Public Works and Competitive Bidding.
Public work is all work, construction, alteration, repair, or improvement, other than ordinary maintenance, executed at the cost of the state or of any municipality. Every city, county, town, port district, district, or other public agency authorized to execute public work must follow specified requirements for competitive bidding for public works projects. Specific requirements vary by the type of municipality and certain exemptions are provided.
Notice inviting sealed bids must state the work to be done or the material to be purchased.
Responsive bids are bids submitted on time with all of the information the agency requested. A responsible bidder must meet certain specified criteria. No contract may be let for more than 15 percent in excess of the estimated cost of materials or work.
Competitive bid requirements may be waived for:
Public Utility Districts.
A public utility district (PUD) is a type of special purpose district authorized for the purpose of generating and distributing electricity, providing water and sewer services, and providing telecommunications services. Public utility districts are governed by a board of either three or five elected commissioners. Public utility districts are authorized to establish rates and charges for providing water and sewer services.
A PUD must contract for:
Contracts are not required for work accepted as an industry practice under prudent utility management. Prudent utility management means performing work with regularly employed personnel, utilizing material of a worth not exceeding $300,000 in value without a contract. This limit does not include the value of individual items of equipment.
"Nonemitting electric generation" means electricity from a generating facility or a resource that provides electric energy, capacity, or ancillary services to an electric utility and that does not emit greenhouse gases as a by-product of energy generation and does not include renewable resources.
"Renewable resource" means: (a) water; (b) wind; (c) solar energy; (d) geothermal energy; (e) renewable natural gas; (f) renewable hydrogen; (g) wave, ocean, or tidal power; (h) biodiesel fuel that is not derived from crops raised on land cleared from old growth or first growth forests; or (i) biomass energy.
Until January 1, 2045, any work ordered by a PUD for the construction, maintenance, operation, or repair of new or existing nonemitting electric generation, electric generation from a renewable resource, energy storage, or transmission or distribution projects estimated to cost more than $500,000, not including sales tax, must be by contract.
A PUD may have its own regularly employed personnel perform work which is an accepted industry practice under prudent utility management without a contract. Prudent utility management means performing work with regularly employed personnel utilizing material worth up to $1 million in value without a contract. The $1 million limit does not include the value of individual items of equipment.
Utilities with a purchasing department are authorized to receive hard copy or electronic bids. Contracts must be let to the lowest responsive and responsible bidder. A contract may not be let for more than 25 percent in excess of the estimated cost of materials or work, rather than 15 percent.
A PUD may use an alternative purchase contract process for contracts awarded for items, materials, equipment, or supplies for nonemitting electric generation, electric generation from a renewable resource, energy storage, transmission, or distribution projects totaling between $50,000 and $250,000 in any calendar month, not including sales tax.
Until January 1, 2045, competitive bidding requirements may be waived for purchases involving projects that are common facilities or relating to energy generation, storage, transmission, or distribution facilities meeting certain requirements.
(In support) This bill is precipitated by the need for more generation facilities. There is tremendous pressure on resource adequacy. Public utility districts are just asking for the bid limits to be raised for contracts for construction. Projects beyond that still go out for bids. It is necessary to keep in mind that there is pressure to get energy sources online and costs have gone up considerably. The thresholds in the bill are well within the range of what is reasonable within house. The bill also asks for prudent utility to be raised to $1 million. This is important for keeping equipment in good repair and stable in its delivery. This also allows for electronic notice which is a matter of efficiency. The increased demand for artificial intelligence requires more technology. It is important to be responsive to that demand and allow PUDs to do this work. All work will be done with union labor because that is what is in house. This bill has also been approved and supported by the labor union.
Electric utilities face a critical need for new and updated infrastructure. Washington is expected to need 30 percent more electricity than it is using now. There is a need to build 30,000 megawatts of energy and 13 miles of power lines for the region including Washington, Oregon, and Idaho. The new numbers are a rough approximation that considered the type of projects and the costs of materials that go into the projects. Since 2020, the cost of transformers have gone up 60 to 80 percent, and other rare kinds of technology can cost up to 150 percent more. Since 2013, the cost of transportation has doubled, after accounting for inflation. Washington is looking at a huge cost increase. This bill creates a very limited exemption in cases where there is a certifiable need for reliability. Public utility districts are governed by locally elected boards who loathe to increase rates. The boards do everything to keep prices down, which is a built-in safety mechanism. Sometimes a utility will want to partner with a nongovernmental entity that will not want to go through the public procurement process. The state has some of the most aggressive clean energy requirements.
(Opposed) None.
Senator Keith Goehner, prime sponsor; Patrick Bishop, Grant PUD; Jason Hudson, IBEW Local 77; and Nicolas Garcia, WPUDA.
The version of the bill recommended by the House Capital Budget Committee, compared to the version of the bill recommended by the House Local Government Committee, clarifies that the authority for public utility districts to use their own employees to perform work utilizing material worth no more than $1 million under certain circumstances does not apply to all work, but rather applies to work related to the construction, maintenance, operation, or repair of new or existing nonemitting electric generation, electric generation from a renewable resource, energy storage, or transmission or distribution projects.
(In support) Utilities are experiencing an unprecedented combination of challenges with clean energy requirements and cost increases. One of the key elements of the bill is to increase the speed of getting projects built. Some of the procurement laws have been on the books for decades, and much of this bill is about bringing those laws into the modern era. Some projects take up to 60 days to even get going, and this bill would allow projects to get constructed much more quickly. The bill does not apply to land acquisition; it applies to procuring the components that utilities need to buy in order to build projects. This bill allows utilities to make greater use of their own internal processes and personnel to construct projects.
The bill is driven by two factors: a massive backlog of energy generation work that needs to be built, and the rise in the cost of projects since the statutory bid limits were put in place. This bill brings procurement requirements in line with modern realities, in order to get more electrical generation and transmission projects built.
(Opposed) None.
Matthew Harris, Grant PUD; and Jason Hudson, IBEW Local 77.