Subtle differences on issues separate PUD candidates

The two candidates for Grays Harbor PUD commissioner have contrasting views on current budget issues and dealing with possible rate increases.

They also advocate different ideas for choosing a new PUD general manager to replace the retiring Rick Lovely.

Chris Thomas, an economic analyst with the state Department of Employment Security, and Arie Callaghan, supervisor at Mason Trucking, each have connections to the PUD through marriage, they told The Daily World’s editorial board. Thomas’ mother-in-law is former PUD Commissioner Diane Ellison, while Callaghan’s wife Tina is a customer service representative for the district.

The two candidates are running to replace Commission President Tom Casey, who decided not to run after holding the position since 1982.

MANAGER SEARCH

On replacing Lovely, who has announced his intent to retire by the end of the year, Callaghan said he has advocated that the current commissioners wait until the new commissioner is seated before deciding on a successor.

“I just think it would be a good thing for them to wait until after the election so that whoever the incoming commissioner should be would have some input into who they are going to have to work with,” Callaghan said.

The PUD currently has retained a consultant to look at the hiring options, but the PUD has not yet advertised the opening or begun a formal search.

Thomas, however, believes the PUD shouldn’t be dragging out the process.

“I want it to be a professional process and thorough to get the most qualified candidates,” he said. “I want it to not cost the ratepayers too much expense.”

But Thomas said now that the process “is taking longer than I anticipated, I wouldn’t mind being in the decision. If it would have started earlier and they would have had a good process to select candidates and find some qualified people, I’m fine with the current commissioners doing their job in finding a candidate.”

Asked what qualities the new general manager should have, both candidates had similar answers.

“You want somebody who has some in-depth knowledge of the PUD system itself, someone who is preferably a previous manager, someone who also believes in public utilities and the mission of them,” Thomas said. “Someone who is a good communicator, who can be able to communicate to the commission and the public and to staff to move the organization forward … not just for today but for years ahead. I would prefer someone with a technical or engineering background.”

Callaghan said his first concern was that the PUD hire “someone with a good business head. Definitely, if that person has a background in public power it would certainly be helpful.”

Callaghan also expressed a preference for “someone who has been involved before. Certainly there are some candidates at other utilities that may not have been general managers but may be assistant general managers who would be interested.”

“I think they should start accepting applications right away just to see who applies for the job instead of making it real, real complicated,” he said, adding:

“I know there are a lot of people who want to see a new face there, someone from the outside.”

Thomas said he wouldn’t mind if someone locally or with previous district experience was considered in the pool of candidates, but he said his preference would be to hire someone “who can move the PUD in a new direction.”

“I think it’s time for a new start,” Thomas said.

REASON FOR RUNNING

Callaghan cited his 23 years at Mason Trucking.

“I know when the economy is bad, you have to size down and do what you have to do to keep going,” he said. “Some of the qualities I can bring are just knowing you can’t spend a lot of money all the time. You have to watch what you are doing and be real careful and cautious and cognizant about what you are doing and how you are spending money. It’s the ratepayers that are always on the hook when the smoke finally clears.”

Callaghan noted that the other two remaining commissioners, Russ Skolrood, a teacher, and Dave Timmons, a police officer, both work in publicly funded jobs. “I think somebody out of the private sector could bring a new perspective in there,” Callaghan said.

His motivation for running, he said, was because of frustrations about “some of the things that have taken place over there. I think people’s hearts might have been in the right place but things just didn’t work out so well.” He cited investments that didn’t pan out.

Thomas, who noted he has a master’s degree in public administration, said he decided to run when he saw that Casey was not going to run for re-election.

“I also had been reading about a lot of things that didn’t work out and people seemed frustrated. I knew it was a chance to make a difference,” Thomas said.

He noted he had served with Casey when the two were on the Grays Harbor Council of Governments, which Thomas also chaired. Added to his relationship with Ellison, Thomas said he “got exposed a little bit to some issues and the PUD itself, and that spurred me to run. It was an opportunity and I wanted to make a change.”

Thomas said that as an eight-year former member of the Montesano City Council, he has experience dealing with a water utility that sets rates “different from a power utility, but it has some strong similarities. There are rates involved and there is infrastructure planning. That also was a factor, too.”

CHANGING PUD

Both candidates were cautious about recommending any specific changes to PUD operations, but Thomas did have several concerns about PUD operations.

Thomas said he would like to see an improvement in communication with staff from PUD managers. “Maybe it’s the organizational culture, maybe it’s a management issue, but that’s one thing I would like to see a new direction.”

One of the areas he would look critically at would be travel expenses and other internal costs.

Thomas also questioned some of the PUD’s spending on other projects, such as the turbine generators that eventually were brokered to the new owner of Harbor Paper after the former Grays Harbor Paper closed down while still owing the PUD for back electricity bills.

Callaghan said he, too, wanted to see the PUD move away from such risks.

“What I would like to see us do is just get back to the basics — buy electricity, sell electricity and run a tight ship,” Callaghan said. “… You have to be real calculated when you are spending ratepayers’ money.”

The PUD commission is currently weighing options for funding some capital projects, considering raising rates or borrowing money. Thomas said the decision between borrowing or using existing revenue is a balancing act.

“With infrastructure projects, if you use revenue, it impacts rates immediately,” he said. “If you borrow, it can spread the cost out over a longer period of time for existing ratepayers and future ones. But at the same time, it puts off the costs into the future and you are going to be paying down the road.”

Given that interest rates are at historic lows, and that there is about a 13 percent unemployment rate, Thomas said he would currently favor using bonds rather than a rate increase with the idea of changing that formula as the economy improves. Otherwise, he predicted, the PUD would have to have as much as a 12 percent rate hike.

Callaghan said he didn’t want to see the district take on any more debt.

“I don’t want my grandkids to be paying for things that we decided we needed right now,” he said. “You are going to have to do the repairs and the infrastructure at some point, but if the ratepayers can see that you are doing everything you can to run a tight ship, a rate increase is a whole lot easier to accept. Obviously, no one likes a rate increase.”

The PUD, he said, has to “wean itself off this borrowing money as quickly as you can. It’s just a bad deal to get the district in a lot of debt.”

BUDGET CONCERNS

Callaghan said spending cuts through employee reductions is not something he favors. “It’s important for us to have the best crews out there.”

“I don’t think that’s an area where you should have any cuts whatsoever,” Callaghan said. “But I think in the management areas, that’s something that could be looked at.”

Thomas said it would be better to look at potential cuts to equipment costs if it became necessary to trim the budget, but it was more important, he believed, to look at ways the district can add to its revenues.

“There are safety factors involved, and the main thing is safety and the reliability of the system,” he said. “I would hesitate making cuts. It all has to be looked at through the lens of: Is this providing relability and safety?”

Ways to boost revenue, he suggested, would be to review the district’s green energy portfolio to see if there were ways to reduce those costs.

“It’s expensive now and it’s a budget driver but in the future those cost ratios may change,” he said. “I would look at finding the ones that have the least impact.”

Callaghan also said he would continue to try to find ways to reduce the costs of power provided by the Bonneville Power Administration and to better market the surplus power the district has to sell.

“I would look at Bonneville and how to fight any increase that would affect our preferred rate,” he said.

Callaghan, however, said he felt it was “important to keep a good relationship with the BPA. That’s the source of our cheapest power.”

“Obviously we’re at (the BPA’s) mercy,” Callaghan added. “We have to have a good relationship with BPA to make sure we are getting the best rate on our power. “

He acknowledged he didn’t know the issue well enough to say whether he believed the district should continue its ongoing legal challenge to the BPA’s residential exchange rate program and proposed settlement, which began as a move to provide cheaper federal power to private utilities at the expense of public utilities that historically have had so-called preference rights to the federally produced electricity from Northwest hydroelectric dams in the BPA system.

“I really don’t know the issue well enough to say whether we should proceed with the litigation or not,” Callaghan said.

Thomas said he’d “love to have a good relationship with BPA,” but 70 percent of the district’s pricing and budget relates to market prices from the BPA.

“We could run the most efficient organization and do all kinds of cost-cutting measures, but if our preferred rate or other programs that we have through BPA are taken away, all our rates go up fast,” he said. “It is critical. Litigation is expensive and risky, and it’s not something you want to do unless you have to. But we have to be vigilant that our ability to provide power at cost is not threatened by changes that the BPA does.”