Before I begin, let me start by saying that if you are invested in this PSD arbitrage and feel uneasy about the press Puget Energy has been receiving, I encourage you to sell out. You’ll still end up with a profit now and more comfortable nights.
People’s Concerns Over a Local Movement
Over at Seeking Alpha where my post was published, people have been commenting on the local counties wanting to start up their own Public Utility District (PUD) which would provide service at a lower rate than to Puget Sound Energy. I replied to a comment regarding this on the previous post.
Press Related to the PUD
These three articles all have one thing in common. They only talk about the possibility of the PUD and what it would bring. No mention of any protests against the merger. What these local people want is lower rates. I would assume most don’t even know the details of the buyout. Classic case of noise interference.
So instead of just sitting around, I did some more digging to see what I could come up with.
On May 6, a UTC press release stated the following
“The commission has received 1,513 public comments to date on the proposed merger – 20 in favor, 48 undecided and 1,445 opposed. The UTC also has received about 2,854 public comments on the rate-hike request – 27 in favor, 73 undecided and 2,754 opposed.”
On September 25, another press release announced the approval of the rate increase.
Then on October 8, it was annouced that electricity rates would decrease by 3% while natural gas bills would increase 5%. This press release also mentioned another opposition from the public.
“The commission received 6,686 public comments on the PSE proposed rate hike – 12 in favor, 6,552 opposed and 122 undecided.”
This brings me to an interesting and vital point. There were over 9000 people opposed to the rate increase compared to the 32 in favor. YET, the rate increase was approved. Why and how? Because it’s in line with market prices and PSD meets the required no-harm standard and PSD have assured the UTC that service will remain just as good. Even Northwest Natural’s gas increase of 19% was approved.
There is also a worry that the company is being bought by foreigners but it will remain locally governed, managed and run.
Concern at the Back of my Mind
The only concern I have is related to the board members of the UTC. The three members that make up the board are appointees of Gov. Christine Gregoire and because she is up for re-election, the board may make a decision to make her look good. If politics gets involved, who knows how this will turn out..
Up till now, this has been my interpretation, but I also want to hear it as it is so I’ve scheduled a call with PSD investor relations today. I’ll share it when I get the chance.
Disclosure: I own PSD at the time of this writing
[tags]PSD, UTC, PSE, merger, arbitrage, special situation, puget sound [/tags]