Analysis of City of Bainbridge Island D.Hittle & Assoc ... · Analysis of City of Bainbridge Island...
Transcript of Analysis of City of Bainbridge Island D.Hittle & Assoc ... · Analysis of City of Bainbridge Island...
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Analysis of City of Bainbridge Island
D.Hittle & Assoc. municipalization study
Andy Wappler Vice President, Customer Operations and Communications Bainbridge Island City Council June 6, 2017
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What can we do together?
Green Direct – building western Washington’s first wind farm
• Mercer Island, Bellingham, Olympia and King County
• REI, Starbucks and Costco
Solar Choice – new option for residential customers Green Power – growing Island participation Reliability – new transmission line and substation Smart grid – new customer technology
PSE wants to serve Bainbridge Island
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Hittle study: too many risks, too many unknowns
1) Rising costs
2) Unrealistic assumptions
3) Critical questions
4) Biased, not objective
Red Flags
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Rising costs are already reversing predicted savings
January May
January study
$57.7 m new city debt
$13.1 m 10-year savings
May study
$62.4 m new city debt
$3.6 m 10-year savings
Rising costs
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January May
Rising costs
Risks are growing and benefits shrinking right from the start
Rising costs are already reversing predicted savings
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Hittle failed to correctly model key costs
1) Operations building will cost $2 million
2) Taxable municipal bonds at 5%
3) City eligible for low-cost Rural Utility Service (RUS) loans
Unrealistic assumptions
Fact: Taxable municipal bonds average 6%
Fact: Clallam PUD’s operations building $11 million
Fact: RUS funding rules prohibit cities over 20,000 people
Real-world fact-check reveals Hittle’s inaccuracies
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Hittle cut costs with unrealistic infrastructure model
Unrealistic assumptions
Hittle made millions of dollars in unrealistic assumptions
Hittle failed to correctly model key costs:
1) No PSE transmission system
2) No PSE easements or property
Fact: New utility would need to own
Fact: New utility would need to own
PSE Agate Pass transmission lines Rebuilt 2013-2015
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Hittle doesn’t answer: What happens after “Day One?”
Critical questions
After “Day One?” Hittle analysis
New transmission line No specifics
New substation No specifics
Increased undergrounding No specifics
Enhanced tree-trimming No specifics
Community energy projects No specifics
Electric vehicles No specifics
Residential solar No specifics
Energy efficiency No specifics
Low-income assistance No specifics
Loss of PSE taxes No specifics
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Executive Summary, p. 6
“The risks associated with natural disasters could have more of an impact on a local City electric system.”
Hittle doesn’t answer: What happens in a natural disaster?
Critical questions
Hittle raises critical questions it doesn’t answer
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Hittle provides 6 business cases
4 rely on 5% bonds
2 rely on RUS funding
Section 7, Table 9, p. 64
Biased, not objective
Hittle’s study does not provide objective analysis
Hittle stacked the deck toward municipalization
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1) Rising costs
2) Unrealistic assumptions
3) Critical questions
4) Biased, not objective
5) Failed Jefferson study
Red Flags
Hittle study: too many risks, too many unknowns
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Hittle 2008 study Jefferson Co. 2017
$66.1 m new debt $115.5 m new debt
$62.2 m savings Zero savings since 2013
Local renewable energy None
Energy efficiency & solar Less than PSE
Local control Open meetings violation
Financial stability • Borrowing from water fund
• Failed State audits
Improved reliability No capital investment
2013-2016
Failed Jefferson study
Hittle’s Jefferson study was wrong on every key factor
Rising costs, unrealistic assumptions, critical questions and bias
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Hittle study errors
No certified appraiser
Incorrect valuation method
Inaccurate startup costs
No analysis of financial and operational risks
Concentric Energy Advisors
$146.8 m city debt
$36.6 m 10-year cost increases
Certified General Appraiser
Municipal utility consultant
Concentric study: stress-tested, realistic assumptions
pse.com/bainbridge PSE on Bainbridge Island (Facebook)
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What can we do together?
Reliability, Sustainability, Community
PSE wants to serve Bainbridge Island