Chelan PUD approves $1.35 million annual county payment amid strained relations

WENATCHEE — Chelan County PUD commissioners approved an agreement Oct. 5 that will pay Chelan County at least $1.35 million annually beginning in 2027, despite objections that the arrangement shifts county expenses onto the utility and strains relations between the agencies.

Commissioner Carnan Bergren opposed the agreement. Supporters said the negotiated arrangement provides greater certainty than leaving the county’s request for compensation unresolved, though several expressed discomfort with the payment and how the process unfolded.

The agreement establishes payments in lieu of franchise compensation for the PUD’s use of county rights of way. The county granted the utility a 20-year franchise in 2025 while reserving the right to seek compensation.

Under the agreement, the PUD will pay 5.5% of its previous year’s retail electric revenue from unincorporated Chelan County, excluding Schedule 4 large-load service and off-system sales. The first payment is due Jan. 30, 2027. The agreement runs through June 2045.

Bergren said his opposition was directed at the principle of the arrangement, rather than the staff members who negotiated it. He argued that the county was using the payment to help address longstanding budget problems without accounting for the PUD’s existing contributions to county projects and services.

“This is just an easy way of getting some dollars to balance their budget,” Bergren said.

He also objected to the absence of a scheduled review during the agreement’s term and said transferring the money to another agency reduces the utility’s control over how its dollars are managed.

“So I guess this is going to formally create a subsidy for the county as well,” he said. “And I’m just not going to stand for it. I can’t.”

The agreement restricts spending to law enforcement, public works, emergency management, natural and cultural resources or other uses mutually approved in writing. It also allows the PUD to request an annual spending report. If the county does not increase its property tax levy by at least 1% in a given year, the payment percentage drops from 5.5% to 3.5%.

Commission President Kelly Allen said she shared Bergren’s concerns and had struggled with her decision, but saw value in establishing certainty amid rapid changes affecting the utility.

Her support came with a warning about future requests for PUD assistance.

“I hope that they hear that there is a strain now placed on the relationship between the county and the Chelan PUD when it comes to future asks that the county might have of this commission, and particularly from this commissioner,” Allen said.

Commissioner Randy Smith described the disagreement as temporary tension between agencies serving the same residents. He said the potential consequences of failing to reach an agreement helped persuade him to support it.

“It won’t be forgotten, but I understand that staff has been looking at what the potential downside was or is for not having an agreement, and that’s got my attention,” Smith said. “And the downside could be larger.”

Smith acknowledged that the payment would help close a county budget gap, but said it would not solve the county’s financial problems. He compared the arrangement to payments the PUD already makes to cities within Chelan County.

Commissioner Garry Arseneault also supported the agreement reluctantly, saying the negotiations had produced a workable resolution to a dispute that had occupied both agencies for years.

He argued that the PUD should approach laws that benefit other agencies consistently with those that benefit the utility, pointing to benefits the district has received under the state’s Climate Commitment Act.

“I just want to thank our staff who have struggled with this for quite some time and I think have landed on the very best resolution that was available,” Arseneault said.

The county will suspend separate franchise compensation charges while the agreement remains in effect. The agencies can amend or terminate it by mutual written consent. It would also end if the county gains authority to impose a utility tax and adopts one.

PUD Chief Strategy and Stakeholder Officer Justin Erickson said county commissioners were scheduled to consider the agreement Oct. 6.

Andrew Simpson: 509-433-7626 or andrew@ward.media