Chelan PUD weighs annual payment of at least $1.35 million to Chelan County

WENATCHEE — Chelan County PUD commissioners are considering an agreement that would pay Chelan County at least $1.35 million annually for the utility’s use of county rights of way, drawing an objection from one commissioner who called it a shift of county costs to PUD customers.

Commissioners discussed the proposed agreement Sept. 21 but took no action. PUD staff expect to bring it back for a vote at the board’s next meeting.

Under the draft, the PUD would pay the county 5.5% of its previous year’s retail electric revenue from unincorporated Chelan County, excluding large-load service under Schedule 4 and off-system sales. The first payment would be due Jan. 30, 2027, based on 2026 revenue.

Using 2025 revenue as an illustration, the payment would have been approximately $1.35 million. The agreement generally sets that figure as a minimum annual payment through its proposed expiration in June 2045, although it provides for a reduction if the county does not meet a condition involving its property tax levy.

PUD Chief Strategy Officer Justin Erickson said the county granted the utility a 20-year franchise in 2025 to operate its infrastructure in county rights of way and reserved the ability to seek compensation for their use. Staff from both agencies have since negotiated the proposed payment arrangement.

The agreement would prohibit the county from charging the PUD a separate franchise fee while it remains in effect. It would also restrict the county’s use of the payments to law enforcement, public works, emergency management, natural and cultural resources or other purposes the two agencies agree to in writing.

The county would have to increase its property tax levy by at least 1% each year. If it does not, the PUD’s payment rate for that year would fall from 5.5% to 3.5% of the applicable electric revenue. The PUD could request a brief annual report on how the county spent the money.

Commissioner Steve McKenna said specifying uses for the funds would help explain the agreement to PUD customers, who are also county residents. He asked how the provision for the PUD’s law enforcement needs differed from the broader allowance for county law enforcement spending.

Erickson said it was intended to cover needs such as patrols of the river and PUD facilities, as well as requests for a law enforcement presence at public meetings.

Commissioner Carnan Bergren said he appreciated the staff’s work but opposed the payment itself. He described it as “cost shifting from one entity to another” at a time when the county faces budget problems.

“And when you look at it over the 20 year period, it's 40 million bucks that we're going to be kicking into, maybe more,” Bergren said.

That figure was Bergren’s projection, not a total specified in the agreement. Actual payments would depend on future electric revenue and the agreement’s terms.

Bergren also said the draft lacked a mandatory review before its expiration. He called for the arrangement to come back before commissioners in roughly two years so they could assess whether it was working.

“I think it needs to come back before this commission and say, is this working for us or not?” he said.

Erickson acknowledged Bergren’s concern and said staff sought a predictable agreement in place of a franchise compensation process whose eventual cost was less certain. He said the negotiated approach was also intended to preserve the relationship between the PUD and county.

Commissioner Garry Arseneault supported the proposal, emphasizing that it was negotiated and that the agreement specifies county services that could benefit PUD customers.

“This was absolutely the best outcome, I feel personally as a commissioner, given the issues that were at hand and how long this has been brewing,” Arseneault said.

The draft contains no scheduled midterm review, though the agencies could amend or end the agreement by mutual written consent. It also allows the PUD to contribute to other county projects through separate arrangements.

If Washington counties gain authority to impose a utility tax and Chelan County adopts one, the agreement would end 180 days after the county passes its implementing resolution. Until commissioners vote and both agencies execute the agreement, the proposed payments remain just that: a proposal.

Andrew Simpson: 509-433-7626 or andrew@ward.media