Jefferson County Public Utility District No. 1’s board of commissioners approved its 2026 budget at an annual budget hearing Oct. 6. It represents the PUD’s largest budget to date with planned expenditures reaching $89 million, according to the utility.  

The budget shows $52.5 million in operating expenses and $37.1 million in capital expenditures across the district’s electric, water, wastewater and broadband utilities. 

“The budget is a guide to the financial path that will allow the PUD to operate our day-to-day, as well as complete our capital projects, and we used a balanced budget,” said PUD Finance Director Mike Bailey. “That just means all revenues are equal to or greater than our expenses.” 

Budget revenues reflect the 9% increase in electricity rates approved by the commissioners in June.

“We did not include any other [rate increases] in the revenue projections for next year,” Bailey said, warning that increases to water rates could be coming. “We actually have a meeting coming up in the next week to start meeting with Financial Consulting Services to talk about the water rate study.” 

Next year, 80% of property tax revenue will go toward broadband and 20% will go toward water. 

Compared to this year’s budget, the PUD’s operating budget is up 3.5%, Bailey said, attributing the cost to an “upswing in power costs coupled with inflationary pressures.” 

As usual, labor and benefits account for one of the highest operating expenses, with the PUD budgeting $13.3 million for its employees next year, up slightly from last year, and 12 vacant positions.  

“Also, per RCW 54.16.100, and the compensation study that has been ongoing and still kind of in progress, we’ve included $200,000 for raises in administrative and general expenses,” Bailey said. 

The top operating expense, accounting for 33% of costs, is purchased power from the Bonneville Power Administration (BPA). The BPA provides all of the PUD’s 95% carbon-free electricity, which is primarily generated by hydroelectric dams along the Columbia River. The cost of the purchased power is expected to rise by $300,000 in 2026. 

Joe Wilson, PUD general manager, said he expects rate increases and “strategic borrowing” to help fund more than $70 million in infrastructure upgrades and reliability improvements the PUD has planned through 2030.  

Next year, the PUD will prioritize tree trimming and vegetation management along transmission and distribution corridors, while maintaining its $1 million annual tree-trimming expense budget. 

“Based on my experience, an active tree trimming plan can really have a positive impact on reliability,” said Wilson. “I’m recommending to our commission that our current 7-year trimming cycle move to a 4-year plan to help us serve our customers with more reliable power.” 

As for capital spending, the PUD’s broadband expansion accounts for the largest share. In total, the PUD anticipates spending over $15 million to expand broadband to businesses in Port Townsend and to start construction of 100 additional miles of fiber from Chimacum to Coyle. 

Commissioners also approved $5.3 million in capital expenditures for the PUD’s water utility, with a majority of funds going toward replacing the water main for the Coyle system. 

Going forward, PUD staff plan to present quarterly financial reports to the commission, providing a deeper understanding of how dollars are being spent.