The Skagit County PUD considers reviving the great electric debate

It has been several decades since public and private utilities fought over control of the electric power market in Washington state. An idea now being floated by the Skagit County Public Utility District could revive that historic debate.

At issue is whether the PUD, which now provides only water service, should offer electricity to the county. Electrical service is currently provided in the county by the privately owned Puget Sound Energy. PUD officials have been meeting with several local government leaders about the idea since January, said PUD General Manager David Johnson.

No formal proposal has been made yet, and the PUD is considering a number of possibilities. One of the simpler options could be to acquire electric distribution lines within the county that are currently owned by Bellevue-based Puget Sound Energy.

The plan could also expand to include the two hydroelectric dams on the Baker River in northern Skagit County. But PUD Commissioner Robbie Robertson said it’s “way, way premature” to be talking about owning the dams.

Robertson also said the PUD could produce its own electricity using Skagit’s other renewable resources such as wind, sun and ocean tides. And the PUD could install electric-producing turbines in the pipes it already uses to distribute water.

Robertson explained his considerations: “Do we want private industry coming in and setting up wind farms, tidal generation and those kinds of things and taking Skagit’s resources and selling them outside? Or, alternatively, would it be better for the PUD to manage and operate those kinds of systems?”

PSE concerns

What triggered the discussion was PSE’s October announcement that its board accepted a buyout offer by an international investment group. That sale, valued at $7.4 billion, awaits regulatory approval. PUD officials say private residents and local businesses approached them after the announcement and asked it to consider providing electricity.

Members of the Skagit Citizens Alliance for Rural Preservation are among those who support the idea. They argue that Macquarie Consortium, an association of investment groups and pension funds in New York, Canada and Australia, might not take care of Skagit’s power infrastructure as well as a local entity would.

Of particular concern for alliance President Diane Freethy are the two Baker River dams. If not properly maintained, they could deteriorate and potentially flood rural Skagit County, she said.

“Anything can happen when control of the corporation is outside your border,” Freethy said.

PSE communications Director Martha Monfried noted that PSE is already a publicly traded company with international investors. And she said the company remains committed to serving Skagit County.

Private utilities such as PSE are regulated by both the Washington Utility and Transportation Commission and the Federal Energy Regulatory Commission.

Public versus private

Skagit County isn’t the first to have the public-private debate.

In the early 20th century, rural Washingtonians argued for more control when private electric companies offered them poor service at high cost, said Dean Boyer, spokesman for the Washington Public Utility Districts Association. It was more profitable for companies to focus on larger population centers.

But rural areas fought back in 1930 when state voters approved an initiative that allowed the formation of public electric utility districts. Public power providers such as the PUD can offer better service at a better price, Boyers said.

“That’s certainly a huge part of being a public utility district,” Boyer said. “They are publicly owned, they are nonprofit and they are locally regulated by an elected board of commissioners that is directly responsible to the voters of the county. That’s something that isn’t true with investor-owned utilities. Other than a business relationship, Puget Sound Energy has no accountability to the people of Skagit County.”

Ursula Schryver of the American Public Power Association agrees that the benefit of public utilities is local control.

“It all comes to local control,” Schryver said. “You never know when (a private electric company is) going to be sold, and you don’t know what (the new owners’) priorities are going to be.”

‘Huge undertaking’

PUD’s Johnson recognizes that becoming a power provider would be a large shift for the local utility.

“Frankly, the current organization would not be able to support being in the electricity business,” Johnson said. “We would have to bring additional resources on board. It’d be a huge undertaking, but it’s not inconceivable.”

But county commissioners have expressed concern about the PUD’s ability to follow through on its electric proposal. During a briefing Monday with County Administrator Gary Rowe, Commissioners Don Munks and Ken Dahlstedt said they were troubled by how local residents could be affected by an international company buying Puget Sound Energy.

However, they also said the PUD hasn’t finished some of its previous proposals, including offering sewer service to Similk Bay on Fidalgo Island and providing wholesale fiber optic Internet service.

The PUD has too many projects right now and can’t seem to keep up, Dahlstedt said. Instead, Dahlstedt suggested that the county could partner with Seattle City Light, a public power provider from King County that also has dams in Skagit County.

Johnson countered that the fiber-optic proposal is moving ahead. PUD commissioners have hired a consultant to design the fiber optic line, which could be installed between Mount Vernon and Concrete by May. And though county voters gave the PUD authority to provide sewer service in November 2000, Johnson said the utility district later learned developing a sewer system near Similk Bay homes was too expensive.

The PUD has a responsibility to its customers to consider offering electricity, Johnson said.

“The only reason we would even consider discussing this issue is because we’re probably the only other entity in the county that is capable through (state laws) to provide electric service to the county,” he said.

Too soon to say

The PUD’s Board of Commissioners has not formally discussed the matter, nor has it made any decisions, Robertson said. But Johnson said the PUD could decide to hire a consultant for a feasibility study “in the next couple of weeks.”

If those explorations prove positive, the PUD could put the matter before Skagit County’s voters as early as this fall’s general election. The PUD commissioners have until Aug. 12 to file a resolution with the Skagit County Auditor’s Office that would put the proposal on the Nov. 4 ballot.

“It’s really premature to say Skagit County PUD is going to get into the electric business,” Robertson said. “It’s our duty to go out and explore what those opportunities may or may not be.”

PSE, which has not been a part of the discussions, has a meeting scheduled for Monday with PUD officials.

* Ralph Schwartz contributed to this report. Franny White can be reached at 360-416-2148 or .