Jefferson County Public Utility District has passed the $1 million mark in expenses related to the cost of going into the business of providing electrical power.
Manager Jim Parker announced the milestone to the board earlier this month while updating commissioners on progress made toward the planned transition in 2013, when the PUD will take over from Puget Sound Energy as the electrical power provider for East Jefferson County’s 18,000 customers.
The transfer of power provision is a result of a November 2008 election in which citizens of Jefferson County approved Proposition 1, which granted the PUD — which now provides water and sewer service —the authority to become the electrical power provider.
“Over the course of six years, we’ve spent over a million dollars in funds to pay consultants and engineers to evaluate, do reports and do legal negotiations with PSE,” Parker said Friday.
Total cost
That price tag is a fraction of what the total project will cost.
The state Utilities and Transportation Commission approved Feb. 2 the $103 million that the PUD will pay for PSE’s assets in East Jefferson County.
The down payment will be $20 million, commissioner Barney Burke has said, and the balance paid soon after, with ratepayers paying the loans that finance the acquisition over 30 years. Loan repayment is figured into the utility rates, he added
“There will be adjustments to the price as [PSE] makes improvements,” Parker said. “We’ve agreed we will pay for those improvements.”
The utility now also is computing its setup costs: how many trucks will be needed, how many people should be hired.
PSE has two servicemen in the county, but also uses a private company as a backup.
“Our goal is to hire people to replace that,” Parker said. “We’ll have to see how the dollars work out.”
Once the transition is made, the utility expects to gain about $33,000 annually in revenue from utility payments — but the first two months, when bills are going out and money is coming in, will be tight.
“We’ll have about two months with no money coming in,” Parker said. “So we’re working through those issues, trying to figure out how to do that transition period.”
The PUD does not expect to begin hiring until next year at the earliest.
Financing next step
Acquiring financing is the next big step.
The largest chunk is expected to come from the U.S. Department of Agriculture Rural Utility Service, with additional financing sought to supplement it.
An application is being put together now and is expected to be filed by May or June.
The federal service already has qualified the PUD to receive a loan — but officials won’t know how much it is until it is approved.
Parker said he hopes to have approval by December, which would mean that funds would be available the next December.
The loan amount “will be based on what USDA thinks the system is worth,” Parker said.
So now, engineers are evaluating what the PSE infrastructure.
“We did a lot of that before, when we were trying to determine the price we were willing to pay for it,” Parker said.
Engineers have inspected all the substations, Parker said, and will look at the underground infrastructure.
“Most of the equipment is in good shape,” he said. “One substation is brand new. Some have older equipment.”
The PUD has signed a power sales agreement with the Bonneville Power Authority that qualifies the utility to receive the lowest power rates starting on June 30, 2013, with power being received no later than March 31.
