9/17/2008 8:57:00 AM Expect 67 jobs from PUD takeover of PSE: consultant
Politics of power: Prop. 1 campaign heats up
The money is growing and the politics are heating up as Jefferson County voters weigh whether to take a step toward public power and a step away from Puget Sound Energy (PSE).
PSE has contributed more than $60,500 to a group called Jefferson County Citizens Against Proposition 1, according to a document filed with the state Public Disclosure Commission. PSE is listed as the sole contributor to the group, which was set up by Strategies 360, a political consulting firm based in Seattle. Strategies 360 personnel are listed as officers of the group.
At a debate on the power issue on Monday at the Tri-Area Community Center, a member of the audience angrily accused PSE officials of setting up a fake committee. "Citizens Against Proposition 1? That's a lie," alleged the audience member.
Karen Waters of Strategies 360, in an interview, said PSE is "unapologetic" about its deep involvement in setting up the committee with a local post office address.
"PSE has real concerns," she said. "We want to make sure voters are fully informed on an issue that affects their rates and pocketbooks." She said many local residents are signing up to support the committee and to oppose Proposition 1.
Waters emphasized that PSE is not using ratepayer money for the campaign but instead is using investor funds.
Waters and another Strategies 360 political consultant working for PSE in its campaign were, until recently, both high-level staffers for U.S. Sen. Patty Murray. John Engber was Murray's state director, based in Seattle, until June 2008, and Waters was his assistant. Both now work for Strategies 360 on the challenges to PSE being posed in Jefferson, Island and Skagit counties. In addition, Mary Schuneman, formerly on the staff of U.S. Rep. Norm Dicks, has recently joined the effort
The Leader has received several reports of residents receiving calls from pollsters who ask leading questions that, residents say, are designed to sway opinions as much as gather information. The pollsters do not reveal whom they work for, but Waters acknowledged that Strategies 360 has been doing polling in the area.
The local committee working in favor of Proposition 1, Citizens for Public Power, is also getting outside help, to a lesser degree.
On Aug. 25, the Washington Public Utility District Association (WPUDA), the Olympia-based trade group that promotes PUDs, gave $6,490 to Citizens for Public Power. Other contributors are all individuals from Jefferson County, including three major donors who gave $1,500 each. Citizens For Public Power has now raised $17,000 in cash and $422 as in-kind donations.
On Nov. 4, voters countywide will decide on Proposition 1, the citizen initiative that, if approved, authorizes the Jefferson County Public Utility District (PUD) to get into the electricity business. The PUD would be given the power, if it chooses, to take over PSE's power network in this county and become the electricity provider. Today the PUD manages water and sewer systems.
A consultant hired by Public Utility District 1 has concluded that Jefferson County's private utility's electrical power network could be purchased for $66.1 million and that 67 new local jobs could be created if voters approve Proposition 1.
This consultant's report must now be weighed alongside the earlier estimate provided by a Puget Sound Energy (PSE) consultant that set the figure about $30 million higher. The PSE consultant said the purchase of PSE's network, including transmission lines and substations, would cost more than $100 million.
Both consultants cautioned, however, that the true price of the PUD acquiring PSE's assets would not be determined unless Prop. 1 is approved and the PUD launches a formal acquisition bid.
Voters will decide Nov. 4 whether they will authorize the PUD to pursue becoming the county's electrical utility in place of PSE.
The PUD-hired consultant - Bob Schneider of D. Hittle and Associates - also concluded that if the Jefferson PUD expands from the sewer and water business into the power business it can expect to hire about 67 people when the public power utility is fully functioning. That represents several million dollars worth of local payroll that, Hittle said, is now leaving Jefferson County, and $113.7 million in total county business impact.
PSE officials said they have about 10 people on the payroll in the county, including four or five who work in the office opened in downtown Port Townsend in early June.
The PSE consultant, Bob Bellemare of UtiliPoint International, challenged some Hittle job numbers after he quickly read the report upon its release on Tuesday. An earlier Hittle report, done in 2000, concluded that the PUD would hire 34 people if it got into the electrical business. "That looked about right to me," based on other PUDs, Bellemare said. "But the figure of 67 [jobs] came out of the blue, to me," said Bellemare. "It doesn't seem sensible, given the budget numbers," for a larger PUD.
On rates, the Hittle study concludes that "PUD's rates would be slightly higher for the first three years, but then decrease in the fourth year" when lower-cost hydroelectric power from the Bonneville Power Administration is available. PSE customers in Jefferson County today pay 30 percent more for power than PUD customers in Clallam County, said the Hittle report.
The Hittle report claims that over 10 years, Jefferson County ratepayers would pay $31.1 million less for power than they would pay if electricity continued to come from PSE, with dollars figured at today's value. The Hittle report puts the savings, adjusted for inflation, at $53.7 million.
Bellemare, in his earlier study, had said that rates would rise by 19 percent if the PUD takes over.
Upon review of the Hittle report, Bellemare said the PUD study uses "optimistic numbers for wholesale power."
He said he was confident his numbers were conservative. "You can't base your plan on low numbers," he said. "That is the problem with studies of this sort. They basically take a best-case scenario on every element. But the reality is you're going to lose on something, and often on something big."
The prospective expense of taking over the PSE network is one of PSE's primary focuses in its campaign against Prop 1.
Bill Wise of Citizens for Public Power countered that the estimate Hittle made of projected increases in PSE rates was conservative. The Hittle study cites a finding by analysts of Morgan Stanley that PSE rates will rise by 67 percent by 2013.
Steve Johnson, executive director of the Washington Public Utility District Association, said PSE's rates would rise because PSE must replace low-cost hydroelectric power with fossil-fuel-powered generators in the coming years.
The Hittle report concludes that if the PUD decides to become the electric utility, the purchase of PSE's assets at a to-be-determined price would occur through bonds, and that new construction, if needed, would come through loans. The Hittle report said that over the first 10 years, county ratepayers would pay less for power, even including the cost of servicing bonds and other debt.
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