PSE takeover: $57.5 million
September 17, 2008 · 8:10 AM
People for Yes on Whidbey PUD released its long-awaited cost study last week for acquisition of Puget Sound Energy’s electric system.
The price tag: $57.5 million.
PSE’s own study, conducted by UtiliPoint International Inc., is starkly higher at $130 million. The study predicts 20 percent higher electrical rates if the public takeover succeeds.
“People for Yes” is aiming to depose the “Bellevue-based PSE monopoly” on Whidbey Island, and create a public utility district, which they propose will offer lower rates and greater reliability. A measure to authorize a PUD will appear on the November ballot.
The group’s plan is to apply for the limited low-cost hydropower from the Bonneville Power Administration, which identified 250 average megawatts for newly formed PUDs.
The proponents initially released an estimated price of about $80 million, but David Metheny, campaign director for “People for Yes,” said their engineering advisers complained the number was too conservative.
“We took a closer look at the numbers PSE filed with the Department of Revenue and decided it must be lowered,” Metheny said.
The 30-page draft was created with the financial help of the Washington Public Utility Districts Association and was based on data from the recent Skagit County condemnation study. Both Jefferson and Skagit counties are undergoing their own battle for PUD electrical facilities.
The study stated that the Skagit report was scaled down and tailored for Whidbey Island. For the first two years, the property tax burden would be between $2.75 and $5.78 per year for a $300,000 home, to pay for legal costs and a professional feasibility study.
At a meeting last month, UtiliPoint CEO Bob Bellemare said his estimate included the company’s hard assets, offices, transmission feeds, startup costs, and about 10 substations, priced at $12 million a piece.
Metheny argued those numbers are exaggerated.
“The Department of Revenue determined in 2007 that PSE’s assets were worth only $40 million,” Metheny said.
Along with cost comparisons, the study also states, “PSE has announced that it intends to increase its rates an average of 9.5 percent. After that, PSE rates are estimated to increase at 3.55 percent per year beginning in 2010.”
“People for Yes” treasurer Bob Kuehn claims that a PUD would lead to 20 percent lower rates, not higher rates as predicted by PSE.
“We tried to get a realistic picture of the transaction. We don’t want to mislead ourselves and end up with a blunder. On the other hand, we have the UtiliPoint study, which we feel is pretty inflated. Their motivation is to scare us into not proceeding,” Kuehn said. “It’s also important to note that a yes vote in November is only to create a PUD, not to buy the system.”
Both the PSE and PUD studies are only estimates. The exact cost of a company’s assets are determined in legal proceedings, before a judge and with the help of expert witnesses. That will only happen if Whidbey Island voters approve a PUD in November.