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Council Recommends Changes in BPA's Future Power Role by CBB Staff Columbia Basin Bulletin - April 16, 2004

The Northwest Power and Conservation Council is recommending changes in how the Bonneville Power Administration provides power to its customers.

If adopted, the recommendations could lead to changes in the BPA's role in regional power supply, the Council said.

According to a proposal aired at last week's Council meeting, the NPCC thinks that BPA should provide the generating output of 31 federal Columbia River basin dams and the Columbia nuclear generating station to its public customers under long term 20-year contracts.

However, customers should either have to provide their own power to meet additional load growth beyond what BPA can provide, the Council said, or BPA could provide the additional power with purchases it makes from the wholesale power market and sell it to customers at full market rates.

BPA currently sells electricity to its public customers at a melded rate consisting of both Columbia Basin power at the cost of production and the market rate for power. That arrangement has sometimes forced the federal power marketing agency to purchase market power at high prices, such as at the height of the West Coast energy crisis in 2000-01, in order to meet its (DSI) customers' electricity demand, resulting in 45 percent higher prices for BPA customers today than in 2001.

The instability threatened BPA's financial condition, "impeded the development of needed resources: and damaged the economy of the Northwest," according to the Council's draft issue paper "Council Recommendations for the Future Role of the Bonneville Power Administration in Power Supply."

"The region's governors have asked the Council to work with Bonneville and interests in the region to resolve this issue," the issue paper said.

The Council plan, which would have BPA allocate a portion of the 8,000 megawatt federal power system to each customer, would economically stabilize BPA, said John Harrison, Council spokesperson.

If a customer needs more power, that customer would either generate it, purchase it from the wholesale market or purchase it from BPA, or the customer could save it through conservation programs that encourage retail customers to use less energy.

Currently, Bonneville bears that responsibility, but the structure suggested by the Council would place the risk of power purchased from the wholesale market instead on BPA's customers, according to the issue paper.

Among the Council's other recommendations are for BPA to continue to pursue cost-effective energy conservation and renewable resources, as well as to resolve current issues with the small farm and residential exchange program with investor owned utilities.

In addition, the Council wants BPA to provide a limited amount of energy to its Northwest direct service industries customers, many of which are aluminum smelters scattered throughout the region, but only if they have been "a responsible customer of Bonneville."

Harrison said the Council believes there should be some amount of power allocated to the DSIs at a price that would allow them to continue operating. However, he added that Council members do not advocate providing DSIs their full complement of electricity. In addition, "to minimize the cost to other customers, Bonneville should sell surplus power to the industries through contracts that allow the power to be interrupted in emergencies," the Council said.

Finally, the Council concludes that the new policy should not affect BPA's fish and wildlife obligations.

According to information provided by the Council, it had made similar recommendations to BPA in 2002, but the process slowed while BPA dealt with its financial crisis that resulted from high power purchase costs in 2001.

The Council will take public comments on its proposal until April 23 and will revisit the proposal and comments at its May 11-13 meeting in Walla Walla. After approval, it intends to send its recommendations to BPA, which, Harrison said, will conduct a public process this summer to define its own future role, as well as address issues it faces on its current power sales contracts.

While some believe federal legislation may be needed to make changes to BPA's role in power supply, the Council said the task could be done through rulemaking and that legislation is risky, unnecessary and should be used only as a last resort.

Related Sites:
Council recommendations: www.nwcouncil.org/library/2004/2004-2.htm

Related Pages:
Confederated Tribes of the Umatilla Indian Reservation: www.umatilla.nsn.us
Bonneville Power Administration: www.bpa.gov