WA Policy Brief Rebuttal

Commissioner Ken Collins rebuts the WA Policy Brief that pans Jefferson PUD.

Jefferson County PUD Commissioner Ken Collins rebuts the WA Policy Brief that pans Jefferson PUD.

Recently, the Washington Policy Center, an affiliate of the State Policy Network, funded by the Koch Brothers, came out with an “policy brief” claiming that the acquisition of the electric utility by Jefferson PUD has resulted in higher rates and lower customer service.  The clear purpose underlying this publication is to discourage other communities from voting for local control of their electrical utility.  While the Washington Policy Center purports to be “objective”, it consistently takes right-of-center positions on minimum wage, paid parental leave, the Affordable Care Act and public transportation.  Although the policy brief contains some factual reporting, for the most part, it takes information out of context and makes statements that are easily verifiable as false.  At no point did the WPC writer contact JPUD or its Commissioners to obtain clarification on any issues or policies, nor were there any references to the JPUD website, which one would expect from an objective inquiry.  Examples of bias, inaccuracies and incomplete information are easily identifiable in the WPC “analysis” of rates, customer satisfaction, billing/audit issues, low income assistance, local employment and in the lack of consideration of environmental impact.

The WPC writer makes the claim that, “Jefferson County ratepayers now pay more to JPUD than they would have if they had stayed with Puget Sound Energy”.  This statement, as written, is demonstrably false.  According to the PSE website, 1000 kwh cost a residential customer $106.23 from May, 2016 until December, 2016.  The cost for a JPUD customer for the same amount of electricity, over the same period of time, has been $99.95 per month, exactly $6.28 lower than PSE.  According to the PSE website, rates will be reduced by $1.84 in December, as a result of variable credits.  PSE has requested a rate increase of $.34 for January, which has not yet been approved by the UTC.  In December, the JPUD Board of Commissioners, following a series of public meetings, approved rate increases for 2017.  Depending on the value of credits applied to the PSE bill, JPUD monthly rates will exceed PSE rates by as much as $2.57 or as little as $.39 per month.  While the cost of electricity from JPUD will slightly exceed PSE’s in 2017, community ownership provides far greater value, for reasons explained below.

Customer Satisfaction
The WPC writer claims that customer service is lower under JPUD’s operation of the electrical utility.  While not providing any research on customer satisfaction under PSE’s operation of the utility or looking at the actual JPUD survey, the WPC writer instead relies entirely on a single quote from the newspaper report on the JPUD customer satisfaction survey, conducted in November of 2016.  In the Port Townsend Leader story, SDS Research, which administered the survey, was reported to have said “This is the only survey in our history without a single Net Positive Index above 100”.  Taken at face value, this suggests a negative evaluation of JPUD’s management and operations.  However, not only did the JPUD survey have different questions than the standard survey used by SDS Consulting, but the format of the survey was also different.  Where many of the JPUD questions were formatted comparatively (JPUD vs. PSE), the SDS questions were either not comparative or were comparative in the abstract.

JPUD has been very fortunate to have the assistance of Dr. Stan Nealey, a survey professional who was Director of Research at the Battelle Human Affairs Research Centers in Seattle for ten years.  Dr. Nealey, who helped design the JPUD survey, examined the actual survey results, which showed that 41% of respondents had “no opinion” on whether PSE or JPUD provided better electrical service.  Among the customers who did state a preference, 58% rated JPUD’s electrical service as better than PSE’s, a ratio of 1.38 to 1. These results were presented to the JPUD Board of Commissioners (and are available on the JPUD website) and support the conclusion that electrical service is equal to or better under JPUD than Jefferson County residents had previously received as PSE customers.

Billing/Audit Issues
Anyone associated with JPUD would have to agree that the first year of operation of the electric utility was plagued by billing problems.  Clearly, JPUD would have been far more successful had the Commissioners decided to purchase the software platform from NISC prior to taking operational control, rather than subsequent to implementation.  Because the existing software to track incoming revenues and outgoing expenses was inadequate for the job, JPUD was unable to reconcile its records for 2013 and 2014.  This was the basis for the State Auditor findings and these problems were not trivial.  However, a comprehensive software package was implemented by JPUD in 2014 to address both billing problems and most of the issues identified by the State Auditors.  This information was included in the same Peninsula Daily News story of August 24, 2016, referred to by the WPC writer, which he chose to disregard.

The WPC policy brief further stated “JPUD officials instituted a harsh billing policy that required utility bills to be paid within ten days.  Families that did not pay quickly were subject to late payments or threatened with power shutoff” and then quoted a customer letter from June, 2013.  Had the WPC writer bothered to contact JPUD about its policies, he would have learned that JPUD has never charged a late payment fee, nor does it plan to do so.  Furthermore, JPUD policy is to allow a three-week grace period and will only disconnect service after four additional weeks, for customers owing a balance in excess of $75.  All customers have the option of spreading out high winter bills over the course of the year and, under RCW 35.21.300, low-income customers may register for a special payment plan.

Low-Income Assistance
The WPC report also stated that JPUD was unable to provide the same level of low-income customer assistance as had been previously provided by PSE.  It is true that PSE donated (and received a tax write-off for) $464,000 to a local charitable agency, OlyCAP, to assist qualifying residents with their electric bills and that JPUD was unable to make a comparable contribution.  However, after the first winter of 2012-2013, JPUD customer service staff worked diligently with low-income customers to reduce the number of seasonal shutoffs to one-tenth the amount the following winter season.  The WPC policy brief cites the restriction in the Washington State Constitution from public utilities making a gift of public funds.  The WPC writer apparently did not look further into state laws or he would have found RCW 74.38.070, which specifically allows for reduced utility rates for low-income senior citizens and other low-income citizens.  In the JPUD Customer Survey, while 41% had “no opinion”, the ratio of respondents who favored an increase in low-income assistance to those who did not was 2.6 to 1.  Subsequently, the JPUD Board of Commissioners earmarked up to $500,000 for low-income assistance in the 2017 budget.  Based on documentation of current earnings and comparison to the Federal Poverty Level, individuals or families will have their electrical rates reduced by up to 60 percent.  Had the WPC writer genuinely been interested in how the JPUD was planning to assist low-income customers, he could have easily accessed this information.

Local Employment
Yet another instance of misleading information is the statement made in the WPC policy brief that JPUD “only” hired 42 employees, rather than the 67 new jobs estimated by a consulting group back in 2008.  Over the past three years that JPUD has been operating the electrical utility, JPUD management has taken a conservative and incremental approach to hiring additional staff.  Today, JPUD is providing good-paying, benefitted jobs for 400% more local residents than it previously employed and 800% more local jobs than PSE had provided and will add six to eight additional positions in 2017.

Environmental Issues
Nowhere in the WPC policy brief is there any mention of environmental issues, no doubt because comparing the discharge of greenhouse gasses into the atmosphere by Bonneville Power Administration, from which JPUD buys all of its electrical power, with that of PSE would have been a major embarrassment.  According to the Washington Department of Commerce, the fuel mix of JPUD is 2% coal and 1% natural gas, contrasted with 35% coal and 20% natural gas consumed by PSE.  In other words, PSE’s impact on global warming is 1833% greater than Bonneville Power Authority.  On average, for every residential electrical customer, PSE contributes 1200 pounds of CO2 to the atmosphere each month, according to PSE’s own reporting and the US Energy Information Administration.

Public versus Private Ownership
The WPC policy brief contains additional instances of misleading information and intentional distortions of fact.  It is almost amusing to read that the WPC writer calls JPUD a “public utility monopoly”, as if PSE had not previously had monopoly control over the sale of electrical power in Jefferson County.  The WPC article also takes a contradictory position that elected officials “are expected to live up to the promises they make” and “must answer to customers directly”, yet “try to avoid accountability when there are difficulties”.  In fact, JPUD Commissioners are far more accessible to Jefferson County residents and their actions are far more transparent than decisions made by the directors of PSE, which serves 1.1 million electrical customers and is owned by an Australian investment bank.  JPUD Commissioners can only make decisions in meetings open to the public and all Board of Commissioner meetings are audio recorded and available on the JPUD website.  In addition, JPUD has a Citizens Advisory Board, which also holds open public meetings and provides valuable input to the Board of Commissioners.

There is no question that acquiring the electrical utility presented a huge challenge to JPUD and that mistakes were made initially, which needed to be corrected.  However, to focus only on the early transition issues and ignore the solutions that were subsequently implemented is, at the very least, intellectually dishonest.  It is equally disingenuous to take facts and statements out of context and to present information about rates and policies that are demonstrably false.  The real story is that JPUD provides electrical power that is 98% carbon free, at virtually the same cost as PSE, with the same or better quality of customer service, provides more local employment and is far more accessible and responsive to its owners, the citizens of Jefferson County.

— Rebuttal by Jefferson County PUD Commissioner Ken Collins

PB-Jefferson-Study Washington Policy Center