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Power Rates, Allocations Views Conflict from Users Over BPA Proposals by Gene Fadness Idaho Post Register, October 1, 1999

Bonneville Power Administration officials heard a variety of opinions, many of them conflicting, during a field hearing in Idaho Falls on Thursday night about the BPA's proposed rates and power allocation methods for the years 2002-2006.

Washington state aluminum workers complained their industry would be hurt because, under the BPA's proposal, they get less low-cost power at a higher price. They argued against breaching dams to save salmon.

Environmentalists and tribal representatives said the aluminum industry shouldn't get any low-cost power and that the BPA ought to consider charging a higher rate to cover fish recovery costs. They favored breaching as the only sure way to restore salmon and steelhead runs.

While interests representing customers of investor-owned utilities argue that BPA ought to cast its net wider to include their customers, farmers and public power interests argue that a wider net means less benefit for the traditional BPA preference customers: those served by nonprofit, public utilities.

The mix of views will make for an interesting next few months as the BPA moves through its eight field hearings throughout the Northwest and then conducts a formal hearing in Portland, Ore., in November. That hearing will be packed with attorneys representing 60 entities, from public power districts to Indian tribes, irrigators and environmentalists, all with strong opinions about the BPA's 15-volume, 4,000-page proposal.

The BPA was created in 1937 as a federal agency to generate power and then resell it at below-market rates to Northwest utilities. The philosophy behind the BPA's creation is that residents of the Northwest are entitled to the benefits from the 29 Columbia River dams built to generate the power.

But the agency is being challenged like never before to be more competitive in a newly deregulated wholesale power market, and with less power to cover its growing electrical load in seven Northwest states.

New to this year's hearings is a proposal that customers of privately-owned, for-profit utilities, like PacifiCorp and Idaho Power Co., should get the same low-cost power as customers of public, non-profit utilities, like the city of Idaho Falls and Fall River Electrical Cooperative.

That drew objections from state Sen. Robert Lee, R-Rexburg, who said utilities that can produce power at the same low cost as the BPA should not be entitled to low-cost BPA power.

"These utilities have not participated in the current BPA residential exchange program because their power costs are so low that there has been no significant difference between their rates and BPA rates," Lee said. Including those utilities, like Idaho Power Co., and Avista, (formerly Washington Water Power), takes benefits away from customers of utilities with higher power rates like PacifiCorp, Lee said.

William Taylor, an Idaho Falls farmer, agreed with Lee that BPA should not expand its base of preference customers, but instead treat more fairly those farmers it already serves. Taylor said farmers who pump water from below ground are not treated the same as farmers who irrigate from the river. Because groundwater pumpers must use more horsepower, they are categorized into a class of larger farms, thus not getting the same small-farm break that surface-water irrigators get. "If you want to expand, expand to the people you already serve," Taylor said.

Edward McKerlie, representing aluminum plant workers in Wenatchee, Wash., said BPA was raising its rates too high, enough that it could impact the survivability of aluminum plants in the Northwest that depend on cheap power to run their smelters round the clock.

"You're going to supply half of what you supply us now and you're raising our rates," McKerlie said. "BPA has the power to make or break the Northwest," he said.

But Keith Kutchens, a Pocatello fish biologist for the Shoshone-Bannock Tribe, said the BPA is not charging enough to meet fish recovery costs, which will likely include breaching four Lower Snake River dams.

Scott Levy, Ketchum, said aluminum companies shouldn't qualify for preferential rates at all. Preferential rates for the industry amounts to a subsidy that isn't needed, given the glut of aluminum on the market, Levy said. "Should corporations that report dividends continue to receive preferential rates?" Levy asked.

Jon Ochi, Idaho Falls, said BPA must be sure it collects enough money for "economically sound" fish recovery efforts, and that would include breaching, he said.

Dam removal is a one-time cost compared to the yearly fish recovery cost now nearing $1 billion, Ochi said. "As a ratepayer, I would rather incur this cost just once rather than the yearly cost of mitigation that will likely lead to extinction anyway," Ochi said.

BPA must also invest more than it is in energy conservation programs, Ochi said. "Energy not needed is the cheapest, cleanest and most environmentally friendly energy of all."