- Plunge Multnomah County into $1 Billion in debt.
The PUD, if formed, can't simply take possession of the Poles and wires and distribution systems from Pacific Power and PGE. The PUD will have to condemn and buy these systems at an appraised value. This will cost a billion dollars. This is a billion dollars that Multnomah county residents will have to pay off through their electricity bills. Multnomah residents will bear the expense and the risk of this proposition.
In a time when budget crisis threatens to shut down schools, throw poor people out on the street and stop medications for the frail, how is it a good idea to go $1 billion in debt??
- No generation assets. Expensive, risky power supply.
The estimated $1 billion needed to take over the distribution systems from Pacific Power and PGE won't include a AA battery's worth of electricity. The condemnation on the service territories of these companies are very unlikely to include any power generating assets. If PUD backers think they are going to take over PGE's generation, they are in for a fight. If they think they're going to take over Pacific Power/Pacificorp generating assets, they are seriously deluded.
The new PUD won't have very advantageous dealings with BPA as a power supplier. The PUD won't inherit any of long term contracts that PGE or Pacific Power hold with BPA. They'll have to make new agreements. BPA rates have gone up 45% in two years and they're set to go up another 15% this year.
Instead, they will have to buy power on the open market, which is volatile and could turn out to be very expensive. Look at the energy crisis of 2001 as an example of how electrical utilities get shafted when they can't produce enough of their own power. A utility is then forced to make the choice of whether to pay prices that border on extortion or let the lights go out.
- An inexperienced utility with no control system or IT infrastructure to manage 300,000 customers.
This PUD will be a brand new utility faced with the task of merging parts of service territories of PGE and Pacific Power. This new utility will probably have to build a new control system to merge the two. This is a big expense that the county will have to pay.
This utility will also have to set up a Customer tracking and billing system for an estimated 300,000 customers. This is a big expense that won't come as part of the foreclosure. Any reader out there in the IT profession can attest that this promises to be a very expensive undertaking. Mulnomah County residents will be paying for this with their power bill as well.
- PUD's and Co-ops have the most expensive power rates in Oregon.
The seven highest rates paid by customers in Oregon all come from PUD's and Co-ops. As a general rule Public power does not translate to lower rates. This is because smaller utilities don't have much bargaining power with big power wholesalers.
Proponents of the PUD like to point out one or two other PUD's who currently have lower electricity rates than PGE. These are most likely due to long term, locked-in, contracts with BPA. These contracts stabilize prices for a time even as generation costs rise. This is deceptive to customers, because these utilities will face steep rate hikes from BPA once their current contracts expire and they have to renew. This is when they'll fee the pinch from several years of accumulated BPA rate hikes.
- Loss of Tax revenue.
PGE and Pacific Power pay local taxes and franchise fees. The Multnomah County and the City of Portland will lose an estimated $40 million annually by condemning these service territories in favor of a PUD which pays no taxes. Remember all of the trouble we've gone through this year just to be able to keep schools open?
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Maybe Dan Meek can come and give a quick response to these questions.