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PSE threatens lawsuit if Jefferson voters, PUD opt to take over electrical service

~~By Jeff Chew, Peninsula Daily News

CHIMACUM - A Puget Sound Energy official threatened Jefferson County Public Utility District commissioners with legal action if county voters give the district the authority to provide energy and the agency acts to do so.

"It is true that Puget Sound Energy is not interested in selling our authority," Terry Oxley, PSE director of community services, told PUD commissioners Wednesday.

"There would be litigation," Oxley told them.

Legal action would be at a "huge cost" to both the Jefferson County utility and his company, he said.

That would not make the PUD's efforts to provide power as well as water service worthwhile, he added.

Feasibility study
The warning came as the PUD commissioners discussed possible participation in a feasibility study of establishing a locally owned public utility district.

Bellevue-based PSE's franchise to provide electricity in the city will end Dec. 31, 2010.

The city's Alternative Electric Management Committee has recommended that the city take steps toward setting up its own power utility operation, with the PUD as a possible partner.

The PUD commissioners, after about a half-hour of discussion, voted Wednesday night to send a letter to the city asking for a more specific cost estimate for the study and more specific details about it.

The estimated cost of the study is between $20,000 and $30,000.

Representatives of Citizens for Local Power and the city's Alternative Electric Management Committee, who were at the Wednesday meeting, urged the Jefferson County utility to participate in the study and to support PUD power authority.

Merger agreement
Oxley said a merger agreement with Canadian consortium of investors would benefit East Jefferson County customers in the future.

"We believe that things will remain the same, only better," Oxley said, adding that the merger adds capital to improve service in the county, as well as the development of environmentally sustainable practices and alternative energy development.

The consortium that merged with PSE is led by Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board and British Columbia Investment Management Corporation, and also includes Alberta Investment Management, Macquarie-FSS Infrastructure Trust and Macquarie Bank Limited.

The transaction provides PSE with $5 billion in capital over the next five years to support supply and delivery infrastructure needs.

Oxley's remarks did not impress PUD Commissioner Wayne King.

When Oxley said PSE was not willing to sell its authority, King tersely replied, "But you will sell it to a foreign country."

The question drew chuckles from the small audience.

When Oxley said that, in order to provide service, PUD would have to hire a new crew at great expense, King asked, "But you guys farm your work out?"

King's question was a reference to the PSE contract with Sumner-based Potelco, which has operations in Kitsap County, to provide Jefferson County power infrastructure improvements and repairs.

PUD last year clashed with PSE officials over delays and cost overruns in providing power to the new Beckett Point community septic and drainfield system.

PUD officials blamed Potelco for the problems.

Kolff: New jobs
Former Port Townsend Mayor Kees Kolff, representing the Alternative Electric Management Committee, told the PUD commissioners that a countywide electric utility would create about 36 new, local living-wage jobs, with almost $2 million worth of labor earnings.

A September 2000 service evaluation study conducted by D. Hittle & Associates of Lynnwood for PUD recommended that the utility move ahead to secure authority to provide electric power to East Jefferson County.

Hittle estimated then that purchasing the system from PSE would cost about $27.5 million.

While King, of Gardiner, and PUD Commissioner Dana Roberts, of Port Townsend, have supported the move to secure voter-approved authority to provide electric service, PUD Commissioner Kelly Hays, of Marrowstone Island, has reservations.

"I thought we were going to wait until an election to find out if we have the authority," Hays said to the commissioners.

PUD General Manager Jim Parker he believed it would be wise to have a feasibility study's findings available this summer to inform voters before they decide whether to grant the PUD the authority to provide electric service.

King agreed, saying, "I think we owe it to them people of Port Townsend, because all we do is take money from them" while not providing water service inside the city limits.

Bill Wise, representing Citizens for Local Power, told the PUD commissioners that the group has gathered more than 1,000 signatures on petitions circulating from Port Townsend to Brinnon.

Needed by July 3 are 1,626 registered-voter signatures to place the question on the Nov. 4 ballot.

Andrew Reding of Port Townsend urged the PUD to join the city and county on the feasibility study, saying the time was right.

He said PSE rates will continue to soar.

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Jefferson County Editor Jeff Chew can be reached at 360-385-2335 or jeff.chew@peninsuladailynews.com. Last modified: March 20. 2008 ~9:00PM