PORT HADLOCK – Bonneville Power Administration has approved discount power for Jefferson County Public Utility District, paving the way for the utility to seek financing to buy infrastructure that will enable it to provide electrical service in East Jefferson County.
The PUD commissioners plan to meet at 3 p.m. Wednesday with a BPA representative to consider signing a binding power sales agreement. The meeting will be at the PUD office at 230 Chimacum Road, Port Hadlock.
The contract with the federal agency that markets wholesale electrical power is the second of three hurdles — the third being finding financing — that the PUD must cross to acquire Puget Sound Energy’s facilities in East Jefferson County that serve more than 18,000 ratepayers and provide public power.
Voters in November 2008 granted the PUD the authority to take over the electrical system, which PSE — a private company — has owned for about 100 years in East Jefferson County.
The PUD commissioners announced on May 3 their plans to begin providing electrical power within three years, a venture they expect will create an additional $33 million in annual revenue.
On June 11, they signed a binding agreement with PSE to acquire its county assets for $103 million, with a $20 million down payment due once financing has been settled.
The PUD needed a power contract before it could apply to lenders, said Barney Burke, PUD commission vice president.
PUD officials said entering into a binding obligation with BPA would mean that the PUD qualifies for the federal agency’s lowest power rates, known as Tier 1, beginning in three years, or about June 30, 2013.
“Jefferson County PUD appreciates the BPA’s timely review of our request for service,” said Ken McMillen, PUD commission president.
“Once a contract with BPA for power is entered into, the PUD will be able to focus on obtaining financing for the purchase and begin planning operations for our community-based electric utility.”
PUD Manager Jim Parker said BPA Account Executive Shannon Greene called him Friday afternoon to inform him that the BPA was prepared to offer the PUD a power sales agreement.
The news comes just weeks after the PUD filed a request for BPA power and executed a definitive agreement with PSE.
A copy of the PUD’s utility development plan, BPA application and other information on the transaction are available at the PUD website, www.jeffpud.org.
Burke said that acquiring financing and developing a management and staffing plan to provide service would be the next steps for the PUD.
Burke — who was appointed this year to fill the seat of Dana Roberts, who died last year — is running unopposed for a full six-year term in the November general election.
The electric service staffing plan will come with the help of a citizens advisory committee the PUD is now forming.
While it is estimated that between 25 and 35 employees would be needed for the PUD’s new power venture, the idea is to find exactly what is the right number of employees, Burke said.
Members of Citizens for Local Power, which successfully campaigned for voters to give the public utility power authority, have expressed interest in acting in an advisory role on the committee.
Burke said about 70 percent of the PUD’s financing will come through a low-interest loan from the federal Department of Agriculture Rural Utilities Service.
The Rural Utilities Service interest rate for bond financing ranges between 4 and 4.5 percent, and financing could take up to two years to secure, PUD officials said.
The PUD commissioners must determine how to come up with the balance of financing, Burke said, which possibly could include a bond issue.
“Some major pieces are starting to fall into place,” he said.
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Port Townsend-Jefferson County Editor Jeff Chew can be reached at 360-385-2335 or at jeff.chew@peninsuladailynews.com.
