t History suggests we might have cause to be alarmed.

Some of you may have noticed the articles that have been recently published about the impending takeover of Puget Sound Energy by a private consortium of Australian and Canadian investors. The deal is being publicly sold as a way to bring needed new capital to the utility so that it can do wonderful things for us, like buy lots of alternative energy generating capacity to build our energy future, and so on.

But if you look closely at the deal, it seems more like a classic Michael Milliken-style junk bond setup. What will happen is that PSE’s current stockholders will be bought out at about 25 percent more than their stock is currently worth. That’s good for them, and they’re pretty happy about it; there was no trouble getting them to vote for the buyout.

But in order to do that, the consortium will borrow $4.2 billion, or most of the buyout price. That means that they will actually pay from their own funds only a little more than 50 percent of the current PSE stock value — the rest is borrowed money.

This might be time for a pop quiz.

Who do you think is going to pay back the $4.2 billion in borrowed money (with interest and a tidy profit)?

a. The Australian fund managers, out of their ridiculous salaries.

b. The Canadian fund managers, out of their ridiculous salaries.

c. The Puget Sound Energy executives, out of their ridiculous salaries.

d. You.

If you guessed anything other than d., please give me a call. I have a special deal in subprime mortgages that I know you’ll like.

The history of this kind of utility buyout has not been encouraging for the hapless ratepayer. The result is almost always enormous increases in utility rates to support the profits that these organizations demand from the deal and to cover the expenses of the buyouts themselves. And these companies, based overseas, have no interest whatever in the plight of the local ratepayer — they just want their money. Of course, right now the air is blue with promises that our rates will not be affected in order to get the necessary approvals from regulatory agencies. But you know …

So maybe you remember the proposal that was on the ballot in 2004 here on Vashon? It was for something called a Public Utility District (PUD). It was judged too expensive at the time and rejected by the voters. But if I’m right, Vashon ratepayers are about to get a crash course in what the words “too expensive” actually mean when applied to utility rates. Remember what happened to the price of gas? Maybe the calculus on this particular option will change dramatically.

That’s what happened when the last PUD was formed in Washington state, in Asotin County. Their original PUD proposal, for a district to manage their water system, was rejected by the voters. Then their water system was bought up by a French company, and rates went through the roof. The second time around, the PUD was approved overwhelmingly, the district was formed, and it has been working ever since. Is this perhaps a glimpse into our future?

So those of you out there who were active in the PUD proposal back in the day – a little advice. Don’t throw away all those materials that you put together. You may need them again, maybe as soon as 2010.

— Steve Graham is an Island activist.