Electrical Authority FAQs

In October 2007, Puget Sound Energy announced plans to sell the utility to a consortium of foreign investors for $7.4 billion. This major change in ownership could have significant implications for Skagit County residents.

Many Skagit County residents have expressed support for the Skagit Public Utility District exploring expansion into electric service. This page is designed to answer many of your questions about the sale and its impact locally.

What is the issue?
PSE is a private for-profit company. It has a current debt load of about $2.5 billion and a low credit rating of BBB- "Watch Status." PSE has proposed a rate increase for customers of ~12 percent. The utility has also requested an increase of its rate of return on investments from 10.4 percent to 10.8 percent.

Due to its low credit rating, PSE has experienced difficulties obtaining capital. PSE needs $5 billion over the next five years for its capital improvements program. Increased debt will result in higher expenses for ratepayers. The sale to a consortium of foreign investors provides a way to obtain capital. Foreign investors will purchase all publicly traded stock and convert it to private stock.

Do Skagit County residents have any options?
In a region where an investor-owned electric utility provides high cost power, communities may wish to authorize a public power alternative. For Skagit County residents, Skagit PUD represents a viable means for lowering electric rates, providing reliable service, and exercising local control over the provision of electricity.

At present, Skagit PUD does not provide electric service. To do so would require a majority of voters approving a ballot measure authorizing the PUD to provide electric service in Skagit County.

What is a public utility district?
Public utility districts are community-owned, locally regulated utilities that are formed by a vote of the people. Unlike private utilities, public utility districts are run by an elected, nonpartisan board of commissioners who are directly accountable to the voters. A public utility district's first and only purpose is to provide efficient, reliable service to their local customers at the lowest possible cost.

Washington is a public power state with 28 PUDs operating in 27 counties. PUDs serve nearly one-third of all state residents.

• 23 provide electricity
• 19 provide water and/or wastewater services
• 13 provide wholesale telecommunications

In addition, there are 20 municipal utilities and 15 electric cooperatives or mutuals. Washington has just three private power utilities.

How do public utilities compare on rates?
As a nonprofit, PUD rates are generally lower—and service values higher—than investor-owned utilities that are focused on making money for their stockholders. On average, investor-owned utility customers pay rates that are 10 percent higher than public power customers. PSE has some of the highest residential electric rates in the Northwest.

Public utilities purchase power through the Bonneville Power Administration. The Bonneville Power Act (1937) gave Northwest public utilities first right—preference—to purchase power at cost from federal Columbia River Basin hydroelectric dams. Collectively, Washington PUDs are BPA's largest purchaser of wholesale electricity.

Do PUDs pay taxes and support the local economy?
PUDs measure success, in part, by how much money stays in the community—through low rates, jobs and conservation of resources—not by how much goes out to stockholders across the country or around the world.

Public power utilities also make a larger financial contribution to state and local governments in taxes and other in-lieu-of payments—18 percent more that investor-owned utilities pay in state and local taxes.