PUD chief now makes $308,407

EVERETT — One of the top paid public officials in Snohomish County just got paid better. Much better.

Snohomish County PUD general manager Steve Klein received a $57,102 raise, bumping his base salary from $251,305 to $308,407.

That’s an increase of 22.7 percent.

In the past, the PUD general manager was the highest paid public official in the county outside of hospital districts.

The utility has been criticized in the past for paying high salaries, but PUD and industry officials say public officials have no choice unless they want to lose employees to privately owned utility companies, or public companies that pay higher wages.

In fact, the PUD has avoided large pay raises as part of its plan to keep rates as low as possible in the wake of the 2000-01 West Coast energy crisis, PUD Board of Commissioners President Toni Olson said.

During the crisis, the utility signed several high-priced electricity contracts with energy traders, most notably the discredited Enron Corp., which was later found to have illegally manipulated electricity prices during the crisis. Those contracts and a price run-up at the Bonneville Power Administration caused the PUD’s rates to shoot up by more than 50 percent.

“We were very conservative and conscientious,” Olson said. “Now that we’re removing some of those clouds that were over our heads, we are going back up to the market.”

Klein, who started as general manager in April 2006, gave raises to eight of the PUD’s senior officials last month. Those raises ranged from 3.76 percent for the assistant general manager of finance — whose salary increased from $158,111 to $164,060 — to a 21.57 percent increase from for the assistant general manager of customer and corporate services — from $152,586 to $185,498, according to PUD figures.

The decision to give Klein a raise was based on a positive evaluation of his first year on the job, Olson said.

To determine the amount of the raise, the PUD surveyed the annual salaries of general managers at a dozen other large public utility districts. Tossing out the highest and lowest salaries, the managers’ annual pay ranged from about $300,000 to $315,000, Olson said.

Commissioners picked the middle-ground for Klein’s raise.

“Even though we’re a public utility, our commission is committed to paying market-based rates,” PUD spokesman Neil Neroutsos said. “It helps us maintain skilled and knowledgeable employees.”

The pay increases will not affect rates, Olson said. The PUD’s projected budget for 2008 is $741 million, and of that, 9 percent is earmarked for salaries, Neroutsos said.

Carl Mycoff, president of Mycoff &Associates, a Colorado-based recruiting firm for utility companies, said it’s cheaper for companies to pay more to retain employees than it is to hire new people.

He predicts a nationwide spike in the salaries of people in the utility industry. The number of new employees entering the market is decreasing, leading to more competition for the people who are most qualified to serve as managers, he said.

It wouldn’t surprise Mycoff to see the PUD’s general manager earning $500,000 annually in five years, he said.

He said Snohomish County PUD is wise to keep it salaries competitive.

“The simple answer is money,” Mycoff said. “Public agencies, it’s only an illusion that it’s a government entity. It’s really a business that’s providing a service that other companies would deliver.”

Reporter Scott Pesznecker: 425-339-3436 or spesznecker@heraldnet.com.