Consolidation will mean more money to improve power system

Puget Sound Energy customers won’t get bigger bills, at least not in connection with the merger announced Friday with a consortium of mostly foreign-based investors, company officials said Monday.

PSE needs more renewable power and the merger with the consortium will give the company the power it will need in coming years, officials at the Bellevue-based utility said.

The company has predicted that population in Puget Sound will grow 28 percent, or roughly

1 million people, over the next two decades. That means PSE will need new power supplies to feed a power demand of 2,600 megawatts, the company said.

In addition to an increasing customer base, PSE has a number of purchased-power contracts that will expire, which has driven the company to seek out new sources of power such as wind farms and natural gas-fired plants.

The merger will provide an infusion of capital that will fund 20 years’ worth of state-law mandated renewable resource and energy efficiency capital improvements, said PSE spokeswoman Martha Monfried.

“We need to invest nearly $5 billion over the next five years to update our power-generating and delivery infrastructure and to increase our focus on energy efficiency and renewable energy,” Monfried said.

“This will allow us to build more wind and more natural gas-fired plants as we outline in our integrative resource plan.”

The company’s integrative resource plan is based on the construction of 10 wind farms and 10 natural gas-fired plants to supplement current power output, she said, giving the company more power delivery security than it presently has.

PSE already owns two wind farms, valued at $600 million, one in Kittitas County and the other in Columbia County.

While the merger was not the only solution to bringing in more capital for the company, cashing in on the publicly held company’s equity and increasing its debt was not a viable option, Monfried said.

“We could continue to operate as we have in the past by going to Wall Street and getting equity and getting debt and being listed on the New York Stock Exchange,” she said.

“To have some committed investors who want to put the money here to allow us to continue our plans makes the most sense.”

Consortium investors saw a lot of potential in PSE, Monfried said.

“This group of investors has looked at us. They like what we are doing and like the area. It is a growing region,” she said. “It is a way for us to move forward to execute our plans.”

In addition to seeking out more power sources, PSE is looking to improve its customer outreach, Monfried said, such as when storms threaten its service and power distribution.

“On storm reliability and communicating more with our customers; we’re trying to investigate what systems are the best to do that to update what we currently have,” she said. “It is always investing in our future to serve our customers better and provide more information and be better integrated and able to respond.”

The merger is valued at $7.4 billion.

The consortium includes Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board and British Columbia Investment Management Corporation, Alberta Investment Management, Macquarie-FSS Infrastructure Trust and Macquarie Bank Limited.

PSE’s board of directors has already approved the merger. An approval is still needed from the company’s shareholders — the company will move from a publicly traded company to a privately held utility — and the merger is also subject to approval from the Federal Energy Regulatory Commission and the Washington Utilities and Transportation Commission.

Simon ffitch, chief of Public Counsel Section within the Washington State Attorney General’s Office, said the merger will get an intensive review from the state.

“This merger could have significant implications for Puget Sound Energy customers,” ffitch said. “Washington law requires that PSE and its merger partners show that the merger is in the public interest and does not harm consumers. Public counsel will be looking at how this major change in ownership could impact rates, service quality and infrastructure reliability.”

Monfried said that she understands the state counsel’s role in examining the merger and remains hopeful because of previous power utility merger approvals.

“That is public counsel’s job to examine agreements that are entered into,” she said. “So we will be filing with the Washington Utilities and Transportation Commission a merger application to be approved. They will review that.

“We are hopeful that we will move forward,” she said

PSE, which provides electricity to Whidbey Island, said customers would benefit from the merger.

PSE also said the merger would not affect the utility’s current workers and management employees.

Spencer Webster can be reached at 221-5300 or swebster@southwhidbeyrecord.com.