Published September 09, 2012
County energy fight takes shapeRolf Boone/The Business Blog
The Thurston Public Power Initiative has come a long way since its first organized meeting about a year ago. The citizen-led effort has raised awareness of public power, and petitioners have enough signatures to get the issue before voters.Voter approval in November of Proposition 1 would give the Thurston Public Utility District, currently a water utility, the authority to pursue public power. If the initiative fails, the states largest utility, Bellevue-based Puget Sound Energy, will continue to provide power in the county and to its 120,000 customers here. The Thurston PUD has 3,200 customers.The march toward November has ramped up the public-power debate among PSE, the PUD, the Thurston Public Power Initiative and a group that opposes the initiative, the Alliance to Protect Thurston Power. The latter group is headed by former Olympia Mayor Doug Mah, former Secretary of State Ralph Munro and former County Commissioner Diane Oberquell. Business consultant John Pearce leads the Thurston Public Power Initiative. Puget Sound Energy and the PUD have released studies that look at costs and PUD proposals for offering power here.The PSE report is a preliminary valuation of its assets in Thurston County. It shows $588 million in physical assets poles, wires and transformers plus $71 million to $100 million in real estate. PSE officials have said public-power startup costs could push takeover costs to $1 billion.PUD commissioners dispute that figure, and the PUD has released its own study, proposing power for three areas of the county instead of countywide. Under that proposal, the PUD would build and provide power to Yelm; build and provide power from the Capitol Campus to the Port of Olympia; and acquire transmission, substation and distribution facilities from PSE to provide power from Tumwaters core to the Port of Olympia. Building and acquisition costs are much lower than the asset valuation cited in the PSE study, but the costs are not insignificant: $41.9 million for Yelm; $50.5 million for the Capitol Campus to Port of Olympia service; and $153.6 million for the Tumwater to Port of Olympia service. The estimated 10-year cost savings for providing public power to those three areas, in place of PSE, are $10 million, $18.7 million and $215.7 million, respectively.Theres also an open seat on the PUD commission that will be filled this fall by either public-power supporter Steve Fossum or Linda Oosterman, who has said shes undecided on the issue.With so much at stake, The Olympian turned to the experts, posing questions to current interim PUD Commissioner Jim Lazar; PSE communications director Grant Ringel; Thurston Public Power Initiative chairman John Pearce; state PUD association executive director George Caan; and Mah, an Alliance to Protect Thurston Power member.Joyce Turner, through state Department of Enterprise spokesman Jim Erskine, declined to comment, as did Port of Olympia executive director Ed Galligan. As a matter of policy, the port does not comment on matters destined for a ballot measure, Galligan said.If voters approve the initiative and the PUD commission decides to go forward, what happens next?Lazar: The next step for the commission will be to identify some alternative course of action (the three proposals mentioned in the PUD study) and to study those in greater detail, with more public involvement. The public would be given many opportunities to participate in any kind of decision. After that, the next step is either to negotiate with PSE to acquire its system, or go through a court-supervised acquisition, or build our own system. The way those kinds of court-supervised acquisitions work and it doesnt matter if its a school district acquiring land for a new high school or a city acquiring right of way for a road is you appraise the value of the asset and make an offer based on the appraised value. If the seller does not accept that, you then go to a court and you ask the court to authorize the acquisition under the constitutional framework of eminent domain. A jury then decides the value of the asset, and you pay that value and get the asset.Is it difficult to start a power-serving PUD?Caan: Seventy or 80 years ago, PUDs were created to serve rural communities and things were a bit simpler. Its tougher if youre in a dispute (with a private utility) because there are a lot of legal, political and economic issues involved. Can it be difficult to do? Yes. Can it be time-consuming? Yes. At the end of the day it comes down to the cost-versus-benefit calculation and whether the cost versus the benefit justifies the effort to go forward.Why is public power so important to the Thurston Public Power Initiative?Pearce: The electrical supply to homes and businesses in Thurston County is a natural monopoly. We have one set of wires coming into our homes and businesses, and we have no choice in who supplies that power. We can go off the grid or we can buy power from PSE. Im a firm believer that natural monopolies should be owned by the people, not a for-profit corporation that make millions without competition. Highways, police departments, fire departments, water service are all things that are monopolies and should be controlled by the public.If the Thurston PUD gets the voter-approved authority to offer power and decides to bring it to Yelm, for example, would rates increase for the remaining PSE customers in the county?Ringel: At this point, we just dont have enough information about the PUDs plans to provide an accurate answer to that question. A key concern about the November ballot is that there are very few firm facts known about the impact on our customers and their bills. While voters will be asked to give current and future PUD commissioners complete control over what money they spend on acquisition and how much of the county to take over, without more information, very little about the impact on customer bills can be known. On a more global level, cost increases are much lower on individual customers when they are part of a group of more than a million, rather than a few thousand.What are your concerns about the public-power process?Mah: The latest study that the PUD is going to be looking at has three alternatives, and Puget Sound Energy has its own assessment of its assets, and behind each one of those are assumptions about how they measure costs and each one of those assumptions can be debated, and thats what makes it confusing for people. If you were running your own business, youd ask, How much is it going to cost us, what is the plan for acquiring and switching people over, do I have the experience to make this happen, and are there safeguards along the way to minimize losses if we make a mistake? The ballot measure is so open-ended that its hard to see what youre buying.