Municipalization
Municipalization is often a lengthy and complicated process by which a city or county tries to acquire ownership or responsibility for the operation of a utility system that serves its residents. Today, the energy landscape is vastly different than it was 50 or even 15 years ago, making municipalization a less feasible and unappealing choice.
On Nov. 4, 2008 the citizens of Jefferson County passed a ballot initiative authorizing the Public Utility District No. 1 of Jefferson County to pursue purchase or condemnation of Puget Sound Energy’s system.
While the debate over the formation of a new electric public utility district in the 21st century is a complex, and, at times, highly charged discussion, following the election outcome, PSE representatives negotiated with Jefferson County PUD commissioners and their independent advisors for more than a year to determine a price for PSE’s electric system in the area.
On May 3, 2010, PSE and Jefferson PUD, in a non-binding letter of intent, reached an agreement for the Jefferson County PUD to purchase PSE’s electric system in East Jefferson County for $103 million.
While we are pleased we could work cooperatively with the PUD to arrive at a recognition of the value of the PSE system in Jefferson County, and do so without expensive time-consuming litigation, this outcome is not what we or our investors prefer. We are moving in this direction and participating in good faith in this process because of the election outcome and the threat of condemnation.
Nonetheless, this is a key step setting the parameters for the PUD’s ongoing deliberations and creates an agreed upon starting point for the PUD to develop a financing plan, and also to find a safe, reliable energy supply – both difficult challenges in today’s environment. The value of the PSE system in Jefferson County has been seriously debated and often misrepresented. In 2008, the PUD’s consultant D. Hittle & Associates Inc. estimated a cost of PSE's facilities ranging from $35 million to $70 million, while PSE’s independent studies estimated a cost of $100 million or more.
We look forward to learning more about the PUD’s business plan. PSE, as the service provider for the area for nearly 100 years, is well aware of the challenge of meeting Jefferson County’s diverse desires and needs. Today’s interest in renewable power, alternative energy services, energy efficiency, smart grid technology, undergrounding, service reliability and storm response is a challenge for any electric service provider.
PSE remains committed to being the electric service provider in Jefferson County. PSE employees will continue to provide the best service possible until the PUD physically acquires our system. While we believe we can provide superior service, we are respectful of the vote of the people and recognize that it is far better for the community to resolve this matter amicably rather than to engage in long and expensive condemnation proceedings.
Joint statement
Read the joint statement by Jefferson County PUD and PSE.
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