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Economic and dam related articles

New Era in Electricity

by Don Jenkins
The Daily News, October 1, 2006

The Bonneville Power Administration hired folk singer Woody Guthrie 65 years ago, and he delivered lyrics exalting rivers, dams, workers, and the abundant and cheap hydroelectricity they made.

BPA's clean and renewable juice flowed and public power flourished. But that era of plenty is passing, if not gone. And the relationship between BPA and public power is about to change.

Under a plan that BPA expects to finalize early next year, public utility districts will be faced with the choice of developing their own power projects or risk losing control over rising electric rates.

The NW Energy Coalition, an environmental advocacy group, calls the plan a "dangerous gamble" and "risky deregulation scheme" that could hurt the economy or the environment.

It argues that transferring responsibility to individual utilities could leave the region short of electricity or lead to new plants that burn fossil fuels.

Cowlitz PUD General Manager Brian Skeahan acknowledges the risks, but he embraces the challenge of stepping out of BPA's shadow.

"I think what this organization will do is develop our own resources, either by ourselves or more likely in conjunction with others, rather than rely on BPA," he said. "We'll be making big decisions." One of BPA's larger customers, Cowlitz PUD receives about 90 percent of its energy from the federal agency. BPA rates largely dictate what county residents and industries pay for electricity.

That relationship will begin to change after the BPA's current contracts with public utilities expire in 2011.

In that year, BPA projects that the output from the 31 dams and one nuclear plant that make up the Federal Columbia River Power System will be roughly equal to the demands of the utilities.

Under BPA's proposal for new 20-year contracts, the agency would continue supplying low-cost power in the amounts and roughly the same rates as it does now.

But as the region's population and economy grows, BPA will have to acquire more power from somewhere elsewhere to supplement a tapped-out hydroelectric system that's under pressure to remove, rather than build, dams.

BPA's newly acquired power will be available to utilities, but will be priced separately from the hydroelectricity. No one knows how much that new power will cost, though it could be more than double current rates.

The two-tier rate schedule, according to BPA, will hold down rates for the system's hydroelectricity. But it means that new energy, wherever it comes from, could cost utilities and ratepayers much more.

As an alternative to buying potentially pricey new power from BPA to meet growing needs, utilities could take the risk of developing their own power resources. Cowlitz PUD already has moved in that direction by investing in a wind farm in Klickitat County and showing an interest in purchasing power from a coal gasification plant proposed for the Port of Kalama.

The PUD estimates it will need energy from the wind farm, which is much farther along in development than the coal gasification plant, beginning in 2012.

Energy from the wind farm or coal gasification plant is expected to be more expensive than hydroelectricity, but it could be much cheaper than buying whatever new energy resources BPA develops.

Skeahan said BPA's history, most notably its involvement in failed nuclear power development in the 1970s, has some public-power managers skeptical of the agency's ability to develop new resources.

The Cowlitz PUD is one utility betting it can develop new resources more effectively than BPA.

"We'd like to control our destiny," PUD Commissioner Ned Piper said. "I think we'll do very well. The reason is we've been forward thinking, more so than other utilities, in acquiring other resources."

Energy Northwest, a consortium of public utilities that Cowlitz PUD joined recently, is applying for state approval to build the 600-megawatt coal gasification plant in Kalama.

The plant holds the promise of relatively low-cost energy but also would be a new source of carbon dioxide, a greenhouse gas linked by some scientists to global warning.

Public utilities' interest in coal concerns NW Energy Coalition, the prime mover behind Initiative 937. The initiative will be on the Nov. 7 ballot and would push utilities seeking new sources of energy toward wind power and away from coal.

Turned loose to find their own resources, public utilities "might pick wind. They might pick conservation. They might pick coal," NW Energy Coalition policy director Nancy Hirsh said. "That's the big risk."

Hirsh said she would like to see BPA's new power contracts require utilities to pursue conservation and renewable energy, instead of coal, as a condition to receiving its block of low-cost power.

Skeahan said he's sensitive to environmental concerns, but added he believes decisions on power development should be left up to individual utilities. "I think the environmental community believes they can be more effective in a top-down approach," he said.

He also noted that with coal plentiful and relatively inexpensive, "I think Nancy is understandably concerned."

Don Jenkins
New Era in Electricity
The Daily News, October 1, 2006

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