CHIMACUM — With voter-granted authority in hand, Jefferson County Public Utility District commissioners were strongly urged to take the fast track in obtaining wholesale electrical power from Bonneville Power Administration while considering acquisition of Puget Sound Energy’s facilities.
“Sooner rather than later, that’s important,” said Bob Schneider, president of D. Hittle & Associates consultants of Lynn¬wood.
Acquiring BPA wholesale power would take up to three years, and the PUD must prove that it owns the needed power transmission system and can pay for the power BPA delivers.
“Over the first 10 years of PUD operation, the benefit of PUD operation is $22 million to the residents and businesses of Jefferson County,” said John Heberling, Hittle vice president, who presented a portion of the final Hittle study that concluded it is feasible and economical to county residents for the PUD to provide electric service.
The Hittle representatives made their final feasibility study presentation to PUD commissioners and about 15 residents at a special meeting Wednesday at Chimacum Grange to focus on what comes next.
The PUD hired Hittle three months before county voters on Nov. 4 handily approved granting the PUD the authority to provide electrical service to about 18,200 customers, 84 percent of whom would be residential.
After the Nov. 4 general election voters were tallied, Proposition 1 passed by 10,027, or 53.27 percent for, and 8,797, or 46.73 percent, against.
PSE now provides electrical power to East Jefferson County, while the PUD offers water and sewer service only.
Join with city
Going in with the city of Port Townsend, should it secure power authority as a municipality, would likely expedite cheaper BPA power if a joint operating agreement was reached with the PUD, Heberling said.
Schneider urged the PUD to waste no time in exploring BPA power transmission and power requirements, and to consider hiring consultants, attorneys, even a project manager to help monitor progress.
A project manager could be recruited by Hittle from a group of former PUD power manager retirees, he said.
Under state law, the PUD has 10 years to exercise its authority.
After first of year
PUD Commissioner Wayne King, PUD board chairman, has said that the commissioners are not likely to ask PSE if it wants to sell its East Jefferson County facilities until after Jan. 1, when PUD commissioner-elect Ken McMillen is sworn into office.
Schneider said that the PUD could explore a number of alternative utility ownership options, including joint operating agreements with Clallam and Mason County PUDs.
He also recommended working closely with the city of Port Townsend, which has indicated interest in starting its own PUD.
At first, higher rates
Heberling figured that, before PUD secured wholesale BPA power rates — such as those at Clallam County PUD — the cost of power to Jefferson County customers would be a “little bit” higher than PSE’s rates.
But that cost would eventually turn to savings once wholesale BPA power is acquired at a rate as low as 3.2 cents per kilowatt hour, he said.
During the first three years of PUD power service, customers would pay about 5.4 cents per kilowatt hour, Heberling said.
Power from such green energy sources as wind and solar power would be closer to the higher rate level, Schneider said.
PSE, which falls under the jurisdiction of the state Utility and Transportation Commission, does not qualify for BPA rates as a private corporation.
PUD would qualify, as a nonprofit government power provider.
Cost of facilities
Before acquiring PSE’s facilities, PUD would have to hire appraisers specifically experienced in dealing with such properties.
“A lot of them end up with a price based on cost per customer,” said Heberling.
That cost would be about $2,000 per customers, he added.
The other valuation option is market-based, he said.
Hittle estimates that PSE facilities would cost between $35 million and $70 million, with the most likely estimate being about $47.1 million.
“A lot of times it ends up somewhere in the middle,” he said.
PSE representatives have said they believe their system is worth at least $77 million, and possibly as much as $110 million.
The purchase price could be negotiated between the PUD and PSE, or established through court condemnation proceedings.
Heberling said he did not believe it would be difficult for the PUD to secure tax exempt and taxable revenue bonds to acquire the PSE system.
“We talked to folks who do this all the time, and we don’t think the numbers here make it too difficult to provide that funding,” he said.
Hittle figured that initial financing for PUD power system acquisition would be $66 million.
Schneider urged the PUD commissioner to go into the project “well planned” and said that community outreach — complete with a citizens advisory committee — was critical.
He also urged discussions with the city of Port Townsend “to avoid conflicts.”
He recommended an “information campaign,” with constituency building in mind.
“Don’t forget that this is still politics,” Schneider 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.
