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Plan Offers No Relief for the Rising Cost of Energy in the Region by Tom Detzel, The Oregonian staff The Oregonian, May 18, 2001

WASHINGTON -- The Bush administration's energy plan could help unclog transmission lines in the Northwest, streamline licensing for hydropower plants and continue a tax credit that's drawn wind farms to the breezy Columbia Gorge.

But it offers no immediate help to Northwest ratepayers in the face of skyrocketing electricity bills, and it sidesteps an appeal for rate relief from aluminum manufacturers who took their case to the administration last month.

Northwest Democrats and environmentalists pummeled the plan Thursday, terming it as payoff to the president's energy industry contributors.

However, Bush won praise from Republicans and industry sources.

"I think he understands our industry's dilemma and is willing to take a stand and encourage Congress and stakeholders to do something about it," said Phil Dutton, president of the American Hydropower Association.

Dutton applauded a recommendation in the plan to revamp the process for licensing hydropower projects, something the industry and Republicans such as Sen. Larry Craig, R-Idaho, have long sought.

About 400 dams on 130 rivers across the nation face relicensing over the next decade, exposing dam operators to new conditions set by state and federal agencies to protect water quality, fish and other wildlife.

The dams, many built in the 1940s and '50s, are licensed by the Federal Energy Regulatory Commission, which released a report this month that asked Congress to give it sole authority for make decisions about licensing.

Bush's recommendations don't go that far, instead directing federal agencies to agree to environmental conditions before asking FERC to sign off. That approach outraged environmentalists, who see industry-backed reforms as an effort to cut costs at the expense of fish and wildlife habitat.

"When you're sitting here in the Northwest, trying to save endangered salmon, steelhead, bull trout, cutthroat trout, the idea of trying to rekindle a fire under hydro . . . is just wrongheaded," said Bill Arthur, the Sierra Club's director for Alaska and the Northwest.

The Bush plan's proposal to extend a 1.7 cent per kilowatt hour tax credit for wind and solar energy won praise from advocates for wind power, which last year saw record growth

The Bonneville Power Administration recently solicited bids for wind power projects that would provide enough power for about 150,000 households. One of the biggest wind farms in the country is being built on the Oregon-Washington border near Umatilla.

The industry will push for a five-year extension of the tax credit in Congress, said Christine Real de Azua, spokeswoman with the American Wind Energy Association, a trade group representing developers and turbine-makers.

Rep. Greg Walden, R-Ore., whose Eastern Oregon district is home to wind generators and dependent on the agriculture and forestry, noted that the tax credit also applies to energy produced from biofuels and that Bush is proposing to include forest products in the mix of eligible products.

Overall, Walden said, the plan represents "the kind of long-term, comprehensive approach that, frankly, it would have been nice to have in place and running 15 or 20 years ago."

Not so kind were Northwest Democrats. They continued to hammer Bush and his plan for not taking short-term steps to halt huge increases in electricity rates and mounting job losses triggered by the California's energy crisis.

"We're seeing major industries shut down and lay off workers. We're seeing small businesses close their doors," said Rep. Brian Baird, D-Wash.

"This is the same old 'let's drill, let's dig, let's burn and let's profit, profit, profit,' " said Rep. Peter DeFazio, D-Ore. "It does nothing for consumers. It's totally absent any short-term relief for price gouging in electricity or petroleum."

DeFazio and most House Democrats are backing legislation to impose price controls on wholesale electricity across the West until more power generation comes on line and rates start to stabilize.

Bush has steadfastly refused price controls. His plan says California's problems are "at heart" a matter of not building enough power plants to keep up with demand. "There are no short-term solutions for long-term neglect," it says.

Sen. Gordon Smith, R-Ore., also has a bill calling for electricity price controls and said he would try to include them when the Senate takes up Bush's energy policy proposals in June as part of a comprehensive energy bill.

Smith, who's up for re-election next year, has said Bush and Republicans risk taking the political blame for blackouts and rate hikes this summer. He called the energy plan "a good start, but it clearly doesn't solve all of our problems.

"It will ultimately need to contain something to protect people on fixed incomes, seniors and small businesses that simply cannot bear the freight of a broken (electricity) market," Smith said.

The plan contains no mention of the Northwest's aluminum industry, which is mostly shut down because of power prices. Aluminum industry officials had met with Bush's energy task force to discuss ways to help the plants.

The plan also calls for a study of whether the BPA should increase its borrowing authority to expand and improve its increasingly congested network of power lines.

The BPA sells power from 29 dams and one nuclear plant in the region and controls 80 percent of the Northwest's high-voltage transmission capacity.

The agency wants to boost its five-year, $1.3 billion budget for transmission system improvements by $775 million. The money would come from up to $2 billion in new borrowing authority from the U.S. Treasury.

Jeff Stier, the BPA's vice president for national relations, said the system is being squeezed by increased power demand and by the proposed addition of up to 25,000 megawatts of new generating plants, many of them gas-fired.

The bonds would be repaid through transmission fees paid by utilities and power marketers that move electricity through the region on the BPA's lines.