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BPA Pushes Plan to Divide Power System

by Chris Mulick, Herald Olympia bureau
Tri-City Herald, August 6, 2006

The Bonneville Power Administration is getting serious with its plan to divide up the federal Columbia River Power System and is steaming toward approving it in January.

There's scads of details to be worked out and bones to pick. But it may already be too late to hem and haw over whether dividing up the system among utilities is a good idea. If public and private electric utilities, environmental interests, aluminum companies and other interested parties don't reach agreement on key details, Bonneville is pledging to do it for them in time to ship a final plan to Washington, D.C., early next year.

The agency is collecting public comments and will have the second of five region-wide public hearings at 1:30 p.m. Monday at Franklin PUD.

The comment period ends at the end of September. Bonneville wants a plan in place soon, in part, so utilities and other entities can begin making decisions about future power supplies.

"Nothing in the energy business can be done overnight," said BPA spokesman Scott Simms. "It's imperative we have those discussions now."

Any changes wouldn't take effect until 2011 but they would be lasting. Bonneville is planning to incorporate them in new 20-year contracts with its utility customers.

"This stuff is going to have long-term implications," said Marc Krasnowsky, a spokesman for the green-leaning Northwest Energy Coalition. "It really does set up a whole new template for meeting energy needs. People should be paying attention."

Historically, Bonneville has provided all or most of the power needs for its public utility customers, even if that meant acquiring extra supplies when demands topped what the system of federal dams and lone nuclear plant could generate.

But after a botched power project deal near Tacoma in the mid-1990s cost Bonneville millions, utilities began pressing the agency to get out of the power acquisition business. Bonneville started getting serious about it after new power sales contracts were signed with utilities in 2001 and set out to define its future role in helping the Northwest meet growing energy needs.

As many utilities have sought, the proposal Bonneville has laid out leaves it with virtually no role. The agency would sell 7,100 megawatts of electricity generated by the Columbia River Power System to its 130 preference customers -- public utilities and rural electric co-ops -- giving each a legally defined sliver of the system's output.

Bonneville would acquire no more than 300 megawatts more so that all preference utilities would have all the power they need when contracts take effect in 2011. But as those utilities grow, they would be responsible for acquiring new power supplies on their own. Bonneville would offer to do that for them at a higher rate but, unlike in past years, the costs and risks of doing so would not be shared by all 130 preference utilities. This is what many Bonneville utility customers have wanted -- freedom to make their own choices about their future power supplies.

"The general direction is excellent," said Franklin PUD Manager Jean Ryckman.

There are difficult decisions to be made about what benefits to provide residential and small farm customers of private utilities and aluminum companies and how much to spend promoting conservation and environmentally friendly power plants.

Another issue is the Bush administration's plan to require Bonneville to use some of the money it gets from surplus power sales to pay down its debt to the U.S. Treasury. That's money that is now used to offset other BPA costs to hold down electric rates.

The Bush plan is contained in the BPA proposal. While public utilities have fought it they may now find themselves negotiating how much they'd be willing to part with. Not everyone is thrilled to be headed down this path. Environmentalists worry utilities acquiring new power supplies wouldn't buy as much green power as Bonneville would. And there's some concern that small utilities, no longer able to share risks in such a large pool of other Bonneville customers, could suffer.

"Most of Bonneville's customers are too small to do resource development and output acquisition," said Benton REA Manager Chuck Dawsey. "We're losing the economies of scale."

There's also differing opinions about whether dividing up the Columbia River Power System will help the Northwest defend it from congressional powers that would prefer its benefits to be spread across the country in one thin sheet. Unity has been the Northwest's greatest weapon.

But divisions were created among the public power community when Bonneville, at the request of some large public utilities, diversified its contract offerings in 2001. That ultimately pit one set of utilities against another. Now it appears Bonneville will offer an even greater mix of contract offerings that could create more divisions.

"I believe we are making a significant mistake in the Northwest by allocating the Bonneville system," Dawsey said. But Ryckman believes the plan may keep would-be raiders in Congress at bay.

"I think it may help on the political front," she said. "If the system is totally allocated and long-term contracts are in place, hopefully some of that will die down."

Chris Mulick, Herald Olympia bureau
BPA Pushes Plan to Divide Power System
Tri-City Herald, August 6, 2006

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