By Charlie Bermant
Peninsula Daily News
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“This is a really big deal for the county,” said Wayne King, who served on the transition team that also included General Manager Jim Parker and retired PSE executive Don McDaniel.
“In the future, they are going to look back on this and say, ‘These old guys really knew what they were doing,’” added King, a Gardiner resident who was elected to a third term as PUD commissioner in November.
The process of the takeover hasn’t been easy, King said.
“There were some tough negotiations, but we got it done,” he said.
At one minute past midnight tonight, the PUD will become the electricity provider in East Jefferson County, taking over ownership of the utility from Puget Sound Energy.
In 2008, voters gave the PUD the authority to decide to take over providing electrical service.
In May 2010, the PUD commissioners approved a letter of intent to buy the PSE infrastructure for $103 million, a cost that has swelled by about $5 million because of improvements PSE has made to the system.
On Wednesday, the PUD received $114,743,000 of a $115.7 million loan from the U.S. Department of Agriculture that was deposited by the Jefferson County treasurer.
Burke said the interest rate is 2.728 percent, locked in for 28 years.
King said the low rate is good news for the county. The rate was not settled until the deal closed.
“The low rate is the biggest benefit,” King said.
“When we were putting the deal together, we determined that we could make it pencil out with a 5 percent loan,” he added.
“This is half of what we planned for, and 1 percent of $100 million is a lot of money for the county.”
Closing documents for the sale were signed in Seattle on Friday, PUD Commissioner Barney Burke said.
The final amount, which will include all improvements made by PSE, will be determined when all of the infrastructure improvements made by PSE are taken into account, Burke said.
“This is a little like closing on a house before the seller has installed a new water heater,” Burke said.
The transferred assets include 19,000 residential and meters, eight substations, 26.4 miles of 115 kilovolt transmission lines, 380 miles of overhead line, 353 miles of underground distribution lines and the operations building and yard at 310 Four Corners Road.
King said he expects electrical rates to decrease, even in the near term — substantially once the loan is paid off.
Rates aren’t entirely within the PUD’s control, since it depends on the rates set by the provider, but King said he doesn’t expect any increases.
It will be three months after the PUD takes over providing service before it will qualify for a preferred rate from the Bonneville Power Administration, but that will not affect what customers pay, PUD Manager Jim Parker has said.
Burke has said the rates won’t change or be addressed for at least a year, but King said Friday that a rate study could occur within six months.
Twelve new jobs already had been created by February, King said.
King, owner of King Hydraulic Marine and Machine in Sequim, said the transition has a certain symmetry, recalling that his family helped create the first PUD in East Jefferson County by ceding the rights to their well, built in Gardiner in 1910, in the early 1970s.
The manager of the PUD at that time was Bill Tatum, whose daughter-in-law, Mary Lou Tatum, now works for the PUD in customer service.
“This is a smart move, and I’m glad this is happening,” said Team Jefferson Executive Director Peter Quinn, who is also chief executive officer of Quimper Mercantile Co.
“We are bringing jobs back into the county and repatriating all the dollars that used to go to PSE.”
Jefferson County Editor Charlie Bermant can be reached at 360-385-2335 or at firstname.lastname@example.org.