BREMERTON — Six days before voters decide whether Kitsap Public Utility District may get into the electricity business, the two utilities at the center of the question agreed on one thing: No one yet knows what a public takeover of Kitsap’s power system would cost.
Michelle Vargo, senior vice president of energy operations for Puget Sound Energy, and Angela Bennink, general manager of Kitsap PUD, took the same nine questions Wednesday, Oct. 28, at the Greater Kitsap Chamber’s membership luncheon at the Kitsap Conference Center. Chamber advocacy chair Alysa Grimes moderated and told the crowd the goal was “not to tell you how to vote.”
Proposition 1 on the Nov. 3 general election ballot asks: “Shall Public Utility District Number One of Kitsap County construct or acquire electric facilities for the generation, transmission, or distribution of electric power?” A yes vote gives KPUD legal authority to provide electric service. A no vote withholds it.
PSE now provides electricity in the county. KPUD provides water, wastewater and broadband services.
What a yes vote means
Bennink said the measure would restore authority KPUD has lacked for decades. She said the district was created in 1940 to investigate providing electric service in Kitsap County, but World War II interrupted those plans. A 1969 state law change requires PUDs that do not start providing electricity within 10 years of formation to go back to voters, she said.
A yes vote would not commit KPUD to buying PSE’s equipment or building a new system, Bennink said. The KPUD board has passed a motion saying it will do a feasibility study before taking any action on electric authority.
“I cannot advocate for or against this,” Bennink said, noting that KPUD is neutral on the measure.
Vargo said voters are being asked to grant the authority before seeing that study. She compared it to her husband, who runs a small business the family recently took over, asking her for power of attorney on a major decision.
“If he were to ask me to give him power of attorney to make this decision without actually bringing me the information to make that decision, I would have a hard time doing that,” Vargo said.
“It’s not a vote to do a feasibility study,” she said later. “It is the authorization to have the authority to take over the system.”
Bennink said the board could have paid for a study now but chose to find out first whether the public would grant the authority.
What it could cost
Vargo said a preliminary PSE study puts the cost of PSE’s physical electric assets in Kitsap County — poles, wires and underground systems — at $1.2 billion to $1.5 billion. That figure does not include buying power or starting up a utility, she said. She cited estimates of about $7,500 per household “just to take over the system.”
Bennink said KPUD has no cost estimate. She addressed a mailer that tied her name to a figure, saying it came from a rough calculation in an email to the district’s bond counsel. She said she took the roughly $109 million cost of Jefferson County PUD’s system, multiplied it by 10 because Kitsap is about 10 times larger, and set a range 20% above and below, or $800 million to $1.2 billion. She said she has since learned the net book value of the Jefferson assets was $47 million.
“We don’t know what those costs are,” Bennink said.
Historically, ratepayers have paid for acquired assets, she said. Any borrowing above the PUD’s limited statutory bonding authority would have to go to voters. “It is not a blank check,” she said.
Rates and power supply
Bennink said it is unknown whether rates would be higher or lower under KPUD. She pointed to neighboring Jefferson and Mason county PUDs, where base rates are higher and the per-kilowatt-hour charge is lower. Customers who use little electricity or have net metering would likely pay more there, and heavy users would likely pay less, she said.
Vargo said PSE rates are rising because of aging infrastructure, cold snaps, flooding, wildfire risk, regional growth and expensive market power. She said the region is short 1,300 megawatts of power.
The Bonneville Power Administration has signaled it will make 200 average megawatts of lower-cost hydropower available to new public utilities after 2028, Vargo said. She said Kitsap could get 50 of that, compared with average county demand of about 350 megawatts, which climbs to about 500 in a cold snap.
“So you are going to be vulnerable to purchasing power on the market, just like we are,” she said.
Bennink said BPA told her KPUD would be eligible for its Tier 1 rates. She said the power would be available in steps of 50 average megawatts a year on a first-come, first-served basis, competing with any other new public utility.
Storms, jobs and taxes
Asked about winter storm outages, Bennink said KPUD would lean on neighboring utilities for support. “We can’t promise today that outages would be shorter or less frequent or handled differently under Kitsap PUD,” she said.
Vargo said PSE has more than 70 employees and more than 50 contractors living in the county. She said the company has over $100 million in grid investments and expects $21 million of an $80 million federal grant for Western Washington to go to the Kitsap area.
Neither utility could say what would happen to those PSE crews under a transition. Vargo said PSE pays more than $88 million in taxes in Kitsap. Bennink said KPUD collects and remits local utility taxes the same way PSE does, and as a public entity it is exempt from property tax.
If Proposition 1 passes, KPUD would issue a public request for proposals and qualifications for the feasibility study, Bennink said. She estimated the process would take a minimum of six months, likely longer. Vargo said PSE would share system data for the study.
Why it’s on the ballot
Bennink said residents who came to the KPUD commission were not complaining about service.
“It wasn’t about quality. It wasn’t about reliability. It was about cost,” she said. “Those consumers were coming to our board to say, ‘This is not sustainable. What can you do to help?’”
Vargo said PSE is accountable through rate cases before the Washington Utilities and Transportation Commission, including one now underway. KPUD answers to three elected commissioners, Bennink said: Debra Lester, North Kitsap; Heather Pauley, Central Kitsap; and Stacy Smith, South Kitsap.
KPUD commissioners meet the second and fourth Tuesdays of each month. Information on the measure is at kpud.org/governance/exploring-electric-service-in-kitsap-county. Ballot return options and deadlines are available from the Kitsap County Auditor’s Office at kitsap.gov/auditor.
At the same luncheon, the chamber announced that Judy Eagleson of The Mentor Company will be this year’s top honoree at its Business Awards Gala on Friday, Dec. 11. Tickets are on sale at greaterkitsapchamber.com.
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