Public pans PSE’s proposed merger

Skagit County residents worried about Baker River dams attend hearing

JOHN STARK

E-Mail

Text Size:

tool goes here

BELLINGHAM — Puget Sound Energy is asking state regulators for a 12 percent rate hike, but it was a private investment group’s proposed takeover of the company that drew most of the ire from more than 120 people who showed up Tuesday for a public hearing.

Myra Ramos of Lummi Island expressed a common sentiment.

“A transaction that will protect the public should inspire confidence,” Ramos said. “This proposal inspires alarm and foreboding.”

AT A GLANCE

Puget Sound Energy’s proposed electric rate hike would:
- Raise basic charge per month from $6.02 to $9. Raise charge per kilowatt from 8.53 cents to 9.29 cents.
- Increase average homeowner’s monthly bill about $10.48, or 12 percent.
Who’s affected:
- All of Whatcom County except Blaine and Sumas municipal power systems.
Puget Sound Energy’s $7.4 billion merger would:
- End the sale of company stock on the New York Stock Exchange.
- Turn control of the company over to Macquarie Consortium, an investor group dominated by Australian and Canadian entities.
- Provide $5 billion to PSE to maintain its system and increase power supply.

The board of PSE’s parent firm, Puget Energy, has unanimously approved a $7.4 billion merger agreement with the Macquarie Consortium, an investment group that includes Australian and Canadian interests. PSE officials say the new owners will provide $5 billion during the next five years to help the company maintain its power distribution system and add new sources of electric power.

But nobody at the meeting appeared convinced that the deal would be good for PSE’s customers.

“We believe the merger will cause irreparable harm to PSE customers,” said Diane Freethy of Sedro-Woolley. “How do we know that Macquarie is not just another corporate raider?”

Skagit County residents made up a sizeable portion of the audience at the hearing. Many of them expressed concern about how the new owners would manage PSE’s dams on the Baker River, a tributary of the Skagit River.

Many said they thought the state would lose some degree of regulatory control if the local electric utility passes from a company with publicly traded stock to a private investment group.

“Some important oversight will be lost, and from experience we know what can happen,” said Ingeborg Paulus of Bellingham. “What do we know about Macquarie’s business plans after the takeover?”

Bob Fodor of Lummi Island agreed.

“The only reason why private investors would be interested in PSE is to make more profits,” Fodor said, adding that would likely mean higher rates and cuts in cost that would hurt service.

The testimony was heard by three mostly silent Washington Utilities and Transportation Commission members — Mark Sidran, Patrick Oshie and Philip Jones — who have the power to approve or deny both the rate hike and the merger. A rate hike decision is expected by November, while the company has asked for a decision on the merger by Sept. 2.

The commission would continue to have the authority to regulate electric rates and to demand financial information from Macquarie if the merger is approved.

While the merger drew the most hostile fire, the rate hike proposal took some hits, too.

Fodor said the cost-of-living increase on his Social Security check was less than 3 percent this year, and he suggested that PSE be held to that standard.

John Day, weatherization coordinator for the Housing Authority of Skagit County, noted that the rate increase PSE proposes would increase the basic monthly charge by almost $3.

“The increase in flat rates puts a disproportionate burden on low-income customers,” Day said.