LETTER TO THE EDITOR: PUD costs are underestimated
October 25, 2008 · 12:13 PM
To the editor:
I have lived on Whidbey Island for 20-plus years, am employed by a neighboring PUD, and an advocate of public power.
I am voting NO on the Whidbey PUD ballot measure because I think it's supporters are underestimating the costs in creating a new PUD.
In years past we have had power outages in very minor windstorms. Puget Sound Energy has done a great job in tree-trimming and pole replacement to improve our service and reliability.
Dave Metheny, campaign director for "People for Yes on Whidbey PUD," uses the December 2006 storm as an example of PSE's lack of system reliability and lack of promptness for the restoration of his power. This 100-year storm affected more people and for longer periods of time than most on Whidbey Island. The supporters of Whidbey PUD contend they can improve reliability and service. I contend that they have no more control over Mother Nature than PSE.
Another contentious issue seems to be foreign ownership of PSE, and according to Mr. Metheny, has national security concerns. There are many foreign owners of companies that provide goods and services in our country. Scottish and Spanish companies are a few of the foreign owners of our power infrastructure. All the natural gas for the Northwest comes from Canada. Foreign ownership is much ado about nothing.
Cheap Bonneville Power Administration power is the mantra of the PUD supporters. BPA marketing people have indicated that BPA will service Whidbey PUD's entire load. The real question is, "At what price?"
While it is true that BPA has set aside 210 megawatts for new PUDs, only 50 megawatts will be available in two-year increments.
Since Whidbey Island's load averages 70 megawatts, peaking at 150 megawatts, Whidbey PUD would have to compete with other new PUDs in Montana, Idaho, Oregon and Washington for their share of the 50 megawatts. The difference would have to be made up with more expensive market rate power.
Prior to becoming a BPA customer, the PUD must demonstrate compliance with BPA's standards of services which includes having a back office organizational structure, having the ability to perform maintenance and operation of the distribution system, having the credit worthiness to purchase wholesale power. This is yet another cost for the Whidbey PUD.
The Washington PUD Association is comprised of PUDs in the state and annually publishes the Sourcebook, which contains statistical data from its members. It is desirable for all the PUDs to receive 100 percent of their power from BPA.
However, adjusting the Sourcebook data for PUDs that have significant generation facilities, we find that BPA supplies an average of 83 percent of the PUD requirements because BPA has a finite amount of generation and must augment additional supplies at contract or market rates.
Again, by looking at the sourcebook data for other PUDs comparable to Whidbey, maintenance, operations and administrative costs for 2007 were $50 to $60 million, not including dollars for capital improvements.
In order to comply with HB1010, electric utilities must develop an integrated resource plan that explains the mix of generation and demand-side resources they will use to meet short and long term customer needs. The utility will need to fund energy conservation and renewable-energy programs.
The plan would be developed in conjunction with compliance to Washington I-937 which mandates power from renewable resources comprise 15 percent of the utility load by the year 2020.
Oregon must provide 25 percent renewables by 2025, and in California, 33 percent by 2020.
Presently contracts for windpower generation are being signed as soon as the generation comes on line. Costs are in the $60 to $90 range with the expectation that costs will rise due to the demands of I-937. Other renewable such as tidal and geo-thermal are still in the developmental stages.
The final issue is the condemnation process.
First, the PUD must show that condemnation is necessary, that the takeover is in the public's best interest. The second phase is valuation which ultimately becomes a battle of experts and legal counsel.
Both phases are appealable to the State Supreme Court.
The September 2008 Whidbey PUD cost study shows operations beginning in 2010. The process usually takes longer than a year and that means several years of expensive consultants and legal fees.
In conclusion, public power and public ownership is good. Washington has a number of well-organized, well-run organizations established in the 1930s and ’40s. However, in these times of financial uncertainties multi-million dollar risks are not prudent in 2008.
I am voting NO for the Whidbey PUD.