New study for Bainbridge city power company: PSE takeover would cost $146.8 million

Creating a city-run electric company could cost the city of Bainbridge Island $146.8 million, according to an independent consultant study paid for by Puget Sound Energy.

The new estimate is more than double the amount that city consultants have said it would cost to launch a Bainbridge takeover of PSE’s assets on the island and start up a city-run power company.

The study also indicated that a city-run utility would cost Bainbridge electric customers $251.2 million more over the next 20 years than the amount islanders would pay if they continued to get electricity from PSE.

The new study is the work of Concentric Energy Advisors, a consultant company based in Marlborough, Mass.

PSE has repeatedly told the city its Bainbridge system is not for sale, and in the 56-page report released Wednesday by PSE, Concentric said the city would face acquisition costs of $109.1 million.

Other costs, which include start-up costs for the new city utility, total $37.7 million.

Concentric said its estimates were preliminary, and could be refined only after a complete inventory of PSE’s assets on Bainbridge is conducted.

The new numbers also assume the acquisition happens after legal condemnation proceedings, which are estimated to be completed by 2021.

City officials have been looking at a possible takeover of the electric system on the island since a group of islanders began pushing the idea more than two years ago.

Island Power, the grassroots group that supports a city-run system, had previously hoped the PSE takeover would be sent to voters in November, but the question on whether the city council will send the issue to the ballot box is still pending the completion of a city-sponsored study on the idea.

That city study, which is being prepared by D. Hittle &Associates at a cost of $99,300, is expected to be finished later this year.

D. Hittle’s draft study has pegged the cost of a Bainbridge takeover of PSE at $57.6 million.

The Concentric study also notes that most of the efforts by municipalities to form their own electric utilities over the past 15 years have not been successful.

Concentric said just 12 of the 39 municipalization efforts since 2001 have been approved.

Of the 12, seven have been finished and the eighth will start providing service in fall 2017.

The experience in Washington has been similar to the national trend, Concentric said, with three of the last four proposed utility takeovers being rejected by voters over the past decade.

“In fact, there have been few publicly owned and operated utilities formed in Washington since the 1950s,” the report said.

Some of the takeovers, according to the report, “have been completed at costs that greatly exceeded original estimates.”

In Jefferson County, the takeover that is frequently cited as a success by Island Power, Concentric said the initial feasibility study projected an acquisition cost of $47 million, which was less than half of the final acquisition cost of $103 million, which did not include start-up costs.

Ann Bulkley, a senior vice president with Concentric who oversaw the study, said the city would need roughly $30 million to run the electric utility in its first year.

“This is a significant undertaking that could double the size of the Bainbridge city government operating budget,” Bulkley said.

By the year 2034, operations costs would rise to $42 million annually.

The Concentric report differs than the D. Hittle analysis in the scope of study.

The city’s consultants based the total costs of the acquisition on the idea that the city-owned electrical system would only go as far north as the Port Madison substation near Day Road and Highway 305.

The Concentric analysis assumed the city-run utility would take over PSE’s Bainbridge system starting at the Agate Pass Bridge.