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PUD proposal on shaky ground

Commissioners likely to rescind resolution after Pacific Power threatens legal action
News Editor
   July 2, 2003 — The Jefferson County Commission’s decision last month to send the formation of a people’s utility district to voters has run into trouble, and could go back to the drawing board in the form of a signature-gathering campaign.
    Bernie Bottomly, director of community services for Pacific Power & Light, told the commissioners Thursday that their resolution to put a proposed people’s utility district on the November ballot violated state public meetings laws. Bottomly demanded that they immediately rescind it or face a lawsuit.
    The commissioners, however, refused to withdraw their resolution, but scheduled an 11:30 a.m. discussion this Thursday to consider Pacific Power’s request.
    Bottomly’s threat was the first of several concerns raised in the past week over the proposed district.
    On June 12, the commission quietly adopted a resolution sending the question to voters. Their action on the people’s utility district, known as a PUD, was not prefaced by a public hearing, or listed on the commission’s regular agenda.
    In the face of Pacific Power’s protest last week, the commissioners quickly conceded that they likely had erred in the public process. Chairman Walt Ponsford admitted the situation could turn into a “debacle,” and noted the county’s oversight might have been caught if they were not without legal counsel. Attorney Paul Hathaway resigned in May to take a new job in Washington County.
    “I’m in favor of having the PUD vote, but I’m not in favor of putting the county at risk,” Ponsford said during the discussion.
    Pacific Power’s appearance at last week’s commission meeting also signaled that any PUD proposal will not succeed at the ballot box without a vigorous fight.
    Bottomly told the commission that Pacific Power was prepared to challenge the effort in court, and warned it could have severe financial implications.
    “We’re not for sale and we won’t go quietly,” Bottomly said. “We strongly believe our customers would be hurt by this.”
    The original PUD resolution was submitted to the commission by a citizens group chaired by Vern Bowers of Crooked River Ranch.
    A people’s utility district is a local government entity formed to provide electricity or water to a community. In theory, a PUD can offer residents lower utility bills by removing corporate profit margins and selling products and services at cost-based rates. There currently are six such districts in Oregon.
    Although the local PUD task force originally was formed to research the idea of condemning Portland General Electric’s dams on the Deschutes River, owned by its bankrupt parent company Enron, Bowers said the focus changed.
    “That’s what brought it to a front, but I think the shift is the fact that it might be more logical to shift to renewable energy,” Bowers said.
    The June 12 resolution puts seven items on the November ballot: the incorporation of the PUD’s boundaries, a proposed $1,500 bond to raise funds for an engineering study and the election of five board members to govern the district.
    Commissioner Mary Zemke said that the original resolution could be “fatally flawed” and most likely will be rescinded Thursday. However, she said the commission might encourage PUD proponents to pursue their effort through an initiative.
    “That does sound like a better way to go,” Zemke said. “I am going to support that as much as I can.”
    Zemke said she is hopeful a Jefferson County-based PUD and Pacific Power can coexist peacefully. PUDs have statutory authority to condemn privately held power assets, but Zemke said proponents are more interested in constructing renewable energy facilities than stepping on Pacific Power’s toes.
    “I’m looking at the PUD as a way to give an economic boost to Jefferson County with jobs in the production of renewable energy,” Zemke said.
    Pacific Power and Central Electric Co-op are the only two electricity providers in Jefferson County. People’s utility districts do not have statutory authority to condemn assets owned by power cooperatives.
    Pacific Power has no generation facilities in Jefferson County. Bottomly said the company has roughly 8,500 residential, commercial and industrial customers in the area.
    “I can tell you right now that a PUD in Jefferson County will not be able to build renewable power that the people of Jefferson County can afford,” he said. “I think the proponents and some of the county commissioners are confused that this will be a vehicle for renewable power.”
    Bottomly said former Pacific Power customers would bear a heavy burden of debt if a PUD tried to purchase Pacific Power’s service infrastructure or build its own power-generation facilities.
    “We’re talking millions of dollars of debt the community would incur,” he said.
    Bottomly also submitted data to the commission last week that suggested Pacific Power’s electricity rates are the seventh lowest in the state out of 24 power providers — lower than four of Oregon’s six PUDs.
    Pacific Power is owned by parent company Pacific Corp., which serves 1.5 million customers in Oregon, Utah, Washington, Idaho and Northern California.
    Jon Coney, a company spokesperson, said Pacific Power owns 80 percent of its generation capacity and would offer Jefferson County consumers more stable rates than a PUD that would begin with no generation facilities and be subject to the open market.
    “Those volatile open power markets have a limited impact on our customers,” Coney said.
    Pacific Power also is opposing a grass-roots effort to create a PUD in Multnomah County.
    PUD critics also will suggest the estimated $1,500 engineering study is an amount far too low. Multnomah County’s similar study will cost several hundred thousand dollars.
    Zemke said the questions surrounding the proposed PUD’s relationship with Pacific Power hinge on one legal nuance.
    “It’s going to boil down to this: Does the PUD have to have a service district, which is customers, or can we just produce power?” she asked.
    County Clerk Kathy Marston said at this point — with so many uncertainties — she has little time to prepare the proposed PUD for the November election.
    She said only Pacific Power customers would be allowed to vote in the election. The commission also must hold hearings before the election to determine the district’s proposed boundary, Marston said.
    “Quite frankly, I don’t think the time frame allows for the extensive research and work that needs to be done,” Marston said. “I would like to see them move it to the March or May ballot.”
    Commissioner Bill Bellamy echoed similar concerns. When he voted to adopt the resolution, he said he had no idea Jefferson County would be the lead agency on the PUD.
    “We thought we were authorizing the petition process to start,” Bellamy said.
    Bowers, the chairman of the grass-roots PUD committee, didn’t mince words when asked to comment on Pacific Power’s resistance. He said the public input his committee received was overwhelmingly in favor of low-cost public power through a people’s utility district.
    “I believe they will fight us any way they can and they’re using our ratepayers to fight us,” Bowers said.
    “It’s also not surprising to learn that Pacific Power paid the same amount of (income) taxes to the state as PGE, which was $10,” Bowers continued. “I wonder if they paid that all at once, or quarterly.”
    Bellamy said he won’t vote in favor of forming a PUD if it makes it to the ballot, but he won’t stand in the way of letting citizens decide.
    In regards to the resolution up for discussion Thursday, Bellamy said, “We made a decision when we didn’t have all the facts.”