Public shares concerns over Chelan PUD acquisition of Peshastin Water District

PESHASTIN – On Jan. 17, Chelan PUD held a public forum at Peshastin-Dryden Elementary to update the community on its progress regarding its acquisition of Peshastin Water District (PWD). The forum included updates on its proposed capital improvement plan, financial options, and rate adders.

Due to existing debt and necessary capital improvements, the PUD developed two internal loan plans, referred to as the replacement loan and the new capital loan. PUD would use the replacement loan to cover external debts PWD currently owes, which should not affect customers, since payments would be supported by existing rate revenue. 

The second proposed internal loan would provide the PUD construction cash for new capital projects, which would be supported by rate adders to the monthly bills of customers. In Sept. 2022, the estimated cost of the projects was $3.1 million, and the rate adder was estimated at $38 a month per residential customer.

After receiving feedback from prior meetings, Chelan PUD presented a refined capital improvement plan that would focus on PWD’s highest priority upgrades, such as a new well, the replacement of a booster pump, and a meter upgrade. Under the refined plan, PUD removed improvement projects that are common to existing PUD improvement needs.

The refinement reduced the estimated cost to $2.67 million. At the request of PWD, Chelan PUD included a consideration for the water rights valuation, which was estimated at $1 million. In doing so, the proposed rate adder was brought down to $17 a month per residential customer, $33 a month per commercial, and $1,780 month per industrial customer.

However, customers will transition to paying PUD rates, which are slightly lower than PWD rates. For example, an average-use residential customer is paying $67 a month at the PWD rate, but would pay $63 a month under PUD rates. With the $17 a month rate adder, the customer would pay a difference of $13 more per month. Average commercial customers would pay $34 more per month, and industrial customers would pay $1,230 more per month.

Local growers who pay the industrial rates expressed the rate adder would only add more financial strain to an industry already facing financial challenges.

“Our goal is to stay here, to keep packing fruit here and keep employing the people in this area that we can and so yeah, every every bit of cost is our concern,” said Ray Schmitten, Blue Bird Inc. President.

In reaction to the rate adders, some members of the public expressed disappointment towards the transfer of assets to PUD without compensation. 

“It would be pretty awesome though, for the community to see that PUD was investing in our community instead of the other way around, where I think it feels like we're investing in the PUD,” said a community member during the meeting. 

In response, Chelan PUD Water and Wastewater Manager Ron Slabaugh clarified that Peshastin residents would continue to benefit from the assets, despite the transfer.

“We refer to our customers as customer owners because it's public. The public does own those assets. It's not a takeover. We want to be crystal clear about that. It's a transfer of ownership, management, and operations,” said Slabaugh.

The rate adders would be applied for the duration of the 20-year loan. However, future grant funding could help alleviate this obligation, which PUD is looking into.

The acquisition would provide certain benefits to Peshastin customers, such as having more available staff and funds to better respond to emergencies.

PWD and Chelan PUD signed an agreement in Sept. 2023, with plans to complete the acquisition in March 2024. Under the agreement, Peshastin Water District will transfer all assets to Chelan PUD, and PUD will not pay monetary consideration for the assets. Chelan PUD will assume maintenance and operational responsibilities, pay existing debts, and cover system improvements to bring PWD’s system to the same standard as other community systems under Chelan PUD.

An official rate hearing was held on Jan. 22. Commissioners will vote on the rate plan and final loan terms on Feb. 5. Questions or comments can be submitted to contactus@chelanpud.org.

Taylor Caldwell: 509-433-7276 or taylor@ward.media