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Region, California Fight Over Power by Gail Kinsey Hill, Oregonian staff The Oregonian, December 15, 2000

Oregon's governor says California's problems
could affect the Northwest and joins a call for electricity price caps

Gov. John Kitzhaber on Thursday warned that U.S. Secretary Bill Richardson's emergency efforts to alleviate California's electricity crisis could threaten supplies in the Northwest.

"We are really at the risk of having California and its problems drag down the rest of us," Kitzhaber said in a stern address at the Capitol.

Kitzhaber called on Richardson to immediately convene an energy summit in the West to deal with the entire region's energy shortage. In addition, he joined Govs. Gary Locke of Washington and Gray Davis of California in calling on federal authorities to impose short-term wholesale price caps on electricity in the region.

Kitzhaber's comments heightened tensions between California and the Northwest over the limited supplies of electricity. And it highlighted concerns that the larger, more politically powerful California might dominate the fight for power as the battles reach federal authorities.

States throughout the West are struggling to deal with energy shortages, caused in large part by the region's rapid growth. While demand for power from consumers and businesses has exploded over the last decade, little additional generation has been built to expand supplies. California's effort to deregulate electricity has further complicated the situation.

A shortage has driven up prices at both the wholesale and retail levels throughout the West.

Richardson, in a rare emergency move designed to avert forced blackouts in California, on Wednesday ordered the Bonneville Power Administration to sell some of the electricity generated from 28 federal dams in the Northwest.

Late Thursday, Richardson followed up with an order to more than 70 power companies that sell electricity to California to make their surplus power available to the state's electricity system operator. The order remains in effect until at least Thursday.

BPA's power heads south "We must act to ensure there will be a sufficient supply of electricity to keep the power flowing to homes and businesses in California," Richardson said in a prepared statement.

The BPA, a Portland-based federal agency acting under the auspices of the Department of Energy, sent 1,750 megawatts of power to California between 2 and 8 p.m. Wednesday and sent similar amounts of electricity south on Thursday.

California declared Stage 2 emergencies on both those days, which means operating reserves of energy fell below 5 percent.

A Stage 3 emergency, the most severe level, is declared when operating reserves fall below 1.5 percent. At a Stage 3 emergency, rolling blackouts are likely.

Kellan Fluckiger, chief operating officer of the California Independent System Operator, which oversees the state's power grid, said the power from the BPA proved critical to averting a Stage 3 emergency.

California must return the power to the BPA on a two-for-one exchange basis. At least half of the return must occur within 24 hours of the BPA deliveries. The remainder can occur during nighttime hours and weekends when loads are relatively low."

Salmon could be another victim The BPA said the agreement protected electricity supplies in the Northwest and prevented a drawdown of reservoirs that might hurt the region's efforts to protect endangered salmon.

"Because the transaction is an exchange, its impact on BPA's reliability, financial status and fish obligations should be neutral, or beneficial for the Northwest," said Steve Wright, BPA acting administrator.

Kitzhaber remained worried that Northwest electricity customers and salmon recovery efforts might be harmed by the BPA's decision.

And he was irritated that the electricity shipments to California occurred right after he had called on Oregonians to conserve energy as cold weather approached.

"I think it's outrageous that Oregon would have to conserve just to sell power to California," he said. Locke also had asked Washington residents to conserve energy.

Kitzhaber said that he sympathized with California's situation and that he understood why Richardson had ordered the BPA to help out. But, he said, a broader response was needed.

Kitzhaber wants a power summit "You can't cut California off. That's not what this is about," he said. "We need to treat the problem, not the symptom."

Kitzhaber asked Richardson to call a summit in the West next week to address the situation. The summit would include utilities, power providers and government representatives from all the states in the Western power grid -- Oregon, Washington, California, Idaho and Montana, among other states.

Kitzhaber's call for federal caps on wholesale electricity prices in the region might prove more controversial than a gathering of government and utility officials. Kitzhaber argued that California's "failed deregulation" plan is a key contributor to soaring wholesale electricity prices. The short-term solution, he said, is to impose wholesale price limits that apply to all Western states.

California placed price caps on wholesale power this summer, then recently lifted them because of fears that California generators were sending high-priced power to states where the caps did not apply.

California Gov. Davis has thrown his support behind regionwide caps, as have Kitzhaber and Locke.

Portland-based utility PacifiCorp on Thursday also sent a letter to Richardson supporting price caps.

"No one likes price caps, but it's one of the options to seriously consider," said Judi Johansen, an executive vice president with PacifiCorp and a former BPA administrator.

Mark Fryburg, a spokesman for Portland General Electric, said that the utility remained wary of price caps but that it might support them "as a very short-term measure."