And I thought the weather got people riled up. Going from meteorology to the energy industry put me in stormy seas.
Puget Sound Energy, my new employer, is merging with some Canadian pension funds and New York and Australian investors. Until now, I would have thought Canadian pension funds were as alarming as Melba toast, and Crocodile Dundee seemed like a fun guy. New York is another story. But this merger is causing a ripple, mostly due to myths about what it means to you and me and everyone who pays a utility bill.
Myth 1: Puget Sound Energy (PSE) won’t be regulated. False. State regulators will still have the last word on rate increases and service just like today. Federal regulators stay on the job, too.
Myth 2: PSE won’t fix things after a big storm. False, again. Keeping the lights on is how we stay in business. Plus, we live here, and want to be good neighbors.
Myth 3: PSE won’t care about the environment. False. PSE is committed to clean, renewable energy, and it’s required by state law. Same with energy efficiency – it’s also the law. The only change you’ll see is more wind, more solar and more tools to help you save energy, all financed by the new investors. Zero-carbon hydropower stays in the mix, as well.
Myth 4: PSE will have too much debt. Actually, the utility will have our best balance sheet in years.
But there’s no getting around our need for dollars – billions of them – to make upgrades, meet customer growth, add renewable energy and keep up with inflation. Public or private, all utilities are facing financial crunch time.
Consider that your standard-issue, used-to-be-a-tree utility pole now costs about $3,300, up some 500 percent since the 1970s. And those awesome wind turbines? With the U.S. dollar tanking, they’ve doubled in price since 2005.
This merger will fund the things you’ve told us are important: Improving service and caring for the environment.
Some critics say we should just stay a publicly traded stock and raise money on Wall Street. The trouble is, Wall Street wants the next sexy investment, and while we’re pretty attractive, it’s in more of a great personality, loves to dance way than drop-dead gorgeous. We’re a good buy, but only in the long run, and today’s Squawk Box watcher can’t see past the next quarterly report. The debt argument also ignores the fact that no matter who owns PSE, the need for huge investments – and huge borrowing – won’t go away.
Want more information? Go to PSE.com and click on the “merger news” section. You’ll see some video Q & A with Steve Reynolds, the boss. I did the interview myself, and he answered whatever I asked him. I’m confident the merger will build a better PSE for our customers and our community.
And next time I get a chance to talk to those scary Canadians, Australians and New Yorkers, I’ll report back on that, too.
Andy Wappler is a senior public relations manager at Puget Sound Energy. He previously was chief meteorologist at KIRO-TV in Seattle. He can be reached at AskAndy@PSE.com.
This takeover eventually could haunt all of us
Over the past several weeks, I have been surprised by the complete lack of local interest in the takeover of Puget Sound Energy by Macquarie Infrastructure Partners – a consortium of investors comprising three Canadian pension management funds – and Macquarie Bank of Australia. I had pretty much decided that nobody really cares what happens to them until they get the bill.
Then I received a phone call from one of the leaders of a Skagit County group fighting the takeover. She had read my article in the Reporter (May 14, “PSE deal: Watch your wallet”) that was posted online (www.covingtonreporter.com, www.maplevalleyreporter.com). She asked me if there was an organized group that she could contact and coordinate with. I told her that as far as I know, I was the only one in the Maple Valley area who ever mentioned the takeover.
We had a nice conversation about the information that we had each collected on the players involved. Her group was very involved and very active in their efforts to stop this deal between PSE and the Macquarie group.
She sent me a packet of brochures (third printing) that her group had produced and distributed in the Skagit County area. One of their biggest concerns were the aging PSE dams on the Baker River, and the continued maintenance and safety of said dams, but also the possibility of major changes in their electric service and billing.
But they have an option that we in Maple Valley, Covington, Black Diamond and surrounding areas don’t have – Skagit County Public Utility District 1. Washington law allows public utility districts to condemn private entities which are not operating in the public’s interest. PUDs (public utility districts) in Jefferson County and on Whidbey Island are looking into or are forming new electrical PUDs for their own areas. Skagit County residents of PUD 1 may be able to vote for the take over of PSE’s assets in November
Here is a notable quote from the brochure: “Knowledgeable speakers are willing to assist citizen groups and organizations to raise awareness of possible changes in their communities resulting from a successful Macquarie takeover.” More information is available at www.savepse.org if local activists are interested in forming their own group.
Here are some news quotes from the brochure:
• “Australia’s electricity code administrator accused a Macquarie subsidiary in 2002 of minimizing power output for the sole purpose of maximizing profits.” Sounds like California and Enron all over again, but closer to home now.
• In the July 2007 edition of The Monthly, Australian journalist Gideon Haigh stated that Macquarie is in “the business of privatizing mature businesses and ratcheting up their returns with liberal application of debt.” Look for a breakup of PSE’s assets in the future when other Washington areas abandon them to form PUD’s. With the loss of customers to the new, smaller PSE, someone has to make up the difference in profits, and that’s you and me.
In the book “Thirst: Fighting Corporate Theft of our Water,” authors Snitow, Kaufman and Fox characterize Macquarie Bank as an investment group so well known in financial circles, its deals are called “”Macqusitions.” That fits the company’s reputation for being “unashamedly and aggressively oriented to making as much as it can as fast as it can.””
As one person, I can’t by myself solve this problem. You and your neighbors have to get involved, because this affects the lives of everyone around here, good or bad. If this deal happens, what other acquisitions of public property and takeovers of our infrastructure will haunt us in the future?
I believe it’s too late to attend any of the public hearings, and no decision will be made until November, so you can still make your opinions be counted. Write to Mark Sidran, Chairman, Washington Utilities and Transportation Commission, P.O. Box 47250, Olympia WA 98504-7250. It’s 41 cents for a stamp now, or a whole lot of dollars later if you do nothing.
Warren Messer lives in Maple Valley.