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Power Crisis Endangers Aluminum Plants, Fish by Rocky Barker The Idaho Statesman, March 12, 2001

BPA says it can't aid industry, spill water for salmon

The electricity crisis has forced federal hydropower marketers to set adrift an entire industry and may jettison salmon recovery programs to keep Northwest lights glowing.

The Bonneville Power Administration has told aluminum smelters they no longer can depend on cheap federal power. The BPA also has warned it cannot afford to divert any water away from its hydroelectric turbines to aid migration of endangered salmon.

These drastic measures reveal the strain placed on the Columbia River's hydrosystem that helped win World War II and powered the development of the Pacific Northwest. The second worst drought since 1929, along with sky-high wholesale electric rates due to California's shortfall, is forcing the agency to make harsh choices.

"People in the Northwest want both salmon and a reliable, affordable energy system," said Pat Ford, executive director of the Save our Wild Salmon Coalition. "Right now, they are getting neither."

About 20 percent of Idaho's electricity comes from the BPA, through rural electrical cooperatives and municipal utilities such as that in Idaho Falls. If the agency were to extend a special deal to keep the aluminum companies economically viable, it would have to charge more to these other customers, who by law have preference.

Meanwhile, California and other regions of the country want to end this preference, which critics call a sweetheart deal.

There is no easy out in the short term, but power planners say a combination of aggressive conservation, development of decentralized power sources throughout the region and new generation plants can relieve the reliance on dams and the assault on salmon.

"The best thing we can do is have a mix of resources," said John Harrison, a spokesman for the Northwest Power Planning Council, a panel of gubernatorial appointees from Idaho, Montana, Oregon and Washington.

The BPA was created in 1937 to market the power from dams built during the Depression to aid economic development in the then-isolated region.

Today, the BPA sells power to public utilities and aluminum smelters from 30 federal dams in the four Northwest states.

It sells the power at cost -- $22.50 per megawatt hour -- to its preferred wholesale customers. But now its customers need more electricity than BPA can produce, and the agency, like Idaho Power Co. and other utilities throughout the West, has been forced to buy power on the open market. Low water and California's demands for electricity have increased market rates to as high as $800 per megawatt hour. The BPA has had to spend $500 million this winter to buy electricity.

Its demand for power has exceeded the hydrosystem's supply, forcing the agency to buy on the open market. The BPA worries that without a huge rate increase and removing the special rates previously offered to the aluminum industry, it will not be able to make its annual loan payment to the U.S. Treasury for the money paid to build the dams and transmission system.

That would open the door, BPA officials say, for California and others to end the region's preference for power.

"I think it's incumbent on energy leaders to protect the hydroelectric resource and not let control leave this region," said Bud Tracy, manager of Raft River Rural Electric in Malta.

Many of Idaho's cooperatives like Raft River have already signed longer-term contracts that lock in lower prices, Tracy said. He's hopeful that they will keep rates manageable until the current crisis passes.

But for Brett Wilcox, president and CEO of Golden Northwest Aluminum, which operates two aluminum smelters in Oregon and Washington, there is no promise of relief.

The BPA has told him he cannot expect to have access to federal power after 2006.

"Historically, the BPA was created as an engine to create business and jobs in the region," Wilcox said. "Now, without a formal change in directive, it has shifted its power from industrial to residential customers."

Some smelters are expected to close, unable or unwilling to upgrade their equipment to meet the realities of higher electric rates. These companies provide 8,000 jobs and indirectly support another 20,000 jobs. Only a few years ago, the aluminum companies provided nearly $2 billion total annual benefits to the Northwest economy, much of it in smaller towns like Goldendale, Wash.

The BPA is attempting to aid the industry through the transition to reduce the effect on small communities and workers, said Mike Hanson, a BPA spokesman. Some companies are seeking protection from Congress, but the BPA officials say politics is not driving their decisions.

"This really is looking at the future, at what is the best thing to keep rates down," he said.

Wilcox isn't giving up. He is looking at alternatives for his company that experts say could be a model for the region -- developing his own power supply and investing in conservation and renewable energy.

"You can try and control your own destiny," Wilcox said. "Don't rely on someone to bail you out or wait for the world to change."

The salmon problem is far more vexing.

Under the federal plan to meet the Endangered Species Act approved in December, the BPA is required to divert water from its power turbines and spill it over the dams to help flush young salmon downriver during their migration. It also holds water in reservoirs for release at the time salmon need it most. Young salmon are washed by high river flows to the ocean. They don't swim there.

The measures were a part of a suite of actions federal officials said would recover salmon without breaching four dams on the Snake River in Washington. But now federal officials are backsliding.

Steve Wright, the BPA's acting director, told the power council Wednesday that if it is required to spill and release water for salmon, it risks running short of power this summer. That could cause rolling blackouts across the region, he warned.

Without the measures, Ford said, most of the young salmon will not survive the low flows. BPA officials have proposed the action, and a decision must be made soon, since the fish will begin migrating this week.

"Bonneville is not proposing to slaughter all the fish, but that is going to be the outcome of their plan," Ford said.

Adding to the salmon's peril is the lack of funding for the rest of the salmon plan proposed by President Bush in his recent budget.

Spilling water and holding it in reservoirs for salmon reduces the BPA's generation capacity by 1,000 megawatts, roughly the amount of electricity to power Seattle. It's only slightly less than the generation capacity of the four Snake dams most scientists say must be breached to save salmon.

Without those dams, California might have suffered more blackouts, BPA officials said. Without them, the BPA would have had to purchase additional power at market prices.

But even if breaching were approved today, it would take five to eight years to complete. Steve Weiss, senior policy associate for the Northwest Energy Coalition, which encourages conservation and development of renewable energy sources, said the crisis shows the weakness of the plan to save all the dams and the salmon.

"It turns out it's going to cost more to do all the alternatives than taking out the four dams," he said.