income(Loss) 92639 87755 106

Non-Operating Activity (14790) (15913) 93Bottom Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

2018 Bottom-Line Results

8

Cognos_Office_Connection_Cache

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

OverviewRevenue Expense

bull Service Revenue better than budget year-to-date (YTD) due to more usage from the colder than average temperatures in Feb and Mar +$500000

bull Net Wholesale Revenue better than budget YTD as more surplus to sell from above average generation + $12M

bull Hydro Long-Term Contract Revenue below budget YTD with lower hydro costs for the cost-based contracts ($16M)

bull Other Operating Revenue better than budget YTD from FEMA proceeds and hydro contract charges + $11M

Total Revenues forecasted to be better than budget for the year +$2M

bull Operating Expenses below budget YTD but expected to catch up ($41M)

bull Non-Operating Net Expense better than budget YTD with higher customer contributions for construction and more interest earnings from the higher cash balances ($11M)

Total Net Expenses forecasted to be below budget for the year ($41M)

4

bull Combination of higher revenues and lower expenses result in a better Bottom Line YTD + $58M

Better bottom line forecast for the year of $778M +$6M

Bottom Line

OverviewCapital Cash

bull Capital expenditures overall are lagging the planned pace and below budget YTD ($56M)

bull Spending is ahead of pace YTD for Distribution and Rocky Reach and expected to be just under budget by year end

bull The Rock Island modernization timeline is under review with some projects likely to shift to 2019 partially offset by accelerations to 2018

Total Capital forecasted to hit $1338M which is below budget for

the year ($6M)

bull Positive bottom line and lower capital spending has increased cash and investments YTD by $178M

Total cash balance forecasted to be better than budget at

year end $4662M

5

Debtbull Total debt is the same as budget YTD

Total debt forecasted to equal budgeted $24M reduction with balance at year end $5135M

5162018 6

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Electric delivered cost per avg kWh better than budgetYTD centkWh result 483cent vs 532cent (actual vs budget)

Power production costs- 200cent vs 229cent (actual vs budget)Power distribution costs- 283cent vs 303cent (actual vs budget)

(Note Fully loaded cost is not a cost of service analysis which includes offsets)

Hydro production cost per avg MWh better than budgetYTD $MWh result $169 vs $178 (actual vs budget)

Actual vs Budget Rocky Reach $127 vs $129 (operating expense ~88 YTD)Rock Island $253 vs $273 (operating expense ~89 YTD) Lake Chelan $182 vs $223 (operating expense ~76 YTD)

5162018 7

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Water cost per 1000 gallons better than budgetYTD $1k gallons result $692 vs $705 (actual vs budget)

YTD operating expense 99 of budget

Wastewater cost per ERU better than budgetYTD $ERU result $194 vs $226 (actual vs budget)

YTD operating expense 86 of budget

Fiber cost per active premise higher than budgetYTD $premise result $121 vs $107 (actual vs budget)

YTD operating expense 113 of budget due to timing of core system support contract payment

8

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Service Revenue 66795 64693 103

Net Wholesale Revenue 108312 108001 100

Hydro LT Contract RevOther PP 118788 119795 99

Other Operating Revenue 21669 21129 103

Other Operating Expense (171097) (173846) 98

Depreciation amp Tax Expense (51828) (52016) 100

Operating Income(Loss) 92639 87755 106

Non-Operating Activity (14790) (15913) 93Bottom Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

2018 Bottom-Line Results

8

Cognos_Office_Connection_Cache

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

OverviewCapital Cash

bull Capital expenditures overall are lagging the planned pace and below budget YTD ($56M)

bull Spending is ahead of pace YTD for Distribution and Rocky Reach and expected to be just under budget by year end

bull The Rock Island modernization timeline is under review with some projects likely to shift to 2019 partially offset by accelerations to 2018

Total Capital forecasted to hit $1338M which is below budget for

the year ($6M)

bull Positive bottom line and lower capital spending has increased cash and investments YTD by $178M

Total cash balance forecasted to be better than budget at

year end $4662M

5

Debtbull Total debt is the same as budget YTD

Total debt forecasted to equal budgeted $24M reduction with balance at year end $5135M

5162018 6

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Electric delivered cost per avg kWh better than budgetYTD centkWh result 483cent vs 532cent (actual vs budget)

Power production costs- 200cent vs 229cent (actual vs budget)Power distribution costs- 283cent vs 303cent (actual vs budget)

(Note Fully loaded cost is not a cost of service analysis which includes offsets)

Hydro production cost per avg MWh better than budgetYTD $MWh result $169 vs $178 (actual vs budget)

Actual vs Budget Rocky Reach $127 vs $129 (operating expense ~88 YTD)Rock Island $253 vs $273 (operating expense ~89 YTD) Lake Chelan $182 vs $223 (operating expense ~76 YTD)

5162018 7

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Water cost per 1000 gallons better than budgetYTD $1k gallons result $692 vs $705 (actual vs budget)

YTD operating expense 99 of budget

Wastewater cost per ERU better than budgetYTD $ERU result $194 vs $226 (actual vs budget)

YTD operating expense 86 of budget

Fiber cost per active premise higher than budgetYTD $premise result $121 vs $107 (actual vs budget)

YTD operating expense 113 of budget due to timing of core system support contract payment

8

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Service Revenue 66795 64693 103

Net Wholesale Revenue 108312 108001 100

Hydro LT Contract RevOther PP 118788 119795 99

Other Operating Revenue 21669 21129 103

Other Operating Expense (171097) (173846) 98

Depreciation amp Tax Expense (51828) (52016) 100

Operating Income(Loss) 92639 87755 106

Non-Operating Activity (14790) (15913) 93Bottom Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

2018 Bottom-Line Results

8

Cognos_Office_Connection_Cache

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

5162018 6

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Electric delivered cost per avg kWh better than budgetYTD centkWh result 483cent vs 532cent (actual vs budget)

Power production costs- 200cent vs 229cent (actual vs budget)Power distribution costs- 283cent vs 303cent (actual vs budget)

(Note Fully loaded cost is not a cost of service analysis which includes offsets)

Hydro production cost per avg MWh better than budgetYTD $MWh result $169 vs $178 (actual vs budget)

Actual vs Budget Rocky Reach $127 vs $129 (operating expense ~88 YTD)Rock Island $253 vs $273 (operating expense ~89 YTD) Lake Chelan $182 vs $223 (operating expense ~76 YTD)

5162018 7

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Water cost per 1000 gallons better than budgetYTD $1k gallons result $692 vs $705 (actual vs budget)

YTD operating expense 99 of budget

Wastewater cost per ERU better than budgetYTD $ERU result $194 vs $226 (actual vs budget)

YTD operating expense 86 of budget

Fiber cost per active premise higher than budgetYTD $premise result $121 vs $107 (actual vs budget)

YTD operating expense 113 of budget due to timing of core system support contract payment

8

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Service Revenue 66795 64693 103

Net Wholesale Revenue 108312 108001 100

Hydro LT Contract RevOther PP 118788 119795 99

Other Operating Revenue 21669 21129 103

Other Operating Expense (171097) (173846) 98

Depreciation amp Tax Expense (51828) (52016) 100

Operating Income(Loss) 92639 87755 106

Non-Operating Activity (14790) (15913) 93Bottom Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

2018 Bottom-Line Results

8

Cognos_Office_Connection_Cache

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

5162018 7

Financial HighlightsFocus on Year-to-Date (YTD) cost per unit

Water cost per 1000 gallons better than budgetYTD $1k gallons result $692 vs $705 (actual vs budget)

YTD operating expense 99 of budget

Wastewater cost per ERU better than budgetYTD $ERU result $194 vs $226 (actual vs budget)

YTD operating expense 86 of budget

Fiber cost per active premise higher than budgetYTD $premise result $121 vs $107 (actual vs budget)

YTD operating expense 113 of budget due to timing of core system support contract payment

8

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Service Revenue 66795 64693 103

Net Wholesale Revenue 108312 108001 100

Hydro LT Contract RevOther PP 118788 119795 99

Other Operating Revenue 21669 21129 103

Other Operating Expense (171097) (173846) 98

Depreciation amp Tax Expense (51828) (52016) 100

Operating Income(Loss) 92639 87755 106

Non-Operating Activity (14790) (15913) 93Bottom Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

2018 Bottom-Line Results

8

Cognos_Office_Connection_Cache

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

8

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Service Revenue 66795 64693 103

Net Wholesale Revenue 108312 108001 100

Hydro LT Contract RevOther PP 118788 119795 99

Other Operating Revenue 21669 21129 103

Other Operating Expense (171097) (173846) 98

Depreciation amp Tax Expense (51828) (52016) 100

Operating Income(Loss) 92639 87755 106

Non-Operating Activity (14790) (15913) 93Bottom Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

2018 Bottom-Line Results

8

Cognos_Office_Connection_Cache

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

Cognos_Office_Connection_Cache

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

Sheet1

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Service Revenue		66795		64693		103		64693		3
Net Wholesale Revenue		108312		108001		100		106638		2
Hydro LT Contract RevOther PP		118788		119795		99		119256		-0
Other Operating Revenue		21669		21129		103		21129		3
Other Operating Expense		(171097)		(173846)		98		(173846)		2
Depreciation amp Tax Expense		(51828)		(52016)		100		(52326)		1
Operating Income(Loss)		92639		87755		106		85544		8
Non-Operating Activity		(14790)		(15913)		93		(14898)		1
Bottom Line		77849		71842		108		70645		10

9

Business Line ldquoBottom-Linerdquo Results

5162018

(in 000s)

2018 Current Forecast

2018 Budget

of budget

Cost-Based Activity 35918 35569 101

Market-Based Activity 47332 47081 101

Retail Activity (20702) (25986) 80

Other Activity 11280 11014 102

Integrated Electric 73827 67679 109Fiber amp Telecom 3820 3839 100Water 559 696 80Wastewater (358) (372) 96Combined Bottom-Line 77849 71842 108

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

Cognos_Office_Connection_Cache

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

Sheet1

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

(in 000s)		2018 Current Forecast		2018 Budget		of budget		2018 Prior Forecast		change from prior
Cost-Based Activity		35918		35569		101		35017		3
Market-Based Activity		47332		47081		101		45560		4
Retail Activity		(20702)		(25986)		80		(25933)		20
Other Activity		11280		11014		102		11835		-5
Integrated Electric		73827		67679		109		66480		11
Fiber amp Telecom		3820		3839		100		3834		-0
Water		559		696		80		701		-20
Wastewater		(358)		(372)		96		(370)		3
Combined Bottom-Line		77849		71842		108		70645		10

10

Capital Expenditures

5162018

(in 000s)2018 YTD Current

2018 YTD Budget

of budget

2018 Current Forecast

2018 Budget

of Budget

Electric Distribution 2241 1920 117 14000 14293 98

Network Transmission 288 736 39 2663 2929 91

Rocky Reach 814 558 146 7966 8111 98

Rock Island 4274 7577 56 79660 83778 95

Lake Chelan 123 132 93 1740 1404 124

Internal Services 999 3120 32 19710 21047 94

Fiber amp Telecom 786 904 87 5158 5547 93

Water 50 76 65 1299 1236 105

Wastewater 46 206 22 1609 1339 120

Total Expenditures 9621 15231 63 133805 139685 96

Contributions (1716) (907) 189 (3821) (3797) 101

Capital net of CIAC 7904 14324 55 129984 135887 96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

Cognos_Office_Connection_Cache

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

Sheet1

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

(in 000s)		2018 YTD Current		2018 YTD Budget		of budget		0		2018 Current Forecast		2018 Budget		of Budget
Electric Distribution		2241		1920		117		- 0		14000		14293		98
Network Transmission		288		736		39		- 0		2663		2929		91
Rocky Reach		814		558		146		- 0		7966		8111		98
Rock Island		4274		7577		56		- 0		79660		83778		95
Lake Chelan		123		132		93		- 0		1740		1404		124
Internal Services		999		3120		32		- 0		19710		21047		94
Fiber amp Telecom		786		904		87		- 0		5158		5547		93
Water		50		76		65		- 0		1299		1236		105
Wastewater		46		206		22		- 0		1609		1339		120
Total Expenditures		9621		15231		63		- 0		133805		139685		96
Contributions		(1716)		(907)		189		- 0		(3821)		(3797)		101
Capital net of CIAC		7904		14324		55		- 0		129984		135887		96

Overview of YTD - 2018 Cash Flow$ Million

Bottomndashline result (YTD - 2018) $ 25Add back non-cash related items (depreciation) $ 12

Estimated earned funds from operations $ 37

Capital Project Expenditures $ 10Net Debt Reductions $ ---Other Misc Impacts (change in AR AP Inventory Etc) $ 9 Added to cash reserves $ 18

Estimated use of funds $37

5162018 11

Cash and investments beginning of year $ 511Added to cash reserves $18Cash and investments end of Q1 $ 529

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Cash amp Investments Balance

5162018 12

($ Millions) 33118 123117

Unrestricted funds $338 $327

Board Designated

HeadquartersService Center Strategic Facilities Fund 20 20

Unrestricted funds 358 347

Restricted ndash DRC amp CRC funds for Hydro capitaldebt 78 78

Total Liquidity (policy minimum $175M) $436 $425

Restricted - bond reserve funds 61 53Restricted - power contract deposits 23 21Restricted - self insurance and other funds 9 12

Total Cash and Investments $529 $511

Board Designated Funds qualify as unrestricted for liquidity and external reporting purposes Additional $30M designated by Board subsequent to 33118

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

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31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Quarterly Reporting Requirement - Financial PoliciesDistrict Combined 2018 2019 2020 2021 2022

Liquidity - $175M Min (Expected) $378M $320M $278M $221M $180M

Liquidity - $175M Min (Unusual) $313M $266M $200M $178M

Debt Ratio (Expected lt35 by 2019) 346 314 286 257 232

Debt Ratio (Unusual lt35 by 2019) 315 288 261 252

Days Cash on Hand (Expected gt250) 603 513 436 352 281

Days Cash on Hand (Unusual gt 250) 502 417 319 279

Combined Debt Cover (Expected gt 200x) 290 274 246 241 237

Combined Debt Cover (Unusual gt125x) 264 235 225 207

Rate of Return (Expected gt 4 thru 2019) 65 52Sunset

Rate of Return (Unusual gt 2 thru 2019) 48

Bottom Line Results (Expected) $78M $66M $52M $50M $46M

Bottom Line Results (Unusual) $61M $46M $42M $35M

Outstanding Debt (Expected) $514M $474M $435M $394M $358M

Outstanding Debt (Unusual) $474M $435M $394M $388M

The information in this schedule contains forward-looking information and projections Such projections are necessarily subject to various risks and uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in making such projections and actual outcomes and certain other risks 13

Assumed issuance of debt to maintain liquidity

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022WATER Business Line

Operating Expense Coverage (target gt120) 134 133 137 133 135

Cash Reserves (target gt $125 million) $36M $33M $25M $13M $14M

Debt Ratio (target lt35) 11 9 7 5 4

WASTEWATER Business Line

Operating Expense Coverage (target gt100 by 2019) 81 102 101 100 99

Cash Reserves (target gt $200K) $23M $27M $29M $27M $27M

Debt Ratio (target lt35) --- 18 17 24 23

FIBER Business Line

Operating Expense Coverage (target gt120) 166 147 155 149 144

Cash Reserves (target gt $20 million) $130M $121M $120M $135M $148M

Debt Ratio (target lt35) --- --- --- --- ---

14

Corrective actions will be determined through the business planning process

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Quarterly Reporting RequirementIndividual Business Line Financial Policies

Business Lines 2018 2019 2020 2021 2022

Integrated Electric Business Line

Retail Total Cost Ratio (target) gt65 gt65 gt65 gt65 gt65

Retail Total Cost Ratio 72 70 68 70 67

Retail OMampT Cost Ratio (target) gt 90 gt 90 gt 90 gt 90 gt 90

Retail OMampT Cost Ratio 94 93 90 95 92

Retail Rate Support Limit (target) $256M $263M $269M $276M $283M

Retail Rate Support $207M $229M $265M $251M $289M

Market Based Margin Limit (target) $250M $250M $250M $250M $250M

Market Based Margin $473M $430M $310M $273M $267M

15

These are ldquotestrdquo metrics developed during 2018-2022 business planningMonitoring during

test period

Metrics indicating that our electric revenues may not be keeping up with our costs as we continue to make significant investments in our assets

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Quarterly Investment ReportIn compliance with District Banking and Investment Policy 16-14094

bull Q1 2018 yield increased slightly to 188 due to improving market interest rates

bull March 21 2018 Federal Open Market Committee meeting reportndash Labor market has continued to strengthen unemployment has stayed

lowndash Inflation rate is running below 2 longer-run objective continue to

monitor and near term outlook appears stablendash Federal funds rate target changed from 150 to 175ndash Gradually increasing although continued relatively low rates are

anticipated through 2018bull Uncertainty around changes in the political climate can influence financial

markets which may impact the Districtbull Laddered investment structure continues to be our strategy to support

safety of principal and liquidity and mitigate interest rate volatility

Q2 2017 Q3 2017 Q4 2017 Q1 2018 YTD 2018 WAM

Average Invested Book Value ($M) $499 $471 $498 $517 $517

District Yield 166 174 176 188 188 792

Benchmarks

3 Month T-Bill 092 106 123 158 158 90

SampP US Treasury 1-3 Year Index 131 138 113 129 129 683

Prior Barclays index replaced Q4 2017 with SampP index and rolling 2 year average to align duration and improve comparability

Full report is in the Appendix

Policy Objectives amp Compliance Safety Liquidity Return on Investment DiversificationMaturity Length

16

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Q1 Key Messages

17

Early forecasts are a little better than budget

Long-term financial metrics policies on track

Stay the course with our strategic goalsReinvest in assets and peopleReduce debt Continue public power benefit program

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

18

Appendix

The information in the appendix contains forward-looking information and projections Such projections are necessarily subject to various risks and

uncertainties Actual results could and likely will differ materially from those projected in part as a result of differences between assumptions utilized in

making such projections and actual outcomes and certain other risks

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Net Wholesale Revenue

YTD result $12 million above budget ($255M vs $243M)

Annual forecast higher than budget ($1083M vs $1080)

Drivers+ Generation 112 of budget YTD- Retail energy use 107 of budget YTD - Hedging program minimizes impact of 2018 flat price $188 vs $228 budget

Hydro Long-Term Contract Revenue

YTD result $16 million below budget ($281M vs $297M)

Annual forecast slightly lower than Budget ($1201M vs $1211M)

Drivers- Combined hydro ldquocost basedrdquo operating expenses below budget (88 YTD)- ldquoPlusrdquo contract charges slightly less than budgeted levels (96 YTD)

Financial Highlights - Revenue

5162018 19

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Service RevenueYTD result $05 million above budget

($199M vs $194M)

Forecast results better than budget ($668M vs $647M)

Drivers+ Retail energy use at 107 of budget (Residential ~110 Industrial ~115 Commercial ~102)+ New retail energy load forecast implemented for Q1 reporting

Other Operating Revenue

YTD result $09 million above budget ($64M vs $55M)

Forecast results better than budget ($217M vs $211M)

Drivers + FEMA proceeds ~$05M YTD (Fire-2015)+ Hydro Contract Revenue ~$05M YTD

Financial Highlights - Revenue

5162018 20

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Operating Expense

YTD result $41 million below budget ($374 vs $415M)

Forecast results below budget ($1711M vs $1738M)

Drivers - Hydro operations and maintenance at 79 of budget (expected to catch up by year end)- Fish and Wildlife at 82 of budget (expected to catch up by year end)- Parks and Recreation at 78 of budget (expected to catch up by year end)

Non-OperatingNet Expense

YTD result $11M better than budget ($29M vs $40M)

Forecast results better than budget ($148M vs $159M)

Drivers + Higher contributions in aid of construction YTD ($19M vs $11M) + Increased forecasted interest earnings on higher cash reserves

Financial Highlights - Expenses

5162018 21

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

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36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

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37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

22

Financial Highlights ndash Balance SheetCapital expenditures below budget

bull YTD - 2018 $96 million vs budget of $152 millionbull 2018 Forecast results below 2018 Budget ($1338M vs $1397M)

Individual project adjustments

bull Bavarian Substation (~$1M shifted to 2019 2020)bull LMR Network Replacement (~$1M shifted to 2019) bull RI B7 Modernization (~$3M shifted to 2019)bull RI B1 Modernization (~$2M shifted to 2019)bull RI B8 Modernization (~$1M accelerated to 2018)

Cash remains strong Debt reduction strategy on track

bull Cash balance forecasted to decrease ~$45 million in 2018 bull Debt balance to decrease ~$24 million in 2018

5162018

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

23

Service Revenue

5162018

Note Excludes internal intersystem revenues

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Residential Electric 10092 9723 104 Colder than average Feb and Mar

Commercial Electric 4836 4784 101 In line with budget

Industrial Electric 1250 1080 116

High Density Load 449 557 81

Other Electric 79 83 95 Small dollar variance

Electric Service 16707 16227 103

Water Service 1227 1235 99 In line with budget

Wastewater Service 174 172 101 In line with budget

Fiber amp Telecom 1783 1795 99 In line with budget

Service Revenue 19891 19429 102

Industrial amp HDL in aggregate at 103 of budget

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Cognos_Office_Connection_Cache

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

Sheet1

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Residential Electric		10092		9723		104		Colder than average Feb and Mar
Commercial Electric		4836		4784		101		In line with budget
Industrial Electric		1250		1080		116		Industrial amp HDL in aggregate at 103 of budget
High Density Load		449		557		81
Other Electric		79		83		95		Small dollar variance
Electric Service		16707		16227		103
Water Service		1227		1235		99		In line with budget
Wastewater Service		174		172		101		In line with budget
Fiber amp Telecom		1783		1795		99		In line with budget
Service Revenue		19891		19429		102

24

Net Surplus Energy Revenue

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceSlice Contracts 20337 18787 108 Additional 3 slice executed post budget

Net Block Trades 3951 4441 89Other Net Wholesale 1197 1115 107Net Wholesale Revenue 25485 24343 105LT Hydro Contracts 28052 29728 94 Operating costs 88 YTD adders 94 YTD

Less Other Purchased Power (330) (330) 100 In line with budget

Hydro LT Contract RevOther PP 27722 29398 94

Surplus Energy Revenue 53207 53741 99

High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

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38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

Cognos_Office_Connection_Cache

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

Sheet1

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Slice Contracts		20337		18787		108		Additional 3 slice executed post budget
Net Block Trades		3951		4441		89		High retail usage (107 of budget YTD) - (Aggregate 93 of Budget YTD)
Other Net Wholesale		1197		1115		107
Net Wholesale Revenue		25485		24343		105
LT Hydro Contracts		28052		29728		94		Operating costs 88 YTD adders 94 YTD
Less Other Purchased Power		(330)		(330)		100		In line with budget
Hydro LT Contract RevOther PP		27722		29398		94
Surplus Energy Revenue		53207		53741		99

25

Operating Expense

5162018

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Hydro Operations amp Maintenance 11017 13880 79 RR C9 Turbine Repairs

Hydro Fish amp Wildlife 2701 3307 82 Predator control Fishway Ops

Hydro Parks amp Recreation 1308 1675 78 Various maintenance projects timing

Electric Distribution 3309 3561 93 Small dollar variance

Electric Transmission 2555 3484 73 Legal amp consulting support OATT

Misc Power Supply Expenses 942 1365 69 Legal amp consulting support EPampT

Water amp Wastewater 679 738 92 Small dollar variance

Fiber Network 1260 1099 115 Core system support contract payment

Customer Accounts amp Service 872 896 97 Small dollar variance

Conservation amp Customer Assist 641 850 75 Regulatory asset Amortization

Insurance amp FERC Fees 2702 2083 130 Increased claims experience

Other Admin amp General 9424 8528 110 Vacancy rate adjustmentTotal 37410 41467 90

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

Cognos_Office_Connection_Cache

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

Sheet1

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Hydro Operations amp Maintenance		11017		13880		79		RR C9 Turbine Repairs
Hydro Fish amp Wildlife		2701		3307		82		Predator control Fishway Ops
Hydro Parks amp Recreation		1308		1675		78		Various maintenance projects timing
Electric Distribution		3309		3561		93		Small dollar variance
Electric Transmission		2555		3484		73		Legal amp consulting support OATT
Misc Power Supply Expenses		942		1365		69		Legal amp consulting support EPampT
Water amp Wastewater		679		738		92		Small dollar variance
Fiber Network		1260		1099		115		Core system support contract payment
Customer Accounts amp Service		872		896		97		Small dollar variance
Conservation amp Customer Assist		641		850		75		Regulatory asset Amortization
Insurance amp FERC Fees		2702		2083		130		Increased claims experience
Other Admin amp General		9424		8528		110		Vacancy rate adjustment
Total		37410		41467		90

Non-Operating Activity

5162018 26

(in 000s)Actuals YTD

2018Budget YTD

2018 VarianceInterest Earnings 2367 2312 102 In line with budget

Capital Contributions 1893 1091 173 High volume of line extensions

Interest Expense (6421) (6351) 101 In line with budget

Other Inc(Exp) (735) (1018) 72 Non Op hydro revenue transfers

Non Operating Activity (2897) (3966) 73

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

Cognos_Office_Connection_Cache

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

Sheet1

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Interest Earnings		2367		2312		102		In line with budget
Capital Contributions		1893		1091		173		High volume of line extensions
Interest Expense		(6421)		(6351)		101		In line with budget
Other Inc(Exp)		(735)		(1018)		72		Non Op hydro revenue transfers
Non Operating Activity		(2897)		(3966)		73

Integrated Electric

5162018 27

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 16727 16248 103 Higher retail load usage

Net Wholesale Revenue 25485 24343 105 Executed additional 3 slice post budget

Hydro LT Contract RevOther PP 27722 29398 94 Lower operating costs amp contract adders

Other Operating Revenue 6795 5825 117 FEMA proceeds (fire 2015)

Other Operating Expense (35804) (39981) 90 Hydro Ops and Maint (79 of budget YTD)

Depreciation amp Tax Expense (13292) (13101) 101 In line with budget

Operating Income(Loss) 27634 22732 122

Non-Operating Activity (5937) (6689) 89 Higher contributions in aid of construction

Bottom Line 21696 16043

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

Cognos_Office_Connection_Cache

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

Sheet1

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		16727		16248		103		Higher retail load usage
Net Wholesale Revenue		25485		24343		105		Executed additional 3 slice post budget
Hydro LT Contract RevOther PP		27722		29398		94		Lower operating costs amp contract adders
Other Operating Revenue		6795		5825		117		FEMA proceeds (fire 2015)
Other Operating Expense		(35804)		(39981)		90		Hydro Ops and Maint (79 of budget YTD)
Depreciation amp Tax Expense		(13292)		(13101)		101		In line with budget
Operating Income(Loss)		27634		22732		122
Non-Operating Activity		(5937)		(6689)		89		Higher contributions in aid of construction
Bottom Line		21696		16043

Fiber amp Telecom

5162018 28

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 2656 2697 98 In line with budget

Other Operating Revenue 9 0 2917 Small dollar variance

Other Operating Expense (1849) (1642) 113 Core system support contract payment

Depreciation amp Tax Expense (761) (783) 97 In line with budget

Operating Income(Loss) 55 272 20

Non-Operating Activity 2579 2576 100 In line with budget

Bottom Line 2634 2848 Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

Cognos_Office_Connection_Cache

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

Sheet1

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		2656		2697		98		In line with budget
Other Operating Revenue		9		0		2917		Small dollar variance
Other Operating Expense		(1849)		(1642)		113		Core system support contract payment
Depreciation amp Tax Expense		(761)		(783)		97		In line with budget
Operating Income(Loss)		55		272		20
Non-Operating Activity		2579		2576		100		In line with budget
Bottom Line		2634		2848

Water

5162018 29

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

(in 000s)Actuals

YTD 2018Budget

YTD 2018 Variance

Service Revenue 1237 1256 98 In line with budget

Other Operating Revenue 17 16 108 Small dollar variance

Other Operating Expense (921) (933) 99 In line with budget

Depreciation amp Tax Expense (543) (561) 97 Small dollar variance

Operating Income(Loss) (210) (223) 95

Non-Operating Activity 444 127 350 Customer contributions

Bottom Line 233 (96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

Cognos_Office_Connection_Cache

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

Sheet1

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		1237		1256		98		In line with budget
Other Operating Revenue		17		16		108		Small dollar variance
Other Operating Expense		(921)		(933)		99		In line with budget
Depreciation amp Tax Expense		(543)		(561)		97		Small dollar variance
Operating Income(Loss)		(210)		(223)		95
Non-Operating Activity		444		127		350		Customer contributions
Bottom Line		233		(96)

Wastewater

5162018 30

(in 000s)Actuals YTD

2018Budget YTD

2018 Variance

Service Revenue 174 172 101 In line with budget

Other Operating Revenue 0 0 83 Small dollar variance

Other Operating Expense (162) (189) 86 Small dollar variance

Depreciation amp Tax Expense (70) (72) 98 In line with budget

Operating Income(Loss) (58) (88) 66

Non-Operating Activity 17 20 89 Small dollar variance

Bottom Line (41) (69)

Revenues gt 100 of budget positive for District Expenses lt 100 of budget positive for District

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

Cognos_Office_Connection_Cache

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

Sheet1

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

(in 000s)		Actuals YTD 2018		Budget YTD 2018				Variance
Service Revenue		174		172		101		In line with budget
Other Operating Revenue		0		0		83		Small dollar variance
Other Operating Expense		(162)		(189)		86		Small dollar variance
Depreciation amp Tax Expense		(70)		(72)		98		In line with budget
Operating Income(Loss)		(58)		(88)		66
Non-Operating Activity		17		20		89		Small dollar variance
Bottom Line		(41)		(69)

31

Actual Cash Balance Comparison to Budget

(millions) 2018

Total Cash ndash Budgeted year-end balance $ 436

Key changes in cash forecast

Decrease in capital projects $ 6

Improvement in operating activity $ 6

Other changes in AR AP inventory etc $18

Total Cash ndash Current forecast year-end balance $ 466

Prior quarter ndash 2018 year-end forecasted balance $ 454

5162018

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

Key modeling assumptionsbull Past water history and current forward price curvebull Water amp Wastewater rate increase placeholdersbull Planned expenditures from 5-year business plansbull Debt reduction plan based on 5-year business plansbull Hydro contract terms set at maximum rates

- Debt Reduction Charge (DRC) - 3 (2018-22)- Capital Recovery Charge (CRC) - 50 (2018-22)

bull Investment earning ratebull (2018-22 198 221 240 265 293)

5162018 32

Five-year outlook

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

33

Cash and Debt Funding CapacityForecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Cash Funding Capacity $203M $145M $103M $46M $5M

ldquoliquidity in excess of minimum $175M targetrdquo

Debt Funding Capacity $9M $84M $151M $219M $280M

ldquofinancing capability up to maximum debt ratio target of 35rdquo

Total Funding Capacity $212M $229M $254M $265M $285M

Purpose of Slide To show Districtrsquos ability to handle increased expenditures or decreases in revenues while achieving established financial targets (liquidity and debt ratio) We will continue to refine our methodology including incorporating the potential impact on Debt Service Coverage

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

34

Combined Five-Year Forecast

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Service Revenue 66795 69648 72490 74820 75950

Net Wholesale Revenue 108312 100428 88801 83524 83919

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Other Operating Revenue 21669 22980 22674 24226 23412

Other Operating Expense (171097) (175890) (180713) (175888) (180385)

Depreciation amp Tax Expense (51828) (55637) (59696) (62044) (65203)

Operating Income(Loss) 92639 82006 65929 62660 58140

Non-Operating Activity (14790) (15564) (13695) (12659) (11962)

Bottom Line 77849 66442 52234 50000 46178

Prior Quarter Reported Forecast 70645 63213 50454 48142 43134

Forecast at 2018 Budget 72238 61167 49336 45912 40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

Sheet1

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Service Revenue		66795		69648		72490		74820		75950
Net Wholesale Revenue		108312		100428		88801		83524		83919
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Other Operating Revenue		21669		22980		22674		24226		23412
Other Operating Expense		(171097)		(175890)		(180713)		(175888)		(180385)
Depreciation amp Tax Expense		(51828)		(55637)		(59696)		(62044)		(65203)
Operating Income(Loss)		92639		82006		65929		62660		58140
Non-Operating Activity		(14790)		(15564)		(13695)		(12659)		(11962)
Bottom Line		77849		66442		52234		50000		46178
Prior Quarter Reported Forecast		70645		63213		50454		48142		43134
Forecast at 2018 Budget		72238		61167		49336		45912		40391

35

Service Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Residential Electric 27381 27656 27981 27989 27907

Commercial Electric 16990 17186 17439 17497 17490

Industrial Electric 5011 5425 5809 6307 6253

High Density Load 1909 3256 4627 6132 7109

Other Electric 1548 1541 1547 1550 1527

Electric Service 52839 55064 57403 59475 60287

Water Service 5922 6162 6410 6669 6939

Wastewater Service 684 725 747 770 793

Fiber amp Telecom 7350 7697 7929 7905 7932

Service Revenue 66795 69648 72490 74820 75950

Prior Quarter Reported Forecast 64693 66840 69003 70957 72605

Forecast at 2018 Budget 64693 66840 69003 70957 72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

Cognos_Office_Connection_Cache

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

Sheet1

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Residential Electric		27381		27656		27981		27989		27907
Commercial Electric		16990		17186		17439		17497		17490
Industrial Electric		5011		5425		5809		6307		6253
High Density Load		1909		3256		4627		6132		7109
Other Electric		1548		1541		1547		1550		1527
Electric Service		52839		55064		57403		59475		60287
Water Service		5922		6162		6410		6669		6939
Wastewater Service		684		725		747		770		793
Fiber amp Telecom		7350		7697		7929		7905		7932
Service Revenue		66795		69648		72490		74820		75950
Prior Quarter Reported Forecast		64693		66840		69003		70957		72605
Forecast at 2018 Budget		64693		66840		69003		70957		72605

36

Net Surplus Energy Revenue

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022

Slice Contracts 81347 70241 55181 55552 42393

Net Block Trades 23804 23006 24614 14357 15221

Other Net Wholesale 3161 7181 9006 13614 26306

Net Wholesale Revenue 108312 100428 88801 83524 83919

LT Hydro Contracts 120108 121796 123693 119343 121766

Less Other Purchased Power (1320) (1320) (1320) (1320) (1320)

Hydro LT Contract RevOther PP 118788 120476 122373 118023 120446

Surplus Energy Revenue 227100 220904 211174 201546 204365

Prior Quarter Reported Forecast 225893 224310 214194 205156 208059

Forecast at 2018 Budget 228094 225395 214123 205621 207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

Cognos_Office_Connection_Cache

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

Sheet1

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Slice Contracts		81347		70241		55181		55552		42393
Net Block Trades		23804		23006		24614		14357		15221
Other Net Wholesale		3161		7181		9006		13614		26306
Net Wholesale Revenue		108312		100428		88801		83524		83919
LT Hydro Contracts		120108		121796		123693		119343		121766
Less Other Purchased Power		(1320)		(1320)		(1320)		(1320)		(1320)
Hydro LT Contract RevOther PP		118788		120476		122373		118023		120446
Surplus Energy Revenue		227100		220904		211174		201546		204365
Prior Quarter Reported Forecast		225893		224310		214194		205156		208059
Forecast at 2018 Budget		228094		225395		214123		205621		207544

37

Operating Expense

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Hydro Operations amp Maintenance 59045 58655 59635 50993 53198 Hydro Fish amp Wildlife 16613 17774 19193 19535 18424 Hydro Parks amp Recreation 7700 8707 8074 7889 7896 Electric Distribution 15164 15501 16191 16933 17544 Electric Transmission 12993 12620 13014 13265 13705 Misc Power Supply Expenses 5368 6035 6259 6290 6534 Water amp Wastewater 3063 3072 3070 3330 3441 Fiber Network 4573 5314 5042 5164 5373 Customer Accounts amp Service 4245 4548 4694 4853 4995 Conservation amp Customer Assist 3142 3610 3889 4377 4657 Insurance amp FERC Fees 7890 7796 8224 8522 8795 Other Admin amp General 31302 32257 33428 34737 35823

Total 171097 175890 180713 175888 180385

Prior Quarter Reported Forecast 173846 177900 180002 175600 181003

Forecast at 2018 Budget 173846 177987 179203 175644 180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

Cognos_Office_Connection_Cache

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

Sheet1

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Hydro Operations amp Maintenance		59045		58655		59635		50993		53198
Hydro Fish amp Wildlife		16613		17774		19193		19535		18424
Hydro Parks amp Recreation		7700		8707		8074		7889		7896
Electric Distribution		15164		15501		16191		16933		17544
Electric Transmission		12993		12620		13014		13265		13705
Misc Power Supply Expenses		5368		6035		6259		6290		6534
Water amp Wastewater		3063		3072		3070		3330		3441
Fiber Network		4573		5314		5042		5164		5373
Customer Accounts amp Service		4245		4548		4694		4853		4995
Conservation amp Customer Assist		3142		3610		3889		4377		4657
Insurance amp FERC Fees		7890		7796		8224		8522		8795
Other Admin amp General		31302		32257		33428		34737		35823
Total		171097		175890		180713		175888		180385
Prior Quarter Reported Forecast		173846		177900		180002		175600		181003
Forecast at 2018 Budget		173846		177987		179203		175644		180961

38

Capital Projects

5162018

(in 000s)Forecast

2018Forecast

2019Forecast

2020Forecast

2021Forecast

2022Electric Distribution 14000 24584 20770 20991 21653 Network Transmission 2663 7714 5595 7631 5403 Rocky Reach 7966 6417 7314 3029 6581 Rock Island 79660 47824 21208 46584 40759 Lake Chelan 1740 416 908 225 435 Internal Services 19710 30671 34598 26075 19200 Fiber amp Telecom 5158 5277 6857 4685 4590 Water 1299 1149 2293 2472 1427 Wastewater 1609 1944 1030 927 27 Total 133805 125995 100572 112619 100074

Prior Quarter Reported Forecast 140204 123781 98213 112311 103151

Forecast at 2018 Budget 139685 121762 98011 111697 102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

Cognos_Office_Connection_Cache

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

Sheet1

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

(in 000s)		Forecast 2018		Forecast 2019		Forecast 2020		Forecast 2021		Forecast 2022
Electric Distribution		14000		24584		20770		20991		21653
Network Transmission		2663		7714		5595		7631		5403
Rocky Reach		7966		6417		7314		3029		6581
Rock Island		79660		47824		21208		46584		40759
Lake Chelan		1740		416		908		225		435
Internal Services		19710		30671		34598		26075		19200
Fiber amp Telecom		5158		5277		6857		4685		4590
Water		1299		1149		2293		2472		1427
Wastewater		1609		1944		1030		927		27
Total		133805		125995		100572		112619		100074
Prior Quarter Reported Forecast		140204		123781		98213		112311		103151
Forecast at 2018 Budget		139685		121762		98011		111697		102456

Financial Policy ndash Financial Liquidity amp DaysCash on HandMethodology Per Resolution 17-14124

COMBINED 2018 2019 2020 2021 2022

District Total Liquidity Targets $175 $175 $175 $175 $175

Base Case ndash expected (50 probability) $378 $320 $278 $221 $180

Base Case ndash unusual (10 prob cumulative) $313 $266 $200 $178

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs $304 $247 $180 $176

Days Cash on Hand Target gt250 gt250 gt250 gt250 gt250

Base Case ndash expected (50 probability) 603 513 436 352 281

Base Case ndash unusual (10 prob cumulative) 502 417 319 279

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 466 370 273 264

5162018 39 Assumes external debt financing to maintain liquidity targets

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

Financial Policy ndash Debt Ratio(Debt(Debt + Equity))

COMBINED 2018 2019 2020 2021 2022

District Targets lt40 lt35 lt35 lt35 lt35

Outstanding Debt Balance - YE(million) $514 $474 $435 $394 $358Scheduled Debt Retirements (million) $24 $25 $28 $30 $32

Planned Debt Accelerations (million) $ - $16 $11 $12 $12

Forecasted Debt Issuance - expected (million) $ - $ - $ - $ - $8

Base Case ndash expected 348 314 285 257 232

Base Case ndash unusual 315 288 261 252

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 316 289 267 275

5162018 40 Assumed debt issuance to maintain adequate liquidity levels

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

Financial Policy ndash Debt Service Coverage(Net Funds from OperationsComputed Debt Service)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) 200 200 200 200 200

District Targets (unusual) 125 125 125 125 125

Base Case ndash expected 290 274 246 241 237

Base Case ndash unusual 264 235 225 207

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs 256 226 215 188

5162018 41

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

Financial Policy ndash Rate of Return(Change in Net PositionNet Plant)

COMBINED 2018 2019 2020 2021 2022

District Targets (expected) gt4 gt4Sunset

District Targets (unusual) gt2 gt2

Base Case ndash expected (50 probability)Bottom-line expectation

65$78M

52$66M

-$52M

-$50M

-$46M

Base Case ndash unusual (5 probability)Bottom-line expectation

48$61M

-$46M

-$42M

-$35M

ldquoWhat-Ifrdquo ndash $20 flat market 82 water (1 in 5 water year) and increased costs Bottom-line expectation

45$57M

-$42M

-$37M

-$26M

5162018 42

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

5162018 43

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

5162018 44

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

5162018 45

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

465162018

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47

475162018

• Slide Number 1
• What we will cover today
• Q1 2018 Key Highlights
• Overview
• Overview
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Financial HighlightsFocus on Year-to-Date (YTD) cost per unit
• Slide Number 8
• Slide Number 9
• Slide Number 10
• Slide Number 11
• Slide Number 12
• Slide Number 13
• Slide Number 14
• Slide Number 15
• Slide Number 16
• Q1 Key Messages
• Slide Number 18
• Financial Highlights - Revenue
• Financial Highlights - Revenue
• Financial Highlights - Expenses
• Financial Highlights ndash Balance Sheet
• Slide Number 23
• Slide Number 24
• Slide Number 25
• Slide Number 26
• Slide Number 27
• Slide Number 28
• Slide Number 29
• Slide Number 30
• Slide Number 31
• Slide Number 32
• Slide Number 33
• Slide Number 34
• Slide Number 35
• Slide Number 36
• Slide Number 37
• Slide Number 38
• Slide Number 39
• Slide Number 40
• Slide Number 41
• Slide Number 42
• Slide Number 43
• Slide Number 44
• Slide Number 45
• Slide Number 46
• Slide Number 47