Push to create municipal electric utility fails to hit fast track

"A councilman's push to create a municipal electric utility that would replace Puget Sound Energy in Federal Way failed to hit the fast track this week.But Councilman Michael Hellickson's idea will come before the City Council again as it considers next year's budget.Hellickson believes creating a municipal utility could save electric ratepayers up to 30 percent on their bills. Initial city staff estimates are more conservative, at 5 to 15 percent. Other council members aren't so sure there will be any savings due to litigation and distribution system costs that could boost rates higher. PSE Community Relations Manager Denny Lensegrav maintains that a municipal utility would cause higher electric bills.The value of PSE's infrastructure, combined with condemnation litigation costs, related damages and debt financing will push millions of dollars into rates, he said. Hellickson has been stumping for the idea of creating a utility since the City Council retreat in January, circulating petitions and holding his own town meeting to discuss the idea.This week he urged the council's Finance/Economic Development Committee to move forward with the idea by directing city staff to develop parameters for a study.We need the hard numbers, Hellickson said, to determine how much - if any - savings a municipal utility would bring.The committee rejected Hellickson's proposal, instead sending the idea of commissioning a study forward to the full council as a 2001-2002 budget issue. Preliminary city staff estimates peg an initial study at $40,000 to $60,000. That's the appropriate place for it - it's a budget issue, said Committee Chairwoman Mary Gates, adding that citizens don't seem overwhelmingly in favor of starting new city programs in the wake of Initiative 695. A draft budget is due to the council in September. Though Hellickson joined the other committee members in voting to send the issue forward as a budget matter, he said he only did so to keep the idea alive. Saying a study of the issue is what citizens want, he added he's done what he can to promote one, and that he hopes council members will vote with their consciouses when the issue comes up again.He added he fears that putting the idea on the back burner will make it easier to kill.However, other committee and council members said they are interested in the idea, but don't share Hellickson's sense of urgency in pursuing it.The city's franchise agreement with PSE does not end until 2008, and no council or city staff members advocate breaking that agreement.Waiting would allow the city to examine two factors, said councilwoman Linda Kochmar.First, the fallout from deregulation of the power industry - expanded by the 1992 Energy Policy Act - has yet to hit, adding many intangibles that a study commissioned now might not address, Kochmar said. The Act established principles of open access to transmission systems for utilities and others, and left it to individual states to determine principles and details of retail customer access and competition. However, the Washington Legislature has not yet passed any new laws.Second, the city could learn from other jurisdictions by waiting. Lakewood, Olympia and Port Townsend all completed studies on the matter, with Lakewood taking the most in-depth look. Lakewood has placed the matter on the fall ballot to see if there is community support for the idea, said Lakewood City Attorney Dan Heid. If citizens vote no, the city will drop the matter. A yes vote would be non-binding, but would mean the city will pursue it, he said.In addition, PSE has filed a $500,000 claim against lakewood, which Heid maintains isn't valid, aiming to recoup costs of opposing the City Council's decision to put the matter to voters, Heid said.In Federal Way, Hellickson says timing is important, and he'd rather see a study done here sooner than later. It's a six to 10 year process to make this happen, he said. ...And really, to be honest, six years is dreamland."

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