March 8, 2023

Commissioners Deshmane, Grant, and Arnett,

In 2022, we created the 2025 Strategic Plan together with staff, customers, and input from the general public.  One of the overarching goals of our Strategic Plan is to define the PUD’s role in advancing clean, renewable, and local energy.  Our first strategy under this goal was to develop a long-term plan to consider the provision of retail electricity throughout Whatcom County (Strategy RE 1).

Shortly after our Strategic Plan was completed, we released a request for proposal and selected EES, a consulting firm, to study the question:  Should Whatcom PUD offer countywide retail electric service?  EES conducted field work and gathered a wealth of publicly available data on the Whatcom County electric distribution system currently owned and operated by Puget Sound Energy (PSE).  Using this data, along with information on future electric supply scenarios, EES built a financial model to forecast outcomes of transitioning to countywide public power. Today, I am able to present the result of EES’s work.

While there are significant non-financial benefits from taking over PSE’s assets in Whatcom County, especially around local control to achieve specific carbon intensity goals in electric supply and local reliability investments—the financial risks are significant.  The study concludes that acquiring PSE’s assets now would incur higher rates for Whatcom County ratepayers for many years.  Of note, these higher rates would be felt most sharply by low income customers.

Supporting the study are a series of necessary assumptions.  These assumptions must be made in order to forecast costs (especially for electricity supply) in the future.  These assumptions include the fact that both PSE and Whatcom PUD must transition to 100% carbon free electricity to comply with the Clean Energy Transformation Act (CETA).  While PSE is currently experiencing large rate increases partially due to CETA, this study assumes that PSE’s rates will revert to a historical norm after the current round of increases, and that the future prices we see for energy today will stay the same for years to come.  Some of these assumptions will likely need to be modified when we have new data, and some will be proven accurate.  Time will need to pass to know.

The guidance from the study is clear:  Becoming the countywide retail power provider should be a mid-term to long-term strategic pathway that remains under consideration for Whatcom PUD. Becoming the retail electric provider for the County in the short term may negatively impact Whatcom County ratepayers, but as new trends materialize—especially if PSE’s rates continue their double-digit increases—the benefits of a transition to public power will likely become far more compelling.

The report does not address other actions we can and should undertake now to help our communities in pursuing a cleaner and less carbon intensive energy supply than they have today.  We need to continue exploring these actions.

I look forward to working with the Commission and other stakeholders as we move forward.

Sincerely,

Chris Heimgartner
General Manager
Whatcom PUD


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