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PUD Questions & Answers

Question: Can a PUD acquire all generating assets by eminent domain?

Answer: A PUD has Constitutional power to acquire all generation upon finding of "public benefit" if it chose to do so. The only exception is the statutory limitation preventing condemnation on thermal power but that restriction would probably be ruled unconstitutional if challenged.

Question: When can a PUD purchase lower-cost power from the BPA?

Answer: A PUD would qualify for BPA power immediately. The amount of preference power it received would depend on the BPA's current obligations and through negotiation. After October 2006, the PUD would receive equal preference and priority with all other publicly-owned utilities in the Northwest.

Question: Can a PUD acquire existing PGE contracts by eminent domain?

Answer: Yes. A contract for power supply held by a private utility is considered "personal property" connected with supplying power to customers. It is subject to the exercise of eminent domain by a public body acquiring the utility distribution system and customers.

Question: What taxes does a PUD pay?

Answer: PUDs are non-profits so they don't pay income taxes. But then again, neither does PGE even though they collect $2 million a week from ratepayers for this purpose. PUDs do not pay state unemployment tax on wages but instead they reimburse the state dollar-for-dollar for unemployment collected by ex-employees. PUDs pay the same rate as investor-owned utilities for the following: property taxes, franchise fees to cities/counties for use of public right-of-way, and Tri-Met taxes.

Question: How is a PUD financed?

Answer: Voters would authorize the selling of tax-exempt revenue bonds. The interest from these bonds are exempt from federal taxation and allow communities to finance the furnishing of necessary local services, such as electricity, water, and waste treatment. Tax-exempt financing is considered to be the cornerstone of public infrastructure programs and an important resource for public power systems. Community-owned utilities (PUDs, Co-ops and Munis) regularly finance projects with tax-exempt bonds.

Logistics of Acquisition and Operation for additional information.