CHIMACUM — Jefferson County PUD Commissioner Wayne King asked on Wednesday if Puget Sound Energy would sell the Public Utility District its electrical system in the eastern part of the county.
“We would be willing to look at all options,” Karl Karzmar, Puget Sound Energy director of regulatory relations, replied during the PUD meeting.
King said selling the system would avoid protracted litigation through condemnation proceedings “to save your customers and our customers a whole lot of money.”
Karzmar said that he has been assigned the position of project adviser during the electric facility acquisition process.
He is to work with PUD leaders and Jefferson County PSE representatives Tim Caldwell and Linda Streissguth.
In November, voters gave the PUD, which now provides water and sewer service to about 4,000 customers, the authority to provide electric service in East Jefferson County, which is now served by PSE, which serves about 18,200 power customers.
The brief exchange between King and Karzmar came at the conclusion of a presentation of the PUD-contracted D. Hittle and Associate’s final feasibility study report.
The report by the Lynnwood consultant recommends that the PUD move aggressively to acquire PSE’s facilities in East Jefferson County by 2012.
Hittle figures PSE’s facilities are worth $47.1 million — considerably less than a PSE consultant’s $100 million-plus estimate aired during the Proposition 1 election campaign, which ended in voter approval of a PUD takeover of electrical service.
The Hittle report concludes that it would cost $70 million to reproduce PSE’s system to serve about 18,200 customers, 84 percent of them residential.
“PUD is now in the negotiation mode,” said Bob Schneider, Hittle president, who told the PUD commissioners they could be assured of getting a faster allocation of low-cost Bonneville Power Administration power because two other power authority elections failed in Island and Skagit counties in November.
BPA has allocated 50 megawatts of discounted power to new PUDs.
With no competition, the PUD could find it has a shorter waiting period for getting into the power business, Schneider said.
“In fact it could be zero,” he added, although he said the notice period to allow BPA to prepare for the changeover from PSE to PUD could take up to three years.
That could increase the cost of getting into the business, Schneider concluded.
“Interest rates have gone up quite a bit since we last talked,” said John Heberling, Hittle vice president.
“The cost of credit needed to get municipal financing has gone up.”
Payment of interest and principal on debt is a significant cost, he said.
But if the PUD were to notify BPA today, he said, “You could reasonably expect to have [power] available to you in 2012.”
He said the price of the PSE system would likely be somewhere between the net book value and original cost less depreciation.
PUD General Manager Jim Parker met with Bonneville representatives on Friday.
“They’re very supportive,” he said Wednesday.
PUD Commissioner Dana Roberts of Port Townsend said that he and his fellow commissioners shared enough interest to take up Hittle’s recommendations.
The PUD commissioners contracted Hittle before the November election for work not to exceed $30,000.
Citizens for Local Power successfully gathered more than 2,169 petition signatures by June — only 1,626 were needed — to put the question on the ballot.
The group argued that granting PUD power authority would secure local voter control of electric service, local living-wage jobs, better customer service and consumer cost savings on energy purchased from Bonneville Power Administration, which has set aside 250 kilowatt hours for new PUDs, along with tax exemptions.
PSE, which falls under the jurisdiction of Washington Utility and Transportation Commission, does not qualify for BPA rates as a private corporation.
PSE executives originally viewed the PUD move as a hostile takeover of its power infrastructure, but now say that although they want to continue the service they have provided to East Jefferson County for more than 100 years, they are willing to accept the will of the voters.
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Port Townsend-Jefferson County Editor Jeff Chew can be reached at 360-385-2335 or at jeff.chew@peninsuladailynews.com.
