CHIMACUM — Expect power bills on par with existing Puget Sound Energy rates or lower when Jefferson County Public Utility District makes the transition to electrical service within the next three years, PUD representatives said Wednesday.
Those and many other questions were answered during the first public forum the PUD commissioners conducted since their Monday decision to sign a letter of intent with PSE to go into the public power business. The PUD commissioners then agreed to a nonbinding agreement to purchase PSE’s electric facilities in East Jefferson County for $103 million.
“If it’s not lower cost, we wouldn’t be here,” said appointed PUD Commissioner Barney Burke, adding that PUD must apply for Bonneville Power Administration discount rates provided to nonprofit public power operations.
PUD now serves more than 3,500 water customers in East Jefferson County but has never provided power service. PSE’s power system serves more than 18,000 East County customers.
An estimated 18- to 36-month transition to public power is expected.
The next step will be a due diligence period in which PSE releases its detailed documents about the company within the next 120 days.
Two years to get loan
The PUD commissioners said it would take about two years to secure low-interest, 30-year financing to pay off the $103 million debt with electric service bonds, a loan from the Rural Utility Service, a program of the U.S. Department of Agriculture for rural communities of 50,000 population or less.
“It’s a huge task to get this utility started,” Burke said, but added that it can be done.
PUD General Manager Jim Parker said the PUD would not take over operations until it made a down payment on a loan, and that there would be no plan to override PSE operations during the transition.
Parker said the PUD chose to acquire all PSE facilities in East Jefferson County north of Mount Walker to Port Townsend because it was “easier and more efficient.”
From Mount Walker south, electric service remains provided by Mason County PUD, said PUD Commissioner Ken McMillen.
Jefferson PUD plans to leave West Jefferson County electric service to Clallam and Grays Harbor PUDs.
Future rates
Once PUD takes over East Jefferson County service, Burke said, “We’re accountable to the public” when it comes to setting future rates.
If voters don’t like the rates, they can make their feelings known in PUD commissioner elections.
Alan Dashen, PUD’s financial consultant in the power system acquisition, said the PUD and its customers now have the chance to secure low-cost BPA rates, control future costs and have local control of service overall.
Commissioner Wayne King said advisory committees would be set up so the public could advise PUD commissioners on rates, alternative energy sources, or “green power,” and on other issues.
At this point, Burke said, “It’s a blank slate. We are looking for community input.”
With up to 35 new Jefferson County PUD employees estimated as needed to provide electrical power service, linemen hired would be stationed in the county rather than contracted from Kitsap County, as is the case with PSE’s contract with Potelco.
Power supply
Phil Otness, a Port Ludlow consultant with power company experience who has aided PUD through the early acquisition process, said, “It’s the power supply that drives this deal.”
About 80 percent of BPA’s electricity-generating source is hydropower from the Columbia River, said Karl Karzmar, PSE’s director of regulatory relations, who attended the PUD forum on behalf of the company.
Karzmar said that PSE respects the will of Jefferson County voters, who in November 2008 handily approved Proposition 1 granting the PUD the authority to become an electrical service provider.
The PUD has been negotiating with PSE over the past 18 months behind closed doors because PSE is a private corporation and its executives would not negotiate otherwise.
“We’ve got from a vote to here in 18 months because we honored these confidentiality agreements,” PUD attorney Kirk Gibson told the audience.
Karzmar said an amicable agreement was the only way to reach a smooth transition from PUD to PSE.
“With the threat of condemnation, we felt it was better to cooperate,” Karzmar said.
Other questions answered Wednesday night:
• PUD could have had a better price by going to court condemnation proceedings to acquire PSE’s facilities but the cost of litigation and the likelihood of several appeals would have added significantly to the cost and PUD must meet a July deadline to apply for BPA low-cost power to obtain it in two years.
• Until the PUD begins to operated the system, county customers will continue to pay rates approved for PSE customers by the state Utilities and Transportation Commission.
As of April, PSE’s rate for electric service is set at 9.8 cents per kilowatt hour for residential customers.
• Initiative 937, passed by state voters in 2006, will not affect PUD customers because they only require utilities serving 25,000 or more customers to supply at least 15 percent of their service through renewable sources of power by 2020.
• PSE will continue its energy conservation programs until PUD takes over operations.
• The final purchase and sale agreement and financing documents will all be open to the public under the state Open Records Act.
The PUD will post updates on its Web site at http://pud.co.jefferson.wa.us.
PUD meetings usually are conducted on the first and third Wednesdays of the month at 5 p.m. at the PUD offices, 230 Chimacum Road, Port Hadlock.
The PUD commissioners released their phone numbers for residents to contact them. McMillen’s phone is 360-385-4439. King’s phone is 360-797-7491 and Burke’s number is 360-379-4081.
E-mail them at jmcmillen@cablespeed.com, barney@burkedigitalpix.com or kinghyd@olypen.com.
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Port Townsend-Jefferson County Editor Jeff Chew can be reached at 360-385-2335 or at jeff.chew@peninsuladailynews.com.
