FREQUENTLY ASKED QUESTIONS
- What’s Puget Sound Energy?
- Why do we want them to go away?
- What’s a Public Utility District
- Are PUDs a Washington State thing?
- That sounds great! How do we get one?
- Why not form a PUD for all of King County?
- Wait, we’re *disconnecting* from PSE? Where will we get our electricity?
- If PUDs are so great, why aren’t there more of them?
- No, really, why aren’t there more of them?
- Isn’t it kind of unfair to just take stuff away from a company like PSE?
- What would happen to PSE’s employees in the Eastside?
- Why does PSE have so many outages?
- Oh no, this is a GOVERNMENT takeover of ELECTRICITY
PSE is the electrical utility that serves almost all of East King County. It used to be publicly traded, but it was bought out by private equity funds in 2008. PSE’s board of directors is selected by the private equities that own it. Because it’s a privately owned monopoly, it’s regulated by the Washington Utilities and Transportation Commission, which determines how much profit PSE is allowed to make–usually around a 9-10% return on equity every year.
- PSE is locked into gas: starting in the late 90s, PSE began investing heavily in natural gas infrastructure–distribution, generation, and storage. This year, Washington passed CETA. Now, PSE wants us to pay for that white elephant gas infrastructure, and buy renewable generation facilities, and provide it a tidy profit as a reward for making all those terrible decisions.
- PSE is letting the electrical grid degrade: They’re owned by private equity, and private equity’s business model is to slowly strip mine the companies it buys until they finally collapse. PSE’s service reliability is in the bottom third of US utilities and getting worse, because it underspends on infrastructure to pad its bottom line.
- PSE is unaccountable: The private equities that own PSE are in the Netherlands, Canada, and (formerly) Australia. PSE’s management answers to them. The only direct input the public gets is in hearings. PUDs have locally elected boards and are accountable to their residents.
- PSE is expensive: Trying to keep prices in line with nearby public utilities like Snohomish PUD, Chelan PUD, and Seattle City Light is hard when you’re PSE and you made a bunch of shortsighted investment decisions and have to send 10% of your revenue to your owners.
A PUD is an electrical utility that’s owned by the residents it serves. A PUD’s commissioners (its board of directors) are directly elected by the voters that live in the district.
They’re generally cleaner, cheaper, and more reliable than investor-owned utilities because they:
- don’t have to divert revenue to investors as profits
- have a lighter regulatory burden because they’re directly accountable to the people they serve
- are eligible to purchase power from other publicly-funded generators like the Bonneville Power Administration
- can construct and operate their own generation facilities
Sort of. There are municipal utilities and cooperative utilities all around the country, but there are a lot of them in Washington. Washington’s PUD law is unusually strong. It was created by Initiative 1, all the way back in 1930.
The Washington Public Utility Districts Association has a good explainer here.
We have to get 35,000 signatures on this petition from people who reside in the proposed district, and then the question of whether to form a PUD will be on the 2020 general election ballot for the following voting precincts. If a majority votes yes, we have a PUD.
Appearing on that same ballot will be candidates for PUD commissioner. Every voter will vote for three commissioners–one for their district, and two at large positions. There are a total of five commissioners for districts the size of ours.
One reason is that we don’t want to bite off more than we can chew. When public utilities get too big, they can start to act like investor-owned utilities. All of King County outside Seattle City Light’s service area is about 1.4 million people. Serving that many people would be one of the 10 largest public utilities in the United States. Instead, we’re trying to keep the district to a manageable size–about 550,000 people live in the area covered by the PUD. That will make our PUD the third largest public utility in Washington State, after Seattle City Light and Snohomish County PUD. We’ll be big enough to get things done, but small enough the public can exercise control.
Another reason is that Seattle and its immediate suburbs are served Seattle City Light, a municipal utility. PUDs don’t replace municipal utilities. Some of the Eastside PUD’s area is served by Tanner Electric Cooperative, and the PUD would not replace Tanner or take any of Tanner’s customers. We’re just replacing PSE.
The biggest reason is geography. Lake Washington and the Issaquah Alps are formidable geographic barriers. The electrical grid in East King County only contacts the rest of PSE’s service area at three places: the Renton/Newcastle border, the base of Squak Mountain, and Snoqualmie pass. When a public utility forms, disconnecting from the incumbent utility can be a technically daunting process if a lot of circuits cross its border. Boulder Colorado has been working on it for 10 years, as it is surrounded by XCel territory and has municipal borders that look like a gerrymandered congressional district. With the boundaries we’ve drawn, disconnection will be easy.
We can get it from the same place PSE does: contract with other utilities to purchase power they generate and purchase power on the wholesale market. As of 2018, PSE only generates 45% of the power it sells. The remaining 55% it buys from elsewhere. The Eastside has less than 25% of PSE’s customers, so there’s plenty of available electricity. With the Eastside out of their service area, PSE won’t be needing it.
PUDs can also (with a popular vote) issue bonds and construct generation facilities. With the Eastside’s resources and without PSE’s fossil fuel debts, we can get that done a lot faster than they could.
There are a lot of them in Washington state. PUDs often formed in rural counties where it wasn’t profitable to provide electrical service. Rural areas require more wire and poles to serve each customer, and the higher costs eat into profits to the point it’s not profitable to offer service. PUDs don’t require profit, so they have been able to provide the service investors can’t and won’t.
Suburbs are ideal customers for utilities: customers are dense enough that you don’t need as much infrastructure to serve them, but still spread out enough that rights-of-way and land for poles, towers, and substations are inexpensive and easy to come by.
So suburbs wind up paying roughly the same rates as rural areas, but where there would otherwise be savings to customers there are profits flowing to investors. In Washington, however, PSE customers pay some of the highest rates in the state.
There would be, but every time there’s a PUD effort in areas with a lot of lucrative customers PSE responds with a professional PR firm led anti-PUD campaign and a whole lot of money. It dropped half a million dollars to defeat a PUD electrification effort in Thurston County in 2012. It defeated a PUD electrification effort on Whidbey Island in 2008. The most recent successful PUD electrification effort was in Jefferson county in 2008, but Jefferson county is only 29,000 people.
We’re not just taking anything. Once we form a PUD, the new PUD either negotiates a purchase price for all the electrical infrastructure in the district, and if we can’t agree on a price we can fight it out in court. Negotiated prices tend to be 150% of book value or more, so we should plan on a court fight. There are things about the Eastside that make us much better able to win that fight than small counties like Jefferson.
They won’t wind up unemployed, that’s for sure. The same amount of work would need to be done on the Eastside’s electrical grid. More, in fact. PSE hasn’t done a good job maintaining our grid. The PUD would need to hire people to do this. Some people would no doubt come from PSE, and we’ll see a net addition of jobs to the region.
The UTC makes PSE keep prices in the roughly the same ballpark as public utilities like Snohomish County PUD, but PSE has the disadvantage of having to give 10% of your revenue to the people that own them and their debts. So PSE cuts corners by relying on fossil fuels, understaffing, outsourcing, and not doing the kind of reliability upgrades that they should. The gas explosion in Greenwood is a good example of this. As long as regulators and lawsuits don’t penalize them financially more than they save by cutting corners, they can let the lights go out a lot on their customers and/or blow them up.
Forming a PUD doesn’t mean your city council (or the King County council) is suddenly in charge of the electrical grid. A PUD is a nonprofit utility, and has commissioners just like PSE has a board of directors.
The good thing is that the PUD’s residents select the commissioners, instead of fund managers in Sydney, Amsterdam, or Toronto selecting the commissioners.