City power utility doubtful

GDS walks back feasibility; PUD, city move forward on franchise agreement

NEWPORT – After nearly nine months and close to $36,000 in attorneys fees, the firm assisting the city of Newport in the possibility of creating its own power utility, walked back the feasibility of that actually happening during a well-attended city council meeting Monday night.

“Our firm did a presentation back in May,” Executive Vice President Kevin Mara said of his firm GDS and Associates. “We usually give an optimistic view and a pessimistic view.” Mara said the presentation given in May was only optimistic and there are too many unknowns to determine how feasible a city utility would be.

“While it is possible, it is difficult,” Mara said.

The city’s 25-year franchise agreement with Pend Oreille Public Utility District expires in August. The agreement, which was in place decades before the formal document was signed in 1996, laid out the terms in which the PUD supplies power to the city of Newport, its residents and businesses.

GDS Senior Project Manager Kim Gentle, a former employee of Pend Oreille PUD, gave the presentation in May. She is married to Pend Oreille County Commissioner John Gentle, who is the county’s liaison to the city and whose cell phone was logged into the Zoom meeting.

Kim Gentle was not in attendance Monday night. She had been working with city administrator Russ Pelleberg on the proposal since at least September of 2020, according to documents acquired by The Miner through a public records request. Pelleberg was also not in attendance at Monday night’s meeting, as he is still on paid administrative leave, pending an employment investigation.

To date, the city has paid $35,621 to Van Ness Feldman, a Seattle law firm hired by Pelleberg on Nov. 10, 2020. The city has not paid GDS or Gentle directly, according to city clerk Nickole North.

Mara told the council Monday night that there was information in Gentle’s presentation that was based on incomplete data. He explained that when they consult with an entity and determine whether the creation of a utility would be a merger, acquisition or startup, the decision is based on an existing asset evaluation. The evaluation that was presented in May was based on Google Earth rather than actual field work.

“There was not a lot of field work done,” Mara said.

The forecast work done on how much electricity the city would use was not done with input from the PUD. Instead, the number of meters within the city limits were counted.

“Our initial estimate was a little aggressive,” Mara said.

Councilman Mark Zorica asked Mara if he and Executive Consultant Gary Saleba, who was also on the Zoom meeting, had reviewed Gentle’s information before it was presented to the city in May. Mara said he had worked on the valuation, but that he had not seen the presentation.

“We would like to review it. In this case, we did not. That’s why we’re here to clarify,” Mara said.

Monday night was the first time the city met with PUD officials to discuss the future of the franchise agreement.

“We aren’t quite sure how we got to where we are tonight,” PUD commission chairman Curt Knapp said after calling his own board meeting to order. “We’ve always gotten along with the city.”

Knapp detailed the ways in which the PUD is a community partner and said for the “health of the PUD and the county, we’d like to get the franchise agreement approved ASAP.”

He said he wanted to correct any false narratives, but admitted the PUD can always do better at transparency and communication.

PUD attorney Tyler Whitney had submitted a one-page franchise agreement extension earlier Monday to city attorney Laura McAloon, with blank spots left for a timeline.

Councilmen Keith Campbell and Zorica both spoke to their relationship with the PUD and gave kudos to the hard work done by the linemen, but Zorica said he would not sign anything without first reading it, referencing the extension submitted by Whitney.

“Will I sign it, once I read it? Most likely yes,” he said.

The PUD had submitted a list of questions to McAloon but they were not disclosed or answered at the meeting. Whitney said he did not expect answers due to the pending investigation, apparently referencing Pelleberg.

Councilwoman Jami Sears told the PUD officials she felt the questions were threatening and fear mongering.

“They don’t come across as very nice,” she said.

Councilman Ken Smith said he had been bullied in the past by PUD personnel, including two people who were at the meeting, but he didn’t say who.

“This city for far too long has been a good ol’ boy city,” he said. “We need to be able to do our due diligence and do our job. And if that ruffles feathers … then maybe there needs to be some changes on your side,” he told the PUD commissioners.

PUD general manger Colin Willenbrock said he cannot speak to bullying or fear mongering and assured the city that was not the PUD’s intention.

“Our concern is on process,” he said. “The city should do due diligence.” But, he said, the sudden talk from the city about starting its own utility has caused concern for many parties, including industrial customers and creditors regarding the PUD’s bond ratings.

He and Knapp both explained that the PUD needs to protect its ratepayers, and if the city created its own utility, that would result in higher rates for the rest of the county.

At the end of the two-hour meeting, with 41 people listening in via Zoom, the council asked McAloon to draft a new franchise agreement for review by the council at a future workshop.

Don Gronning contributed to the reporting in this story.