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Green Power Battles to Stay Afloat by Chris Mulick, Herald staff writer Tri-City Herald, May 28, 2002

West Richland's Ed Bridges would like someone to explain.

Since he bought his two-story home more than three years ago, he's installed a high-efficiency heat pump, ceiling fans to distribute heat, an electronic thermostat to regulate temperature and added insulation to his basement.

In all, he figures his energy consumption is down by as much as a third. So why has his bill gone up by just as much?

"It's a vicious cycle," Bridges said. "They want us to save, but when we do, we get hit. It just really irks me."

There's no simple way to explain how the energy crisis has been redefined in a year's time. Last year's fears of blackouts are gone, along with outlandish wholesale power prices. But power rates remain far higher.

Put simply, utilities are stuck in an investor's nightmare. They bought high and now they're selling low.

Such yo-yoing changes are giving the energy efficiency and green power industries whiplash. Wind power and conservation were hip a year ago. Now they're as dated as rubber watches and Pokemon.

Some public utility managers want their energy provider -- the Bonneville Power Administration -- to scale back on the two high-cost investments, making it hang-on time for environmentalists.

"The whole conservation and renewables piece is certainly being hotly debated," said George Darr, Bonneville's renewable resource program manager.

Conservation industry needed
Energy efficiency advocates have been through this before. In the mid-1990s, the BPA had a conservation staff of about 230. But heavy precipitation in the years to come produced far more energy than the region needed and depressed market prices, curtailing BPA revenues for surplus sales.

Retail rates rose above market prices and the agency looked bloated. To cut costs, the BPA wiped out more than a quarter of its work force, including three-fourths of its conservation crew.

Worries of blackouts began escalating in late 2000, bringing energy efficiency back into style, and BPA prepared aggressive plans. Now supplies again appear sufficient, but rates remain high, putting BPA under pressure to scale back conservation costs.

This time it may not. Analysts say all this back-and-forth puts too much stress on the conservation industry, which needs to remain strong to prevent the next supply crunch.

Though Bonneville already has cut what was a $46.4 million conservation and energy efficiency budget by $8.4 million, it's still 25 percent higher than a year ago.

"We still are committed to a sustainable, long-term conservation program," said John Elizalde, who manages Bonneville's western power business line.

From a utility manager's perspective, conservation is great in a supply pinch, but not in a financial one. Programs for developing new energy-efficient appliances and distributing new-wave light bulbs cost money and cut power sales revenues.

"All of the utilities are definitely feeling pressure," said Dick Watson, power planning director for the Northwest Power Planning Council, which tracks regional energy needs. "They would like to not spend any more money or lose any more revenue. Doing conservation does both."

Steve Weiss understands, even though he represents the green point of view, because he's helped write utility budgets. The Northwest Energy Coalition's top policy analyst was a utility commissioner in Oregon for 12 years.

"That's part of the problem with conservation," said Weiss, a former Salem Electric commissioner. "It's one of the few things in a utility budget that is discretionary. It raises rates, but it lowers bills."

He is pushing Bonneville to increase energy-efficiency investment, saying more conservation in the late 1990s could have helped avert the energy crisis of 2001.

But Chuck Dawsey, the outspoken manager of the Benton Rural Electric Association, was back in Washington, D.C., this month trying to increase congressional pressure on BPA for more cost-cutting. He believes conservation programs could be scaled back until rates come down.

Today, conservation only adds to the surplus power the BPA can't sell in the first place, Dawsey said. Moreover, the region may not be able to afford implementation costs of conservation programs.

"We have literally reached the bottom of the pockets of every ratepayer in the Northwest," said Dawsey, whose utility recently raised retail rates by an average of 32 percent. "There's no more money there."

Wind farms on the rocks
Perhaps in even greater jeopardy are the six wind farm projects from which BPA is considering buying power. When wholesale power prices were high a year ago, wind power looked attractive.

Now that prices have fallen and no one needs more energy, some utilities hope BPA won't buy more.

"Given the rates, our stomachs are kind of full of expensive renewable resources," said Ken Sugden, manager of the Franklin County Public Utility District.

Three projects already have fallen by the wayside, largely because of the determination the wind at proposed sites in Klickitat County, Gilliam County, Ore., and near Waitsburg wasn't good enough.

BPA still is considering two wind farms in Klickitat County, one in the Horse Heaven Hills in Benton County, the Maiden Wind Farm northeast of Prosser and two others in Oregon.

But low market rates aren't helping. Neither are the calls from utilities, which don't want Bonneville adding to its power supply.

"We're not prepared to make any commitments," BPA Administrator Steve Wright said. "We may not or we might sign them all. There are no promises that have been made."