PUD Commission Fields Questionsby Steven Wyble
Nisqually Valley News, September 18, 2012
Thurston County PUD and representatives from a consulting firm fielded questions Tuesday during a workshop and meeting gauging the feasibility of the PUD providing electricity.
The PUD currently provides water to Thurston County residents.
Proposition one will ask voters in November whether to grant the PUD the authority to provide electricity as well.
The main presentation was given by representatives of D. Hittle & Associates, Inc., the consulting and engineering firm that wrote the assessment.
The PUD commissioners asked the firm to provide a study of the technical and economic issues related to providing public electric service to Thurston County.
The study, which was released last week, found that an electric PUD is technically feasible in Thurston County, pointing out that there are currently 22 PUDs in Washington providing electric service. Jefferson County PUD will begin providing electric service in 2013.
The study said 85 public electrical utilities have been formed across the U.S. since 1983; 17 of them have been formed since 2001.
Thurston County PUD can issue revenue bonds at favorable tax exempt or taxable interest rates, depending on the purpose, and can meet Bonneville Power Administration (BPA) standards of service to acquire BPA power, according to the study.
The study identified three areas the PUD could serve for approximately 50 megawatts: Yelm, Capitol Campus to Port of Olympia, and Tumwater to Port of Olympia.
The firm found that all three alternatives provide economic electric rate benefits to customers.
The study estimated that 10-year, cumulative savings would be $10 million for the Yelm area; $18.7 million for the capitol campus area; and $215.7 million for the Tumwater area.
The savings would be realized because the power from the Bonneville Power Administration the PUD would purchase is below the cost of Puget Sound Energy's bulk power; because the PUD's tax-exempt and taxable financing costs -- at 4.5 and 6 percent, respectively -- are below Puget Sound Energy's allowed return of 7.8 percent; and because the PUD is nonprofit, according to the firm's study.
The amounts that would finance each alternative with tax-exempt revenue bonds is $41.9 million for the Yelm area, and $50.5 million for the Capitol Campus area.
The Tumwater area would be financed with $26.9 million in tax-exempt revenue bonds and $126.7 million in taxable revenue bonds.
The PUD is only looking at serving a small part of the county so far because the Bonneville Power Administration only entitles newly formed electric utilities to 50 megawatts of energy per rate period at the BPA's low tier-one rates, Commissioner Alan Corwin said.
The law doesn't require that the PUD serve the entire county, he said.
Corwin pointed out that other counties, such as Lewis and Asotin, have multiple electricity providers.
According to the study, Yelm was selected as a potential service area because the City of Centralia owns and operates a 69-kilovolt transmission line between its B Street substation in Centralia and its Yelm hydro project just outside Yelm on the Nisqually River.
The transmission line could provide the PUD a way of gaining transmission access without requiring the use of PSE transmission to the area, the study said.
"Once service is established in the Yelm area, it could be expanded toward Rainier, Tenino, and Bucoda with an additional substation along the City of Centralia 69 kV transmission line," the study said.
"This would be a modest incremental capital cost at likely favorable economics once the basic concept is proven," the study said.
To read the electric service business assessment in its entirety, go to www.thurstonpud.com
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