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...
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
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
Hittle study: too many risks, too many unknowns
1) Rising costs
2) Unrealistic assumptions
3) Critical questions
4) Biased, not objective
Red Flags
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
January May
Rising costs
Risks are growing and benefits shrinking right from the start
Rising costs are already reversing predicted savings
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
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
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
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
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
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
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
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
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Reliability, Sustainability, Community
PSE wants to serve Bainbridge Island