[TCDPCO] Olympian: Puget Sound Energy sale

[Pickett]

The Olympian finally covers this story...
Paul

http://www.theolympian.com/news/story/459031.html

Published May 25, 2008

What sale of Puget Sound Energy will mean to you
 By John Dodge | The Olympian • Published May 25, 2008


By year's end, Puget Sound Energy customers could be paying their
electricity and natural-gas bills to a utility owned by an Australian
investment bank and Canadian pension funds.

Regardless of whether the sale is approved, subscribers could be in store
for a double-digit electric-rate increase and a more than 5 percent boost in
natural-gas rates.

The state Utilities and Transportation Commission will decide the fate of
the $7.4 billion utility sale and rate case, but not before the public has a
chance to comment at a June 4 public hearing in Olympia.

PSE is the state's oldest and largest investor-owned utility, with 1 million
electric and 721,000 natural-gas customers in 11 counties, including
Thurston.

Arguing on behalf of the sale and rate increase, utility officials paint a
picture of a business strapped for cash and facing growth in the number of
customers equivalent to two Seattle-size cities in the next 20 years.

The new consortium, led by Macquarie, an investment bank based in Sydney,
Australia, and the Canadian Pension Plan Investment Board, has agreed to buy
the utility and provide $5 billion in capital in the next five years. "What
it really boils down to is access to capital," said Tom DeBoer, PSE's
director of rates and regulatory affairs.

But the proposed sale has raised concerns that a loss of local control is
not in the best interests of customers.

"Personally, I'm deeply concerned about PSE being bought out by a consortium
of foreign corporations," Thurston Public Utility District commissioner Paul
Pickett said.

About the deal

Question: PSE is regulated by the Utility and Trade Commission, which has
final say on rate increases, customer complaints, service reliability, etc.
What changes under the buyout?

Answer: Rate increases, rate of return on investments and consumer
complaints will continue to be handled by the three-member board, whose
members are appointed by the governor. In addition, the utility still must
abide by state and federal laws to build power plants, increase its reliance
on green power, promote energy conservation and curb greenhouse-gas
emissions. The utility's corporate headquarters and officers would remain in
the region, as would the PSE logo on utility bills and communications.
"Customers are not going to notice a difference," DeBoer said.

Q: Wouldn't financial scrutiny of the utility be more difficult? The stock
would go from publicly traded to privately held, reducing the oversight of
the federal Securities and Exchange Commission.

A: "The UTC needs that financial information to properly regulate the
company," said Simon ffitch, who represents consumers as chief of public
counsel in the state Attorney General's Office. The commission could make
continued SEC filings a condition of the sale. "I'd be shocked if they
didn't require it," DeBoer said.

Q: The consortium of buyers is borrowing about $4.2 billion. Doesn't that
raise a red flag about the financial stability of the utility?

A: Yes, ffitch said. That much debt financing could put pressure on the
company to ask for future rate increases. While the amount of debt financing
could be a concern, PSE faces the same sorts of challenges as a stand-alone
company, DeBoer said.

Q: Who are the buyers?

A: Three branches of the Macquarie Group, which has been described as the
Australian equivalent of Goldman Sachs, control more than 50 percent of the
holding company. Macquarie manages assets valued at more than $200 billion,
including five toll roads in the United States and Canada, the water company
serving London, two Canadian port terminals and Duquesne Light, a regulated
electric utility in Pittsburgh.

Q: What assurances do customers have that the new ownership won't harm
utility customers?

A: No harm to consumers is the standard the utility commission must use to
approve, reject or create conditions of the sale.

Q: What has been the reaction to the proposed sale since it was announced in
October?

A: The buyout has triggered grassroots initiatives on Whidbey Island and in
Skagit and Jefferson counties to study the feasibility of public utilities
taking over electrical service there. Puget officials have said they would
take legal action to halt such moves. In addition, opposition to the utility
sale and rate increase is running about 95 percent from the more than 8,000
public comments received by the UTC, commission spokeswoman Marilyn Meehan
said.

Q: What about the rate increase?

A: PSE has asked for an average 11.8 percent residential electric-rate
increase. Residential-gas customers would see an average 5.73 percent
increase. The $174.5 million in new revenue from the total electric-rate
increase would pay for new power supplies and transmission lines, increased
power costs, returns on shareholder investments and past storm damage,
DeBoer said. The total gas-rate increase would raise $56.8 million. "This is
Puget's ninth rate-hike request since 2001," ffitch said. "Customers are
feeling the pain of rising costs for fuel, food and other items, and energy
is no exception."

Q: What's the timeline and approval process for the sale and rate increase?

A: The deal has been approved by the Federal Energy Regulatory Commission.
The UTC is the last major hurdle. The company filed the rate increase
request in December 2007 and expects a decision by November.

Q: What's next?

A: UTC staff, public counsel and other parties have until Friday to file
their recommendations with the commission on the rate increase and June 18
on the buyout.


-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mail.thurstondemocrats.org/pipermail/tcdpco_thurstondemocrats.org/attachments/20080526/a2ee08fd/attachment.html