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What Would it Cost PUD to get into Power Business? Try at Least $30 Million by Jeff Chew Peninsula Daily News, July 16, 2008

PORT TOWNSEND - Puget Sound Energy's Jefferson County infrastructure could cost the county's public utility district more than $30 million should it decide to get into the electrical power business, a consultant said Wednesday.

Bob Schneider, D Hittle & Associates Inc. consultants president, said he expects East Jefferson County power provider PSE to challenge his figure, estimating its Jefferson County assets at $45 million or more.

"The controversies are what are the assets worth," Schneider said, addressing the Jefferson County PUD commissioners during a special meeting at Chimacum Grange.

He later added that PSE "will probably say" that his estimate is "a low value."

The ballot question of whether to give PUD authority to provide electric power is expected to be on the Nov.4 general election since the county Auditor's Office certified enough valid petition signatures on June 27.

Jefferson County commissioners are expected to call the election this month.

They must act on the election resolution before Aug. 12 to be in time for the Nov. 4 ballot - the same election in which voters will decide the U.S. president and state governor.

If voters approve the measure, PUD which now provides water and sewer service in East Jefferson County, could take action to become the power provider.

Bonneville rates
Bonneville Power Administration officials told PUD leaders Wednesday about the process of securing and buying power from the company.

Schneider said the PUD commissioners could serve Bonneville power to customers less than a month after voter approval.

"You would have a very limited load," he said, recommending that PUD provide service only "where it makes sense to the citizens, to the customers."

By signing with Bonneville by December, the PUD would receive preferential power rates given to existing industrial customers, BPA officials said.

Scott Coe, Bonneville's Western Area Power business manager, said the rates of the federal agency are driven by legislation and an open public process.

"We have gotten out of the business of selling power contracts long term because we got burned in 2001," he said, referring to extremely low water flows that year that proved costly.

Electricity is produced by the Columbia River - which generates power through a network of more than 30 dams - a nuclear power plant and wind power.

The agency is researching ocean, wave and wind integration.

Coe doubted that PUD could float a bond by December to finance acquisition of all or part of PSE's county asset.

"You negotiate with Puget," he told the PUD commissioners.

Second study
The commissioners contracted Lynnwood-based Hittle last month to conduct a second feasibility study for no more than $30,000.

The first Hittle study was conducted in 2000, but it ended up on the PUD shelves without public support to bring PUD power authority to a vote.

Support came forward this year, with both city and county interests calling for local power authority.

The county auditor's elections division certified 1,650 signatures as those of registered voters out of the 2,169 on a petition presented by Citizens for Local Power in mid-June.

PUD commissioners have supported Citizens for Local Power's effort to get the question on the ballot.

The Hittle feasibility study is expected to be completed in August.

PSE representatives, who are expected to release their findings next week, have said they will legally challenge any attempt by PUD to take over power service in the county, where it has more than 17,400 customers.

10-year forecast
Schneider told the Jefferson County PUD commissioners that Hittle's second study would look at a 10-year forecast.

PUD commissioners said the study should contain a comparison of the city's impact and the economic impact without the city's involvement.

City of Port Townsend Senior Planner Judy Surber, who attended the PUD meeting Wednesday, said the city's comprehensive plan includes consideration of the city buying power directly from BPA.

Saying it was the "elephant in the room that no one was talking about," Schneider predicted that PSE's rates would dramatically increase.

Those supporting local PUD power, with or without the city of Port Townsend involved, fear higher rates now that PSE is merged with Canadian investors.

Schneider suggested that Jefferson PUD commissioners ask PSE for its future rate estimates.

"They probably won't disclose that. We don't know. But it really gets to the heart of the matter," he said.