The Elephant in the Room
By: Edna Willadsen
I don’t know how many remember the (WPPSS) the Washington Public
Supply Systems from the 1950s.
This project was to supply electricity for the anticipated large population
growth to the Pacific Northwest. Nuclear power was to be the solution.
The project was not successful and ended in default in the early 1980s.
The project left behind as many as 75,000 municipal bondholders that
invested around $225 billion. They spent years in court only ending
up with as little as .40 to .10 on the dollar.
Bonneville Power Administration (BPA) had gathered a collation of small
public own utilities together to build 3 large nuclear plants by inducing
them with a “net billing” (BPA pledged revenues toward repayment
of the borrowings by WPPSS). In 1973 the safety net offered from “net billing”
ceased to exist and the 88 regional public utilities signed on for 2 more plants.
This agreement appeared to commit them to pay for their shares whether
or not the plants ever generated electricity.
When the project ended in default the City now had a debt owed to BPA.
The City furnished the following information on the amount we owe.
“Given that the City’s Tier One Cost Allocator is 1.19772%,
which essentially represents the City’s percentage share of BPA,
suggests Port Angeles might eventually be billed a bit more than $64.5 million
dollars of the remaining WPPSS debt. No such decision has yet been made,
but it is certainly one of the main issues facing Regional utilities and
ratepayers as they look to the future.”
Bonneville Power Administration (BPA) is a Federal agency within the
Department of Energy and Tennessee Valley Authority (TVA) is a federally
BPA and TVA entered into a purchase where they deftly siphoned many
millions from the Pacific Northwest and in to the coffers of TVA
BPA purchased units of uranium from TVA for .55 cents over the prevailing
market price. Then to pay for the purchase BPA sold $711 million in bonds,
thinking they would receive 12% return on their money they had borrowed
at 5%, only to find when they crunched the numbers they showed a
$150 million dollar loss, so to correct the loss they changed the interest
rate to 2.8% and they now show a $252. million gain. (that could be considered
creative accounting, or maybe that new math)
Look for your rates to increase as they have depleted their cash flow
to the point it could prove hard for them to raise any more money.
It now changes the picture that a federal agency sells us the
electricity and is now the largest stakeholder in our Utility because of
the $64.5 million dollars we owe them. We have put them in the
position of power as we are unable to pay off the debt even if they
were to cut the amount in half.
When I read the City is considering building a Conference Facility before
we have our financial house in order, was just beyond belief.
There is the Landfill, Storm water, Rainier, infrastructure, BPA,
environmental issues, and you want to put us further in debt.
I for one take issue with that, and everyone else should take issue.
I would suggest that you take the Conference Facility and stick it in your
back pocket sit on until our fiscal house is in order, and then and only
then bring it out for consideration.
I can assure you that I do not want to continually clean up after the
Elephant in the room.