A perspective from Oregon’s mid-Willamette Valley

Power grab would cost more

Written April 22nd, 2014 by Hasso Hering
The Murder Creek substation serves a wide area in and around Albany.

The Murder Creek substation serves a wide area in and around Albany.

If you wanted to know the implications for the rest of the Albany area of a Millersburg electric power takeover, it would help to have an advanced degree in electrical engineering. Lacking such a degree, most of us will be interested in what the engineering staff of Pacific Power says based on a preliminary analysis the company has just made public. It says that a ballpark figure for the cost of separating the power delivery system that supplies Millersburg is $41.5 million.

Pacific Power does not want Millersburg to grab ownership of the electric system within the town, so its assertions may be taken with a grain of salt. On the other hand, Pacific knows a lot more about its own system requirements than any number of consultants and their lawyers hired by Millersburg.

Although it was somewhat vague on this point, consultant D. Hittle and Associates estimated that Millersburg would require financing of either $7.4 million if it condemned the system without the substation or $11.6 million if the station was included. Neither estimate appears to account for the complexities of separating the proposed Millersburg system from everything around it.

100_0684The Murder Creek substation on Old Salem Road supplies not just Millersburg but also customers north to the Santiam River, west across the Willamette River to Spring Hill Drive in North Albany, east along Knox Butte Road all the way to Cottonwoods, and south to Grand Prairie Road in southeast Albany.

The Pacific engineers point out that the Murder Creek substation is in the center of the large area it serves, and losing it would require two new substations to be built, one east of I-5 and the other in North Albany, along with upgrading the transmission lines to reach both.

What about letting Pacific keep Murder Creek and just adding new circuits there for Millersburg? The engineers say the substation is “fully developed” and new distribution circuits cannot be added.

Their report touches on many other details such as transformers that would have to be replaced, high-tension lines that would have to be upgraded, and the Willamette River crossing at Monteith Riverpark, which would have to be rebuilt.

Also, there’s the “hole in the line network” that removing Millersburg from the system would leave, making it necessary to build new lines around the city limits to reach the country to the north, or to string new wires through the town, adding to line “congestion.”

The Pacific engineering staff did not even attempt to get into likely complications such as siting restrictions on new substations, the proximity of any new lines to the Albany Airport and I-5 interchanges or railroad rights of way.

Some in Millersburg may have visions of lower rates, and what those rates might actually turn out to be is another area of dispute. But if the Pacific engineers are even half right, yanking the very center out of an electric system that serves a much bigger area is going to cost far more than the promoters of this idea think. That alone should give Millersburg pause. (hh)

8 responses to “Power grab would cost more”

  1. Bob Woods says:

    Of course there is another option: Albany, Tangent and other cities could join with Millersburg to create a regional system, much as Albany and Millersburg have already done with water and sewer services.

    Don’t forget that back in the 80’s Pacific Power was virtually begging Albany to take over the water system. Wen Albany did, they found a system in dire need of repairs and upgrading and repair. The result is having a top-notch water system on the road to providing all the services necessary to service growing communities for the next 20+ years.

    Remember that Pacific Power is GUARANTEED a significant profit above and beyond the cost of service to provide electricity. A publicly owned utility does not need that profit margin to return to shareholders. They can provide lower cost power, making the communities more competitive in securing economic expansion for all.

    It is wise to examine the costs carefully. And it is more important to ensure that a public utility spends its money wisely while investing for the future.

    Remember, Pacific Power is NOT part of the free market. It is a regulated monopoly without any real competition. They can be repaid the book value of their assets in any takeover, making their shareholders whole,

    The public can potentially benefit from rates free of a private profit margin, and a utility dedicated to serve the interests of their customers, rather than a world-wide set of stockholders.

  2. Bill Kapaun says:

    I have no dog in this fight, but wonder about potential liability issues in such that-
    Say a major failure at their sub station that wipes out a few of their main transformers.
    Would they have the financial resources & ability to get them replaced promptly?
    Would you see an added $xx/month surcharge on your bill to pay for them?
    One might share in the profits, but they also must be ready to share in the losses.

    • Craig Ziegenhagel says:

      Thats been an issue I have brought up Bill. Pacific Power can call upon parts, equipment and extra staff from the area and even out of State (especially in the event of a big storm or disaster). A Public Utility would have limited resources at hand to deal with such issues…money included.

  3. Craig Ziegenhagel says:

    I have commented a lot on this issue and have attended most of the Council Meetings. I am quite frankly shocked at the lack of public involvement of any kind. One other resident (along with myself) mentioned that the final decision on this issue should be by public vote. Not one other Millersburg resident or business has commented on this publically or in the newspaper. Citizens and the Council have spent more time in meetings discussing a chicken ordinance than the utility issue. I do not believe this will save us anything. This entire proposal has been based on one entity bringing it to the Council for consideration…that is Wah Chang. Wah Chang wants and is virtually demanding cheaper utility rates. They have sued Pacific Power several times and have lost in Court. Wah Chang took this to the State Court of Appeals and lost. So Wah Chang’s last ditch effort is to convince Millersburg to develop their own utility and seize Pacific Powers business and operations. Wah Chang does not care about anyones utility rates except their own. I have read these studies and if you look at the Millersburg City Power web site… everything is “Pro” doing this. It is not unusual that in the studies and study reviews that there is not a section on “Risks”/”Risks to The City” ? I cant find any negatives listed. Hermiston was the last City to develop a Public Utility some 10 years ago. I understand there was a huge jump in property taxes the first year to cover additional costs in developing the utility. Maybe they saved a little on their power bill but their taxes went up. If this was such a great idea more cities would be doing it ! Estimates of up to $20 million dollars may be needed to start this public utility. When has government stayed on budget with anything ? If anything goes wrong…the taxpayers will be the fall guy. With an estimated 600 households in Millersburg and maybe 75 businesses…thats not a large base to fall back on to to pick up the pieces. And here is one for you…lets say we do this. Wah Chang uses 65% of the power in Millersburg. Lets say down the road Wah Chang leaves the city. Now rates will have to go up for everyone to pay for the overall expences to operate the utility. How about law suits ? Who pays ? Upgrades down the road ? Who pays ? If a major storm came through and devastated power in the area…Pacific Power can call on their equipment and staff from throughout Oregon and beyond to come in and help. Millersburg City Power would not have that luxury. After sitting through these council meetings and understanding of the larger political “crap” going on here…..I think this is a done deal. Citizens in Millersburg need to get involved no matter what their opinions are. And lastly… for this tiny little town to take on something so huge with huge financial implications, a PUBLIC VOTE should be required and the Council should commit to that concept now !

  4. Jerry Stewart says:

    Thanks hh, Bob, Bill and Craig for your involvement and information. I don’t get the DH and haven’t heard anything from any other media source so this is news to me (clearly I need to pay more attention to what’s going on around me). The first I heard of this issue was yesterday in an e-mail from Pacific Power. Since then I have been reading all the information I can find and have the same concerns as you and others. My first thoughts were, “how was this going to be paid for?”, and “the citizens will likely end up paying more in the long run.” Did the city send any notices out? I don’t remember seeing any and, if they didn’t, why wouldn’t they if this is such a great deal. Just from the information that I have read so far, and I’m no expert, I do not believe this is a good thing for the residents of Millersburg and we will end up on the short end of the deal one or another. I too believe that this should be voted on and I will definitely be at the next meeting. In addition, I will talk to my neighbors and get the word out. We do need to be involved NOW.

  5. Craig Ziegenhagel says:

    Jerry, welcome on board as an involved citizen ! NO, the City did not send out notices. Wah Chang on behalf of the City sent out a post card a few months ago, but I know many who said they did not receive. it. Wah Chang walks into a closed Executive Council meeting last year and “asks” the City to look into this PU. It goes wrong right there….the Council should have asked citizens if WE wanted this pursued…they did not. Then more closed door sessions, a web site paid for and operated by Wah Chang, a study paid for by Wah Chang, the Council seems to not really embrace public comments, all studies point out the positives but no negatives, if you look at the wording in several print materials it states “the council will make the final decision”, several have asked repeatedly that this be put for public vote and the Council will not commit to it. And now the Council/Wah Chang will be sending out a mailer soon, summarizing what has transpired (I hope it points out risks and negatives too, but I doubt it). And lastly there may be many rules the public will have to follow in making their public comments at the two Public Town Hall meetings. Hope you and others can make it to Council meetings (2nd Tuesday of each month, City Hall 7:30pm) and to the town hall meetings.

  6. Craig Ziegenhagel says:

    Yesterday I received the “flyer” from the City (probably came via Wah Chang) notifying residents and businesses of the power take over plan here in Millersburg. This may be the first that many even hear of this, if they just dont toss it as junk mail. BUT AGAIN….this leaflet is ALL propaganda “for” the development of a public utility. There are no negatives mentioned, not one ! The Council assurred in the last Council meeting that no decision has been made, they want to hear all the facts, they would remain open minded, bla bla bla….. Why then does the website, studies, study review, this mailer all PROMOTE the development of a PU ? There are no risks ? No negatives ? Does that even sound logical ? Are council members really being open minded about this ? Citizens need to read this garbage and see if they notice what I am.

  7. Bill Kapaun says:

    Maybe at this point your city council doesn’t dare to put it up for a public vote else they be accused by the state elections board of “electioneering”?


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