PORT TOWNSEND — The goal of local electrical power has taken another step toward completion now that state regulators have approved an agreement for the Jefferson County Public Utility District to purchase Puget Sound Energy infrastructure.
The state Utilities and Transportation Commission ruled Wednesday that the $103 million price for PSE’s assets in East Jefferson County was appropriate and that no further commission approval would be needed for the deal to go forward.
“This is exciting how this has come together so quickly,” said PUD Commissioner Barney Burke on Thursday.
“Less than two years after the voters approved the idea, we were already moving forward in a substantial way.”
The proposed transfer is a result of a November 2008 election in which citizens of Jefferson County voted to approve Proposition 1, which granted the PUD — which now provides water and sewer service — the authority to become the electrical power provider for East Jefferson County.
Burke said he expected the transfer to be completed in the spring of 2013.
A condemnation proceeding will be avoided assuming the agreement between PSE and the PUD is consummated, and the commission’s action removes a potential hurdle to the agreement being fully implemented, Burke said.
The next step in the process is the acquisition of financing.
That will be a combination of private and federal sources, Burke said, with the largest chunk, about 70 percent, expected to come from the U.S. Department of Agriculture.
Burke said the financing step is the third major action in the process, after acceptance of the price and the acquisition of inexpensive electricity from the Bonneville Power Authority.
The amount needed may be more than $103 million, as the utility will need operating capital to sustain it until the revenue from utility bills come in.
“We have to be ready in case a power pole gets knocked down on the first day we take over,” he said.
“We need to be ready.”
Additionally, the PUD will pay for any system improvements PSE makes between now and the ownership transfer, although PSE has agreed to notify the PUD about these changes as they occur, Burke said.
Once the financing is secured, the PUD will make a $20 million down payment to PSE, at which time PUD will be able to approve or reject new expenditures.
The balance would be paid soon after, Burke has said, with ratepayers paying the loans over 30 years.
“That’s figured into the electric rate,” he has said.
The next step in the acquisition process could begin as soon as next week.
PUD personnel will inspect local substations.
Burke said he didn’t expect to find anything wrong during these inspections, but that the process was part of PUD’s due diligence.
“PSE has maintained all the facilities and I don’t expect we’ll see any problems.” he said.
“It’s the same as when you buy a house and inspect the property closely before you seal the deal.”
Burke expects the utility to bring in about $33 million annually from revenue generated by utility bills.
The expected annual revenue is figured from the rates that customers pay now.
The pact with BPA, which was signed in August, is intended to secure low-cost electricity to more than 18,000 customers now served by the private Puget Sound Energy.
PUD officials said entering into a binding obligation with BPA means that the PUD qualifies for the federal agency’s lowest power rates, known as Tier 1, beginning in 2013.
The agreement is expected to provide electricity at a lower cost than what is offered by PSE, although other costs could drive up the bills to their current level.
The PUD purchase of the PSE’s electrical infrastructure, making it the state’s first public utility to buy out a private utility’s franchise since 1949.
“This gives us independence.” Burke said of the acquisition.
“A lot of communities are looking to develop ‘green power’ systems, and running the utility will allow the public to determine exactly what kind of power it wants.”
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Jefferson County Reporter Charlie Bermant can be reached at 360-385-2335 or charlie.bermant@peninsuladailynews.com.
