In February 1996, Hermiston city officials had met with Pacific Power’s district manager to discuss what they perceived as a deteriorating level of service from the utility. The city’s concern grew when Pacific Power announced it would close its walk-in customer service office in Hermiston in the fall of 1996 and replace it with a toll-free number to its Portland call center. Hermiston officials began an open discussion of possibly acquiring Pacific Power’s local distribution system.
At a meeting with the city in November 1996, PacifiCorp’s CEO Fred Buckman said his company “would honor the will of the people of Hermiston as to which electric service provider Hermiston might choose,” according to the Oregon Public Utility Commission’s account of what transpired. The city also asked if PacifiCorp would sell its Hermiston operations to Umatilla Electric Cooperative (UEC), which served surrounding areas.
Discussions between Pacific Power and UEC occurred sporadically through the next several months. In the meantime, the city hired a consulting firm to study buying the facilities and forming its own municipal system. The assessment concluded that Hermiston customers could pay for the system, build a capital investment fund, and still enjoy rates lower than PacifiCorp’s.
If Pacific Power and UEC couldn’t agree to a sale, the city said it would make an offer to acquire PacifiCorp’s system. About the same time, UEC and Hermiston first discussed the possibility that UEC might operate the facilities on Hermiston’s behalf if the city were to acquire PacifiCorp’s facilities by condemnation or negotiation.
In June 1998, after PacifiCorp decided it would neither sell to UEC nor to the city, the city council called for a September 15 advisory vote on whether Hermiston should acquire PacifiCorp’s facilities.
The East Oregonian was skeptical of the plan to change providers. “Pacific Power had been a good corporate citizen and to boot them out didn’t seem good at the time,” the editor told Public Power magazine. But the Hermiston Herald supported the idea, stating in an editorial:
“The difference, however, is that UEC is based in Hermiston, it serves only Umatilla and Morrow counties, and decisions that affect its customers are made right here by people that live right here. Pacific is based in Portland, it serves hundreds of communities and the decisions that affect its customers are made by people who do not know us. Those decisions are based on what is good for the company as a whole, not necessarily what is good for Hermiston…The question isn’t “What company is better?” The question is “What company is better for Hermiston?”
In the end city voters approved (1,469 to 1,364) the advisory measure to take over Pacific Power’s wires and poles and form a municipal utility.
The city began paperwork to condemn PacifiCorp’s properties, but said it would withdraw its condemnation effort if PacifiCorp agreed to provide Hermiston residents with service equivalent to what it anticipated with UEC. PacifiCorp rejected the offer, and filed a complaint in May 1999 with the Oregon PUC alleging that UEC had violated state utility laws by trying, with the city’s help, to take over the Hermiston service area. The PUC rejected and dismissed the complaint in December 2000. The following July, under the threat of condemnation of its assets by the city, PacifiCorp finally agreed to sell the system to the city. (The city would expend about $12.5 million to acquire the system.)
Meanwhile, BPA was adopting criteria for determining which utilities would qualify for lower-cost preference power; a September 20, 2000 deadline for qualifying for its purchase was announced. To meet the BPA criteria and expedite Hermiston’s acquisition of PacifiCorp’s facilities by the deadline, the city and UEC terminated their earlier agreements and entered a Mutual Cooperation Agreement. The city offered the job of electric utility superintendent to Russ Dorran, who had retired a decade earlier from UEC.
The locally owned municipal electric utility, doing business as Hermiston Energy Services (HES), began operations on October 1, 2001, serving 4,900 meters. The city bought its wholesale power, an average load of 12 megawatts, from BPA and contracted out day-to-day operations to UEC. All of the city’s customers were without power for a planned five minutes early one morning as HES switched to its own power.
HES became the first municipal utility formed in Oregon in 53 years, and after a decade it was still receiving calls from cities around the U.S. asking how the feat was accomplished.
“It’s amazing how well it has worked,” City Manager Ed Brookshier told the council as it extended the operating agreement with UEC through 2032. “It has been a partnership in every way.”
