There are two fundamental ways to increase reliability. The first is to eliminate the cause of the outage. The second is to create redundancy in the electric system – create a robust electrical system that has ample room to keep the lights on when damage happens to one part of the system. The best practice is to use both strategies.
Reliable energy for our customers is one of Puget Sound Energy’s (PSE) top priorities. There are a few things that make this a difficult goal on Bainbridge Island.
- Geography. Being an island is one of the biggest challenges to electric reliability, since there is no surrounding electrical system to support the electrical infrastructure on the island.
- Geography, Trees and Weather. Bainbridge Island is situated in a location that is often impacted by high winds and winter storms. High winds and tall trees create a recipe for outages. In fact, trees are the number one cause for outages on Bainbridge Island.
- Limited Redundancy. The Island is served by three substations. Two of the three substations have only one source of power – one transmission line. It is best practice to “feed” a substation with two lines - or “loop” the substation. When substations are looped, they provide a redundant source of electricity for one another. This configuration is considered to be a best practice for reducing the duration and frequency of outages.
PSE invests every year to improve electric reliability on Bainbridge Island. We’ve invested over $21 million since 2010 in upgrades and improvements to the system, including:
- Rebuilding the Port Madison transmission line.
- Rebuilding Agate Pass towers
- Undergrounding distribution lines along parts of Wyatt Way NW and Eagle Harbor Drive NE and some of Sportsman Club Road into the Ferncliff neighborhood. More is planned along Blakely Avenue NE in 2017.
- Replacing miles of distribution lines with tree wire (less susceptible to falling branches) along New Sweden Avenue, Eagle Harbor Drive, Fletcher Bay Road, Baker Hill Road and NE Day Road. Additional tree wire will be installed along N Madison Avenue, NE Lafayette Avenue and Manzanita Road NE and NE Bergman Road in 2017.
- Trimming trees near overhead power lines. In 2016 over 24 miles of trees were trimmed and we plan to trim up to 51 miles in 2017.
We also have over $7 million in planned future projects on the Island including trimming trees, undergrounding more distribution lines and replacing more distribution lines with tree wire.
PSE is working alongside customers to ensure a reliable and responsible energy future. We offer customers many resources to reduce their home energy use, including energy efficiency programs and discounts on more efficient household appliances and light bulbs. This has helped curb the urgency for system improvements; however, the ever-increasing demand for electricity will eventually surpass the current system’s capacity.
A new substation and transmission line to connect the Winslow and Murden Cove substations would greatly increase reliability for the southern part of the island. These projects would reduce outages for two reasons: 1) a new substation would provide additional capacity to keep the lights on when another substation goes down and 2) connecting the Winslow and Murden Cove substations with a new transmission line would connect the substations providing two potential sources of power, so the lights stay on even when one source is not working. We are committed to continuing to work with customers to find a solution that best addresses all interests and concerns.
No. A City-run electric utility would operate the same electric infrastructure that PSE operates today and it would face all the geographic, weather, and infrastructure challenges that PSE faces today. These challenges do not change with a change in ownership.
Yes, we can underground lower-voltage distribution lines. However, there is cost sharing involved.
Our state regulators determine how underground lines are funded. The basic principle is cost sharing. If undergrounding is needed for technical reasons (e.g., not enough physical room to build an overhead line safely), then PSE pays for the undergrounding of the power lines and spreads the project costs over all 1.1 million customers. This helps keep costs low for all of our customers. On Bainbridge Island, around 55 percent (~165 miles) of distribution lines are already undergrounded. We also typically underground lines in new developments because the City of Bainbridge Island requires it and costs are shared by the developer.
If a jurisdiction or community wants to underground an existing overhead distribution line then there are cost sharing mechanisms in place through the Schedule 74 tariff. For example, if the City of Bainbridge Island wants lines undergrounded as part of a public improvement project, the cost is split 60/40 – PSE pays 60 percent of the costs and the local jurisdiction pays 40 percent plus trenching and restoration.
Yes, PSE can build transmission lines underground. However, it is up to the community to decide whether to invest in it. State regulations require PSE to first consider building overhead transmission lines because of their combination of reliability and affordability, both of which are important to our customers.
When a new line is constructed overhead, project costs are distributed evenly between PSE’s 1.1 million customers. Undergrounding is an option, but under these regulations underground transmission lines are considered a “local option” and the local community must pay the cost difference between overhead and underground lines. Most communities decide not to invest in undergrounding transmission lines because they have other investment priorities.
When PSE customers lose power, there is no higher priority for us than getting it safely restored. In a large storm, hundreds of PSE employees and our partners work tirelessly to get the lights back on. We open our local storm bases and emergency operations center, working around the clock to restore power and provide customers with information. We bring in additional crews from Canada, Oregon and Montana to help bolster our response. We also coordinate closely with emergency medical and fire services, government bodies, schools, businesses and the media.
Our strategy is carefully choreographed yet highly flexible, designed to change quickly in response to unanticipated events. This approach is the result of decades of experience, millions of dollars of investment in restoration technology and an employee culture that thrives in emergency situations. Moreover, this is an instance where PSE’s size gives us extra flexibility in tailoring our response to the situation.
A new tool we now can deploy is a warning email letting you know your power is out with an estimated time of restoration. This tool helps you plan if the power goes out while you’re out of the house.
The most common cause of power outages in the Pacific Northwest, including Bainbridge Island, is tree-related damage. Outages can be caused by branches coming in contact with power lines as well trees falling through lines.
Bainbridge Island is also especially vulnerable to outages since two of the three substations on the Island have only one source of power – one transmission line. It is best practice to feed a substation with two lines - or “loop” the substation. When substations are looped, they provide a redundant source of electricity for each other, therefore reducing the duration and frequency of outages.
Transmission outages affect the largest number of customers.
Distribution outages affect fewer customers, but are more frequent.
Since 2011, PSE spent $21 million on improvements to the Bainbridge Island electric system, to reduce outages and improve overall service to the Island. Here are some of the specific things we’ve done to reduce the frequency and duration of outages on the Island:
Tree wire PSE is replacing many sections of Bainbridge Island’s distribution line with tough, durable “tree wire,” which can more easily withstand the impact of a falling branch.
Underground distribution PSE is undergrounding particularly vulnerable sections of distribution line on the Island, reducing the likelihood of damage in those locations.
Tree trimming PSE actively monitors and trims the trees on the Island every three years, doing our best to keep branches and trees away from our electric lines.
There’s a science to restoring customers as quickly and efficiently as possible. We start as close to the source of generation as we can and work our way down the transmission lines to the smaller distribution circuits that feed communities and neighborhoods. Why? Because until we’ve found and repaired the damage to our large transmission lines we won’t know the extent of the damage further down the line. This method also ensures that the largest amount of customers have their power restored as quickly as possible. We also prioritize essential services, such as hospitals, water systems, energy and transportation.
No. A City-run electric utility would operate the same electric infrastructure that PSE operates today and it would face all the geographic, weather and infrastructure challenges that we face today. These challenges do not change with a change in ownership. Also, a small local utility may be disadvantaged in its ability to call upon outside crews.
PSE has invested billions in renewable energy, including three wind farms in Washington State. We are the second-largest utility producer of wind power in the United States and the Pacific Northwest's largest utility producer of renewable energy.
We have distinguished ourselves in many ways as a leader in clean energy technology:
- 36 percent of our overall electric supply comes from clean, affordable hydropower.
- We own and operate three large wind farms.
- We own one of the largest solar arrays in the region.
*biomass, landfill gas, petroleum and waste
In addition to hydroelectric and renewable energy, PSE generates electricity at natural-gas-fired power plants and at Colstrip, a coal-fired generating facility in eastern Montana.
Learn more about our electric supply at pse.com.
PSE’s power-supply portfolio includes the utility’s ownership interest in one coal-fired power-generating facility, the Colstrip Generating Station in eastern Montana. Colstrip consists of four separate coal-fired generating units, collectively owned by PSE and five other energy companies. We own 50 percent of units 1 and 2, built in the mid-1970s, and 25 percent of units 3 and 4, built in the mid-1980s.
Yes. PSE plans to reduce and eventually eliminate all coal from our fuel sources. As a company, we place great value on being good environmental citizens without sacrificing our commitment to safe, reliable and efficient energy. We know customers want cleaner power at a reasonable cost and we are committed to providing it, starting with shutting down the two oldest generating units (units 1 and 2) in Colstrip no later than July 2022.
Getting natural gas to Bainbridge Island is an expensive and risky proposition. First, an important point of clarification, the Washington Utilities and Transportation Commission (WUTC) considers natural gas a convenience, while electricity is an essential service. The WUTC determines whether a gas company can expand its service area or not.
One criterion is whether the expansion is a prudent investment. This means the economics of the expansion into the new service area must have enough customers to justify the investment and doesn’t place too great a financial burden on the existing natural gas customers. A very rough estimate to bring gas to the island is $75 to $100 million for a maximum of 12,000 customers. This cost does not include any possible capacity expansion that may be needed, any natural gas infrastructure installed on the island or the costs associated with siting, permitting or opposition to expanding natural gas.
Another criterion the WUTC examines is the proximity of the gas company to the new service area. Cascade Natural Gas already serves much of the Kitsap peninsula and, therefore, would be the most logical company to expand. PSE could petition the WUTC to expand our service area; however, the WUTC might deny the request due to Cascade’s proximity.
Considering these and other factors, we currently don’t have any plans to expand our gas service to Bainbridge Island.
PSE Green Power and Solar Choice are two renewable energy programs available to all PSE electric customers. Both programs give you a way to match your electricity use with clean, renewable energy.
Solar Choice is a way to match some or all of the power you use with clean, solar energy. As a participant, panels will not be installed on your home. Instead, solar energy is generated at a separate location and added to the power grid on your behalf. Every $5 you spend buys 150 kilowatt-hours of solar power generated in Washington or Idaho.
In addition to supporting clean solar power, your home’s electricity-based carbon footprint goes down. For the average home, annual electricity emissions could be a little less than 12,500 pounds of carbon dioxide equivalent (CO2e, which is a standard way to measure the global warming effect of any greenhouse gas, in terms of how much carbon dioxide would produce the same amount of global warming). With a $20 per month contribution for Solar Choice (matching about 60 percent of the average home’s usage); annual electricity emissions would be reduced to about 5,000 lbs of CO2e.
While Solar Choice supports 100 percent solar, Green Power supports a blend of resources. PSE’s Green Power program is also funded by voluntary purchases from our customers, creating an environment for small green power producers (e.g., dairy digesters, independent wind farms, etc.) to bring their projects on line. Every $2 you spend per month buys 200 kilowatt-hours of a mix of wind, solar, biogas and low-impact hydro from Washington, Oregon or Idaho.
Your carbon footprint is also reduced supporting Green Power. For the average home, $10 a month is enough to match 100 percent of your electricity usage.
For both programs, PSE uses the funds to purchase renewable energy credits (RECs) from a local producer of solar or other renewable energy options, and that guaranteed purchase creates a favorable financial situation in which the producer can get a loan to complete the project. In this way, our customers help create an environment to bring small-scale renewable energy to the market that would otherwise have a difficult or impossible time. PSE administrates these programs but cannot profit from them.
PSE is also committed to traditional solar power panels on homes and businesses and realizes it has a bright future in the Northwest. Many of these customers are not only generating electricity to light their homes and businesses, but many earn bill credits (net-metering) from us when their solar systems produce more power than they are using. In 2016, solar arrays on Bainbridge Island provided 1.6 MW of power back to the grid.
Hopefully it can be someday, but with today’s technology there simply isn’t a cost-effective way for PSE’s entire system to be powered by renewable energy sources. Solar and wind energy are not constant and might not be available when customers need power. However, we are on the cutting edge of technologies that could enable a greater reliance on clean energy in the future. For instance, our Glacier battery storage project is piloting an innovative technology that could help make intermittent energy sources like solar or wind more practical.
Also, in the fall of 2016, PSE partnered with the Harbour Public House and Impact Bioenergy to fund a biodigester pilot project. Impact Bioenergy is a Seattle-based startup that builds small biodigesters to turn food waste into energy. The new biodigester uses food waste from the restaurant and converts it into organic fertilizer used by local farms and electric energy for the restaurant.
We have also been in talks with the City of Bainbridge and other local partners regarding a permanent community biodigester on the Island.
Currently, about a third of the energy we provide to our customers comes from the Colstrip Generating Station in Montana. The rest of our energy comes mostly from hydropower, wind power and natural gas-fired generation.
PSE’s mission is to provide our customers with safe, reliable and efficient energy at a reasonable cost. Coal has historically been inexpensive compared to other energy sources and adds diversity to our fuel mix. This diversity helps us reduce the likelihood of rate increases or reliability issues due to unforeseen supply problems.
Although using coal has provided low-cost energy to our customers, we also want to make the best possible choices for our planet and that includes transitioning to cleaner sources of energy. To do that, we must responsibly reduce coal from our energy portfolio.
PSE plans to shut down Colstrip Units 1 and 2 by July 2022 and Units 3 and 4 by 2035. However, all units will require clean-up after they are decommissioned and that could last until 2051. Throughout that time, the two owners, PSE and Talen, will invest a total of about $200 million in Colstrip as the clean-up creates new jobs and we invest in the long-term future of the region.
Eliminating coal from our fuel mix isn’t as simple as flipping a switch. To prevent a drastic increase in our customers’ rates, we must reduce our reliance on coal slowly and strategically. Otherwise we risk threatening our ability to provide our customers with reliable energy at a reasonable cost. We are working on a plan with our state regulators and the legislatures of Montana and Washington that will help us gradually reduce our reliance on coal without creating hardship for our customers or the workers in Colstrip, Montana.
For nearly 80 years, PSE has been part of the Bainbridge Island community. We’ve grown alongside the island, from its beginnings as a mill and shipping town with less than 500 residents to the vibrant community of businesses and neighborhoods that is now home to over 23,000 people.
We work hard to balance the Island’s energy needs with Islanders’ desire to remain a sustainable, environmentally friendly and naturally beautiful community. PSE deeply values our relationships with our Island customers; we are proud of the leadership we have shown on the Island beyond our obligation to provide safe, reliable and efficient energy.
PSE is committed to being a good corporate citizen in the communities we serve. We support and participate in many events and initiatives, especially those related to energy efficiency, renewable energy, safety and emergency preparedness. We also support other community events, organizations and projects that make Bainbridge Island a better place to live and work.
As a significant economic and jobs contributor in the Puget Sound region, PSE chooses to be a leader in our communities. Our community involvement on Bainbridge Island demonstrates our long-standing dedication to being not just a good utility, but also a good neighbor.
No matter where you live, having an emergency preparedness plan for your family is a good idea. Natural and man-made disasters, including earthquakes, floods and landslides, have the ability to disrupt public and emergency services for days, weeks or even months.
PSE is dedicated to ensuring our customers’ safety. We organize and sponsor emergency preparedness initiatives every year, including Safe in the Sound, an emergency preparedness partnership with the American Red Cross.
On Bainbridge Island, PSE is the primary sponsor and an organizing partner of Bainbridge Prepares, an annual event that teaches Islanders to prepare for and survive a disaster. PSE collaborates with the City of Bainbridge Island, Bainbridge Island Fire Department, Bainbridge Rotary, Bainbridge Island School District and Kitsap Regional Library – Bainbridge branch to make the event a success.
PSE supports Island organizations through the PSE foundation, which is funded by our owners. The foundation recently made a $50,000 grant to Island Church to support their new emergency generator.
PSE’s corporate giving program also supports many other Island groups, agencies and non-profits, including:
- Bainbridge Island Arts and Humanities
- Bainbridge Island Boys & Girls Club
- Bainbridge Island Chamber of Commerce
- Bainbridge Island Downtown Association
- Bainbridge Island Parks Foundation
- Bainbridge Island Schools Foundation
- Bainbridge Youth Services
- Bloedel Reserve
- Helpline House
- West Sound Wildlife Shelter
One-hundred percent of PSE’s charitable contributions are paid for by PSE’s owners and employees. Additionally, one of the benefits provided to our employees is matching their donations to local organizations. This allows employees to support causes of importance to their own communities within our service territory. We also support employee volunteer opportunities, such as the annual rotary auction on Bainbridge Island.
Public utilities, like the one the City of Bainbridge is considering, by state law cannot provide financial support to local charities and causes, unless they solicit 100 percent of those funds from local residents. A private utility like PSE is able to dedicate private funds to support the communities we serve. We are a proud member of the Bainbridge Island community and are committed to supporting causes that are important to our customers.
Clean energy (also known as “green” or “renewable” energy) comes from generation sources that can:
- Be used over and over again without being depleted
- Create the smallest amount of environmental impact as possible
Common sources of clean energy include solar, wind, geothermal, low-impact hydro and biogas.
Yes, a portion of the power we deliver to customers comes from renewable sources. While hydro power is not considered renewable by our state regulators, it is by the federal standards. Using that standard, our renewable energy portfolio, as of 2015, is 36 percent hydro, four percent wind and one percent solar and biomass combined. We balance renewable energy with more predictable energy sources like thermal-produced electricity from natural gas and coal. This variable mix of fuels helps keep our customers’ rates stable and the lights on.
We are steadily expanding our supplies of renewable power. We’re already the nation's second-largest utility producer of wind power (our three wind farms generate enough power to serve nearly 200,000 homes) and we expect to triple our existing supply of renewable energy by 2020. We’re also exploring other cost-effective sources of renewable power including geothermal, biomass energy and solar. We currently operate one of the state’s largest solar arrays and have more than 5,000 customers with grid-connected solar at home, including many Bainbridge Island residents. Including our significant hydro power supply, 40 percent of our energy portfolio comes from renewable sources.
PSE and Bainbridge Islanders have something in common: a passion for innovative, cleaner electricity. In 2004, PSE began investing in dairy digesters as part of its Green Power program. Today, PSE has partnerships with six local dairy digester projects and 10 family dairies. Dairy digesters turn manure into methane needed to fuel electric generators. PSE also partnered with the state and several other organizations in a pilot project, building a two-megawatt battery storage unit in Whatcom County. During a severe storm, these four battery units can keep the lights on in Glacier until crews arrive.
In the fall of 2016, PSE partnered with the Harbour Public House and Impact Bioenergy to fund a biodigester pilot project. Impact Bioenergy is a Seattle-based startup that builds small biodigesters to turn food waste into energy. The new biodigester uses food waste from the restaurant and converts it into organic fertilizer used by local farms and electric energy for the restaurant.
We have also been in talks with the City of Bainbridge and other local partners regarding a permanent community biodigester on the Island.
Yes, by signing up for PSE’s Green Power program, you can increase green energy resources in the Pacific Northwest right now.
For a small additional payment of $4 to $12, sent in with your monthly energy bill, we can match all or a portion of your energy usage with clean, renewable power from independent producers in the region. This commitment makes it possible for local energy innovators in wind, solar, landfill gas and agricultural waste to bring new renewable generation to the market with funding that would otherwise not be available.
Currently 10 percent of Bainbridge Islanders participate in the Green Power program, the second highest community participation rate in our service area. Visit pse.com/greenpower to learn more.
No. PSE is able to make such impressive renewable energy investments on behalf of our customers because of our size. When we build a wind farm, for example, we spread the significant cost among our 1.1 million electric customers over a reasonable time period, ensuring a minimal impact to rates. A small City-owned electric utility would not be able to invest in wind technology without drastically increasing the rates of all 12,000 Bainbridge Island customers.
One point currently made about a City of Bainbridge public power utility, is the energy it would receive from the federal Bonneville Power Administration (BPA) is all hydro energy, which federal regulators classify as renewable. First, not all BPA power is from hydro power. BPA markets all the output from Washington’s only nuclear plant. Second, BPA is not considering building any new renewable energy generation (such as wind or solar), while we expect to triple our existing supply of wind energy by 2020.
Energy efficiency is the conscientious choice to reduce your household's or business’ energy use. Puget Sound Energy (PSE) customers can lower their bills and limit their environmental footprint by using the many energy efficiency tools, rebates, grants and resources provided by PSE.
Any type of energy, even wind and solar, has some environmental impact. In addition to reducing greenhouse gas emissions, energy efficiency helps improve air quality in your community and can delay the need to build new energy generation facilities and infrastructure.
Since 1979, no other utility in the Northwest has helped customers save more energy than PSE.
Our energy efficiency programs have helped PSE customers save enough electricity to power a total of almost 500,000 homes for a whole year. In 2014 alone our customers saved enough electricity to power 25,000 homes.
PSE has helped our customers reach this amazing accomplishment through our innovative approach to energy efficiency, made possible by our size, our experience and our commitment to environmental leadership.
Between 2010 and 2015, PSE invested more than $3.3 million in energy efficiency funding to help residents and businesses on Bainbridge Island.
PSE helps customers reduce their energy use with tools and services such as:
- Rebates and incentives on a wide variety of energy-efficient appliances and products, including washing machines, shower heads, light bulbs, water heaters and windows.
- Home and business energy retrofit resources and grants. Our customers include the Bainbridge Island Aquatic Center.
- 12 Energy Advisors providing personalized phone-based customer service to PSE customers who want to reduce their energy use.
Unfortunately it’s rare for public utilities, like the one the City of Bainbridge Island would run, to offer the same quality of money-saving energy efficiency resources that PSE does.
That’s because PSE’s energy efficiency goals are set by the Washington Utilities and Transportation Commission in consultation with environmental groups, low-income advocates, customers and other stakeholders. A public utility would develop its own energy efficiency goals with no oversight or incentive. Indeed, there are challenges for such programs imposed by rules contained in the Washington State Constitution that make broad energy efficiency programs difficult for governmental utilities to create. PSE’s large customer base allows us to offer very sophisticated tools that would no longer be available if the City of Bainbridge Island purchases our system.
In addition, since our energy efficiency programs are funded through a small amount paid by all of our 1.1 million customers, Bainbridge Island customers receive a much bigger benefit overall than they ever could with only 12,000 customers contributing.
PSE is a regulated investor-owned utility. We are currently owned by investor-run funds that invest in energy companies such as PSE in part due to the relative predictability of the utility industry.
During our more than 135-year history one thing has remained constant: PSE's focus on safe, reliable, affordable energy service. We’ve been on Bainbridge for nearly 80 years. We're proud of our legacy: a commitment to great customer service and helping to make our communities better places to live and work.
We are headquartered in Bellevue, WA with 2,700 local employees covering our 6,000 square miles of service area, primarily in the Puget Sound region of Western Washington. In total we have about 1.1 million electric customers and 800,000 natural gas customers. On Bainbridge Island, we serve over 12,000 electric customers.
PSE is a privately held company regulated by Washington state and federal agencies. We fully disclose financial statements through regulatory agencies including the U.S. Securities and Exchange Commission. Of course, this financial information is available to the public.
Public utilities, such as the one that the City of Bainbridge Island is contemplating, finance their operations mostly with bonds and loans, which must be paid back with interest. In rare instances, they may also use tax increases to fund services.
Investor-owned utilities like PSE are able to make large investments to benefit our customers, such as building and operating a new hydroelectric dam or wind farm. Owning our own generation facilities, rather than buying most of our energy on the open market, helps keep costs stable for our customers and allows us to invest in cleaner, renewable sources of energy.
PSE can make expensive, environmentally sound investments like this because our funding comes from investors, who expect (though are not guaranteed) a reasonable return on their investment. However, it is noteworthy that the “return” available to such investors is actively regulated by the Washington Utilities and Transportation Commission (UTC).
By comparison, public utilities often must purchase their electricity on the open market, where they have no control over the source and are more vulnerable to rate increases.
In 2000-2001, the price of energy skyrocketed. The customers of investor-owned utilities had a buffer to protect them from dramatic rate increases: their utility’s regulators, who could elect to place the financial burden on the shoulders of a utility’s investors instead of the public.
The customers of public utilities are not offered the same protection. As an example, in response to the crisis, Seattle City Light raised its rates by 55 percent, Snohomish PUD raised them by 53 percent and Clark PUD raised them by 45 percent. Puget Sound Energy didn’t raise rates at all.
When the costs, responsibility and ownership of running an electric utility are taken over by a city, the transfer is known as “municipalization.”
A community’s high-stakes decision to municipalize hinges on the hope that a new city-run utility is capable of providing better service to its customers than an experienced private utility—and that they are prepared to manage the significant complexities and costs of delivering electricity to customers.
The City of Bainbridge Island is looking into taking over the electric system from PSE. There has been only one other successful municipalization effort in the past 60 years, for good reason. After Jefferson County voters chose to form a Public Utility District (PUD) in 2008, they found that the promised costs of purchasing the system had nearly doubled from the original estimates. (read: Washington Policy Center policy brief)
Acquiring the Island’s electric system would require the City to purchase all of PSE’s property, equipment and assets. PSE is not for sale so purchasing our assets would require going through a lengthy and expensive legal process called condemnation.
PSE commissioned a preliminary feasibility study to give Bainbridge Island residents a detailed assessment of the costs and risks of a City-owned electric utility. The study’s authors, Concentric Energy Advisors, estimate purchasing the assets would cost the City about $109.1 million. The estimated transaction costs, which cover legal, consulting and financing costs for the condemnation process, would be an additional $8.7 million. For details, read the full preliminary feasibility study or a memo from the study’s authors to PSE.
Concentric Energy Advisors are a management consulting and financial advisory firm focused on the North American energy industry.
As a large utility with a strong local presence, PSE is able to provide the services of a large company along with the community engagement and leadership of a smaller one. Voters can expect some of the following effects to those services if they vote to leave PSE:
Spending tens of millions to acquire and set up the City-run electric utility.
Jefferson County voters decided to municipalize based on the optimistic estimates in a feasibility study. Unfortunately for customers, we now know that the study vastly underestimated the costs of purchasing PSE’s infrastructure and setting up a new electric utility, including:
Purchasing the electric system and all related assets. In Jefferson County, PSE was a willing seller, which is not the case with Bainbridge Island.
Operating the system, including debt payment, purchasing power, paying taxes and employees, maintaining trucks and equipment, implementing billing and outage management systems, and setting up operations bases, to name just a few.
In Jefferson County, the startup costs were $115 million – more than two to three times what the feasibility study estimated.
In response to a proposal being considered by the City of Bainbridge Island to take over the electric system on the Island, PSE commissioned a preliminary feasibility study to give Bainbridge Island residents a detailed assessment of the costs and risks of a City-owned electric utility. The study’s authors, Concentric Energy Advisors, estimated a City-owned electric utility would cost Bainbridge Island taxpayers $146.8 million upfront to take over and set up the utility, and millions more to operate.
The upfront costs would be broken into three main parts:
Acquisition costs of PSE’s assets are $109.1 million, which cover purchasing electric infrastructure items such as substations, transmission lines, distribution lines, easements and property.
Transaction costs are $8.7 million, which cover costs such as legal, consulting and financing costs to pursue the condemnation and close the transaction.
Start-up costs are $29 million, which include the cost of new systems, resources, inventory, machinery and services. These items are needed to operate and maintain the utility, manage customer relationships, data, and billing, and to provide sufficient financial reserves.
There are also annual operations costs. Concentric Energy Advisors estimates ongoing operation costs for the citizens of Bainbridge Island will be greater with a City-run utility than with PSE. These costs include:
- The City-run utility would need approximately $30 million to operate the utility in the first year (assumes 2021), and by 2034, would require roughly $42 million annually.
- Over a 10-year period, customers on Bainbridge Island would spend $36.6 million more than if they stayed with PSE.
For more information, see the full preliminary feasibility study by Concentric Energy Advisors.
Low-income customers could stop receiving bill payment assistance.
While the PSE-commissioned preliminary feasibility study from Concentric Energy Advisors assumed a City-run electric utility would continue to provide the same level of low-income assistance PSE currently provides, a City of Bainbridge Island-run electrical utility would have a harder time funding low-income programs due to Washington State’s restriction on using public funds for private benefit. In contrast, PSE is able to help keep the lights and heat on for low-income customers on Bainbridge Island who might otherwise have their service shut off.
Customers could have less protection from rate increases.
As a Washington state-regulated utility, Puget Sound Energy follows a structured judicial process and review system for its requests to change rates. Washington state law requires that state-regulated utility rates must be reasonable to customers, providing utilities a chance to recover legitimate costs and earn a fair profit. PSE’s rate cases are heard in a formal, legal setting, with the state’s Utilities and Transportation Commission hearing evidence from all parties before issuing a decision. The process takes 11 months.
Municipally run utilities, like the one proposed by the City of Bainbridge Island, generally seek approval of rate increases through their City Council or an appointed Utility Board or Commission. These reviews generally are conducted during a regularly scheduled public meeting. Public input occurs during these reviews. This process may take only a few weeks.
Customers would foot the bill for the entire cost of improving the electric system.
When PSE makes an investment to improve electric service for our customers in a specific community, we spread those cost to all 1.1 million customers. For example, PSE has invested $21 million in electric infrastructure projects since 2010 on Bainbridge Island, and has plans for an additional $7 million in electric system improvements over the next several years. That cost is shared by all of our customers, not just the 12,000 on Bainbridge Island.
Another example of shared costs that would be foregone by Island residents if they vote to purchase PSE’s electric system is the cost to underground power lines. Currently, if the City of Bainbridge Island decided to underground existing distribution power lines as part of a city improvement project PSE would pay for 60 percent of the cost. Under a City of Bainbridge Island-run utility, Islanders would pay for the entire cost of undergrounding.
A third example might be building a wind farm or solar facility. Such intermittent but renewable resources have to be backed up with something and a larger utility like PSE allows economies of scale to protect all ratepayers.
Customers would be dependent on a novice City of Bainbridge Island Electric Utility to provide safe and reliable power.
PSE has served Bainbridge Island for decades. During storms and other emergencies, PSE coordinates the entire restoration effort from their network of emergency operations bases. PSE’s support personnel grows to over 200 people during storms, including service crews, substation crews, tree crews, engineers and support staff. If customers vote to leave PSE, the City of Bainbridge Island would be responsible for maintaining the infrastructure, making expensive improvements to ensure reliability and coordinating all emergency response efforts.
Customers could lose solar power incentives.
PSE administrates Washington State’s Renewable Energy Production Incentive program. The annual funds available through this solar incentive program are limited to 0.5% of a utility’s power sales. PSE’s incentive limit, based on annual power sales of over $2 billion, has consistently been over $10 million per fiscal year.
In 2016, PSE administered $460,000 in incentive payments to Bainbridge Island customers. We are currently serving 203 solar customers on Bainbridge Island, with a combined generating capacity of 1.6 MW.
A small, locally run utility, such as the City of Bainbridge Island, wouldn’t have near the amount of available incentives that we can provide, which would require drastic incentive reductions to residents with existing solar systems. This would also cripple the new adoption of solar energy on Bainbridge Island.
For more information, go to the pse.com website.
Puget Sound Energy (PSE) is a state-regulated utility. That means we must convince independent regulators and the Attorney General (AG) that any expenditure is in our customers’ best interest before PSE gets to include its investment in rates. The Public Counsel unit of the AG’s office represents the customers of state-regulated investor-owned utility companies like PSE on such issues as rates, service quality, conservation, business practices, mergers and competition.
If the City of Bainbridge Island takes over PSE’s system they would be a public utility. Public utilities don’t face state-level scrutiny of their decision-making. The leadership of a public utility, in this case Bainbridge Island City Council members, would be able to take actions, build new infrastructure and spend money without review or oversight.
It’s difficult to know precisely how much rates would be impacted but we do know that customers would have less protection from rate increases. PSE can only increase our customers’ rates after a strict 11-month process, during which the Washington State Utilities and Transportation Commission (UTC) opens the floor to public comment and involvement. Municipally run utilities, like the one proposed by the City of Bainbridge Island, generally seek approval of rate increases through their City Council or an appointed Utility Board or Commission. A rate increase can be imposed by such a utility in a matter of weeks.
Customers of the Jefferson Public Utility District (the only public utility to form in our state in over 60 years) have still not received the bill savings they were promised during the campaign nine years ago.
For more details, see the Washington Policy Center Policy Brief for Jefferson County PUD.
When PSE’s customers have concerns about the way our business decisions are made, they have several options including lodging a formal complaint with the UTC. While we always attempt to act in all of our customers’ best interest, this set of checks and balances gives our customers confidence that their interests are protected by independent consumer advocates.
A City of Bainbridge Island-run electric utility would not offer customers this same recourse. Any complaints about service or rates would go directly to the City-run utility, rather than a watchdog or regulator.
The rate that Puget Sound Energy (PSE) charges customers for electricity reflects the many costs that go into running a safe and efficient utility, including:
- Price of electricity
- Cost of delivering it to your home or business
- Cost of building and maintaining infrastructure to ensure reliable electricity for our customers.
As a Washington state-regulated utility, we follow a structured judicial process and review system for requests to change rates. Washington state law requires that state-regulated utility rates must be reasonable to customers, providing utilities a chance to recover legitimate costs and earn a fair profit. PSE’s rate cases (taking 11 months) are heard in a formal, legal setting, with the Washington Utilities and Transportation Commission (UTC) hearing evidence from all parties before issuing a decision.
Municipally run utilities, like the one proposed by the City of Bainbridge Island, generally seek approval of rate increases through their City Council or an appointed Utility Board or Commission. These reviews generally are conducted during a regularly scheduled public meeting, with no defined process and may only take a few weeks.
The UTC considers public input when they decide whether PSE should be allowed to increase rates. Typically they provide several public comment opportunities where customers can weigh in on the proposal.
A City of Bainbridge Island-run utility would not be obligated to consider public input when they are deciding whether or not to increase rates. Without an objective third-party regulator there would be no obligation to include public commentary in the decision.
PSE is a heavily regulated investor-owned utility whose actions are carefully monitored and reviewed by the UTC. In order to build needed upgrades to the electrical system, we invest the money upfront. Once these capital upgrades are “live” (power is flowing through the lines and customers are receiving power from those lines), we then submit the amount of the capital investment to the UTC. The UTC reviews the investments for prudency before these amounts can impact rates. All of PSE’s work must pass muster.
Once the costs of upgrades or additions to our electrical infrastructure are approved by the UTC, they are shared by all of PSE’s 1.1 million customers and paid for over time.
Electricity is an essential service that Puget Sound Energy (PSE) customers depend on to cook their food, warm their houses and charge their electronics. There are many reasons why a customer might struggle to pay their bill and PSE is committed to easing the burden for income-eligible customers as much as possible.
PSE offers two programs to help ease the burden for financially struggling households.
PSE HELP (Home Energy Lifeline Program) provides customers with assistance paying their energy bill. In Kitsap County, PSE provides over $600,000 of bill assistance each year.
PSE Weatherization Assistance Program provides free assistance to qualifying customers who need help lowering their energy usage and bills.
Both of these programs are designed to supplement the assistance offered by local and federally funded agencies.
A City of Bainbridge Island-run electrical utility would have a harder time funding low-income programs due to Washington State’s restriction on using public funds for private benefit. In contrast, PSE is able to help keep the lights and heat on for low-income customers on Bainbridge Island who might otherwise have their service shut off.