Public power two years later

Scott Wilson
Posted 5/12/15

It's been just over two years since the Jefferson County Public Utility District flipped the switch and became the electricity provider for what is today over 18,000 homes and businesses in east …

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Public power two years later


It's been just over two years since the Jefferson County Public Utility District flipped the switch and became the electricity provider for what is today over 18,000 homes and businesses in east Jefferson County that use electricity. This was the first county in Washington to make a move into public power in over six decades. Today our example is inspiring the residents of Bainbridge Island to consider doing the same.

How has it gone for us, in comparison to what was promised, or threatened, or feared during and after the raucous, record-breaking campaign for and against Proposition 1 in 2008 - when the county's voters gave the PUD permission to become the power utility by a narrow 53.3 percent?

It's been a bumpy ride; there have been winners and losers. But on balance it's gone pretty well. Here are some measurement points:

• Electrical rates: During the campaign, consultants for Puget Sound Energy (PSE) suggested rates would climb at least 19 percent. Consultants for the public power association, WPUDA, countered that rates would drop 10-15 percent. Instead, the PUD has held rates at exactly the same level as the PSE rates when the PUD took over on April 1, 2013. No change to date.

• Rate hikes: They are almost certainly coming. The BP A, the regional federal power producer from which the PUD purchases wholesale power, is initiating 6 percent rate increases in the summer or fall, which could affect our PUD's rates in the range of 3 percent. In addition, the elected three-member PUD commission is discussing new expenses related to rate breaks for low-income residents and establishing electric car charging stations, either or both of which could raise rates.

• Rate comparison to PSE: During the campaign, public power consultants said PSE rates would continue a steep climb. That hasn't happened. The bills paid by PSE customers have actually fallen. PSE power rates remain slightly higher than PUD rates, but energy exchange credits have made PSE residential final bills lower than Jefferson PUD rates by 3.4 percent today. For a couple of months PSE bills were 10 percent lower than PUD rates thanks to the Utility and Transportation Commission's (UTC) order that PSE use $59 of $109 million that the PUD paid for PSE's system to lower the bills of the remaining 1.1 million PSE customers. However PSE rates could also rise in the months ahead. PSE is still legally entitled to generate an 8 percent profit, unlike the nonprofit PUD.

• Economic impact: In terms of jobs, the news has been all good from the PUD. PSE's skeletal in-county staff of two or three, bulked up temporarily as the public power movement got started, has been replaced by the PUD's 28 new jobs, all of them paying family wages ranging from $50,000 to over $100,000 (linemen, with overtime). The total payroll is over $3 million. (During the 2008 campaign a pro-PUD consultant estimated the PUD would gain over 60 new jobs with an annual payroll of over $7 million. Nope.) The PUD also uses local contractors, local suppliers, local services and pays local taxes, so there are additional millions in local dollars staying at home. The PUD's tax contribution to Jefferson County alone is about $2 million. On the flip side, the PUD apparently paid top dollar to acquire the PSE assets, funded through a long-term federal loan that ratepayers will be paying off over 30 years.

• Low-income households: The county's lower income households have had a rougher go under PUD. PSE devoted about $500,000 in subsidies for low-income families across the Olympic Peninsula to sustain winter heating. The PUD cannot do the same, due to state law, and has struggled to keep up with needs through voluntary donations. During the cold winter of 2013-2014, many households were abruptly cut off from electric heat. The resulting disaffection was one factor in the replacement of former PUD Commissioner Ken McMillen by Ken Collins in the 2014 election. Today the PUD is discussing a proposal to cut rates to low-income residents by as much as $50 per month, which would be subsidized by other ratepayers.

• Transition issues: During the 2008 campaign, PSE threatened that the company would not willingly sell, instead forcing the PUD to go through an expensive, long and uncertain condemnation lawsuit. Instead PSE came to the negotiating table and, two years later, signed a sale agreement. PSE and PUD staff worked together for three years before the PUD took over. PUD Manager Jim Parker runs a very lean operation, and despite the transition time the PUD initially struggled. Its billing and accounting system was hard-pressed to handle 17,400 new electrical customers with the pre-existing 3,100 water and sewer customers. (That billing system is finally scheduled to be replaced later this year.) Its customer-service staff was often challenged to keep up, especially during power outages. It's doing much better today. And the PUD's response time to power outages today is exemplary.

• Sources of energy: PSE gets 25 percent of its regional power from a huge coal-burning power plant in Montana. BPA gets almost all of its power from carbon-clean hydro-electric dams, although it obtains 13 percent from the nuclear plants at Hanford.

• Accountability: The PUD is accountable to the voters, and its meetings and documents are open to the interested public. PSE instead is now part of a global multi-national enterprise; its public regulation comes from the state UTC. I would say local accountability has proven effective, based on the 2014 election results and the fact the commissioners and staff today are concerned about public reaction to possible rate hikes.

• In sum: Despite stumbles, public power has been a success in Jefferson County, with many of the long-term benefits still ahead.