PORT HADLOCK — Before Jefferson County Public Utility District can get into the power business, it must leap three hurdles.
The PUD must reach a final agreement to acquire Puget Sound Energy’s Jefferson County facilities, secure rural utility service financing through the U.S. Department of Agriculture and apply to Bonne-ville Power Administration for discount power rates.
PUD Commissioner Ken McMillen and General Manager Jim Parker met with Bonneville officials last week in Portland, Ore., to work through the application process.
June 30 deadline looms
The PUD must apply to BPA for the rates by June 30 to secure the PUD’s needed 38 megawatts of the 50 megawatts BPA is allocating to applicants.
If the PUD misses the deadline, it cannot apply again until 2012.
“We don’t know if anybody else is applying this year,” said appointed PUD Commissioner Barney Burke, adding that if there was no other applicant, “we think we’re in good shape.
He said to buy BPA power, the PUD must show in its application that it is “an operating utility” and has the infrastructure to deliver power to customers.
The PUD is taking the power authority granted to it by voters in a November 2008 election to the next level now that the agency has signed a nonbinding letter of intent with PSE to purchase the private company’s electrical system for $103 million.
PSE serves about 18,000 customers in East Jefferson County.
The PUD commissioners on May 5 announced their plans to begin operating the PSE system — one the company has owned for about 100 years in East Jefferson County — within three years.
The letter of intent outlines the basic terms of the agreement, another step in the process, with much work remaining during an estimated 18- to 36-month transition from PSE to PUD.
A “purchase power agreement” to finalize the deal with PSE also must be completed and signed.
The PUD commissioners worked on the agreement with PSE representatives last Friday in closed executive session.
Burke said the PUD was working with the Rural Utility Service, a financing branch of USDA to provide most of the financing to acquire PSE’s assets in the county.
The interest rate for bond financing ranges between 4 and 4.5 percent, according to Burke, and financing could take up to two years to secure.
Any other financing that the PUD requires also would have to be figured and secured.
Applicants inquiring
The PUD office in Port Hadlock has received a number of inquiries from linemen around the country who want to work in Jefferson County.
While it is estimated that between 25 and 35 employees would be needed for PUD’s new power venture, the exact number isn’t known.
Once the PUD has applied for BPA discount power rates and financing, the agency can act on forming public advisory committees in July, Burke said.
The nonbinding agreement with PSE says that if the PUD can’t come up with the financing, it can back out of the deal.
However, if both parties commit to all terms and one reneges on the deal after its effective date, it is agreed that a $2.5 million penalty would have to be paid to cover legal and other expenses.
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Port Townsend-Jefferson County Editor Jeff Chew can be reached at 360-385-2335 or at jeff.chew@peninsuladailynews.com.
