OLYMPIA — State regulators have approved the proposed sale of Puget Sound Energy, which provides electrical power to most of East Jefferson County, for $7.4 billion to a group of investors mainly from Canada.
The state’s largest private utility can be sold to New York-based Puget Holdings LLC, the state Utilities and Transportation Commission announced Tuesday.
While based in New York, the company is held by foreign investors.
Puget Sound Energy officials have said the merger would produce $5 billion in future capital to system improvements.
But some Jefferson County residents, concerned in part because of the pending foreign ownership, have organized a possible assumption of East Jefferson County’s power grid under the auspices of the Jefferson Public Utility District.
A ballot measure granting the PUD the authority to pursue the franchise passed easily among the county’s voters last November.
Tuesday’s 2-1 decision by the state commission paves the way for the sale to Puget Holdings.
“We’re gratified that they issued the decision,” said Martha Monfried, PSE director of corporate communications.
She added that PSE was closely reviewing the decision, a 150-page order.
“If all the conditions are acceptable, it will enable us to have access to the funds,” she said.
“We think its good for Washington, it’s good for our Washington customers, including Jefferson County.”
Puget Sound Energy provides electric service to East Jefferson County from Mount Walker north to Port Townsend and west to the Clallam County line, but its future in the county has been in limbo since voters in November easily approved granting authority to Jefferson PUD to become east county’s power provider.
Monfried said if Jefferson PUD moves forward to acquire PSE’s Jefferson County assets, “we hope it will be seamless.”
She said PSE will continue to provide the same service until then.
PUD studying issue
The PUD commissioners are now studying the matter with the help of citizen advisers, such as those with Citizens for Local Power, which successfully promoted Proposition 1 on the November ballot.
The commissioners next take up the matter at their first meeting of 2009 at 5 p.m. next Wednesday in their conference room at PUD headquarters, 230 Chimacum Road, Port Hadlock.
Reacting to the news of the state commission’s blessing to PSE’s sale, Steve Hamm, co-facilitator for Citizens for Local Power said, “We’re in such preliminary stages. At this point is it’s in PUD’s hands.”
He added: “Good for Puget Sound Energy. I hope this brings them what they need in terms of financial access.”
Hamm said the citizens group now wants to help PUD commissioners more through what could be a three-year process.
PSE has provided electricity to Port Townsend and East Jefferson for more than a century.
Asked if the merger would any impact on PUD acquiring PSE’s facilities in the future, he said it now looks like PUD won’t be negotiating directly with PSE — if PUD commissioners decided to acquire PSE’s Jefferson County facilities.
PSE’s prospective buyer is a group led by Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board and British Columbia Investment Management Corp., and also includes Alberta Investment Management, Mac¬Âquarie-FSS Infrastructure Trust and Macquarie Bank Ltd.
“With Macquarie holding the keys to the kingdom it seems to me there may be opportunities to explore,” Hamm said.
“We don’t know how they are going to evaluate this particular market.”
Bill Wise, the other Citizens for Local Power co-facilitator, said he was glad PSE would not have funding to build out its Northwest regional system.
But he did not see any impact on the local move for PUD power authority.
Purchasing PSE facilities
PSE officials have said the foreign acquisition would mean no change in East Jefferson County’s primary power company.
A report from consultant D. Hittle & Associates Inc. estimated it would cost Jefferson PUD between $34.9 million and $69.8 million to acquire Puget Sound Energy’s facilities in East Jefferson County.
Bob Bellemare, president of Utili¬ÂPoint International, which was contracted by PSE to conducted the company’s own feasibility study, said it would probably cost more than $100 million to acquire PSE’s facilities.
Washington state’s oldest and largest energy utility, PSE has a 6,000-square-mile service area stretching across 11 counties.
It serves more than 1 million electricity customers in Western Washington.
In Tuesday’s 2-1 opinion, the state Utilities and Transportation Commission said the sale, subject to conditions to protect customers and the public interest, would be “consistent with the public interest” and would not harm rate¬Âpayers, the legal standard for approval of such sales.
The proposed sale was supported by the commission’s staff, Industrial Customers of Northwest Utilities, Northwest Industrial Gas Users, The Kroger Co., The Energy Project and Northwest Energy Coalition.
It was opposed by the Public Counsel Section of the Attorney General’s Office.
UTC Chairman Mark Sidran and Commissioner Patrick Oshie voted in favor of the sale, saying the commission will continue to regulate the utility’s gas and electric rates and services.
Commissioner Philip Jones dissented, writing that he believes the agreement “creates too much risk, and potential harm, for ratepayers and stakeholders.”
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The Associated Press contributed to this report.
Port Townsend-Jefferson County Editor Jeff Chew can be reached at 360-385-2335 or at jeff.chew@peninsuladailynews.com.
