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Some Reasons Not To Panic by Editors The Oregonian, February 1, 2001

The crisis over power in California and West is real --
but reasonable solutions are within our grasp. First of three parts.

Welcome to the energy crisis, 2001. We say it that way because the Northwest and the nation have traveled down this road before.

So when the governors of the Western states and U.S. Energy Secretary Spencer Abraham meet in Portland today and tomorrow to discuss solutions to the current energy crunch, they should take advantage of some of the lessons learned in the past.

The crisis now, as in the 1970s, is real. Its consequences can devastate the economic growth and stability of the Pacific Northwest.

Yet in crafting solutions, elected officials, appointed policymakers and citizens must bear in mind that we can create an even greater crisis down the road by overreacting to this one.

Demand for power in the Northwest outstrips supply, on average, by about 3,000 megawatts -- the power capacity of three nuclear power plants. By way of comparison, Portland consumes, on average, about 750 megawatts. As serious as that imbalance could be, the region can easily make it up over the next three years. The gap can be filled by building gas-fired power plants, investing in renewable energy projects, such as wind and geothermal that become more attractive as energy prices rise, and by aggressively encouraging conservation.

So there is no reason to panic.

There is, in particular, no reason to shove aside environmental rules or repeal rational energy restructuring legislation -- the kind that Oregon enacted in 1999, not the bankrupt degregulation approach that California adopted a year earlier.

Nor is there reason to repeat the mistakes the region made in the early 1970s. Back then, Northwest utilities and the federal Bonneville Power Administration overreacted to supply shortage forecasts. As a result, they engaged in a misguided hydro-thermal power program --WPPSS (an oddly apt acronym for Washington Public Power Supply System) -- a nuclear-power fiasco that ratepayers today are still paying for.

Five 1,000-megawatt nuclear plants were proposed in Washington state; two were scrapped before construction started and two others were mothballed before construction finished, because the demand estimates were wildly out of whack. The Supply System defaulted on the bonds for two of the plants, causing the largest municipal bond default in Wall Street history -- $2.25 billion. Only one of the remaining three plants was built, but BPA ratepayers, who backed bonds for all three are still paying the $5 billion debt.

As a region, we can avoid another WPPSS-style mistake simply because various energy producers already have 10 new power plants -- nine gas-fired combustion-turbine plants and a wind farm -- either under construction or fully licensed and permitted. They can produce 4,236 megawatts when they come on line in the next two years or so. That's more than enough power to close the region's current supply-demand gap. Eleven other gas-fired power plants are on the drawing board.

There are some broader considerations, however. It would be unwise for the Northwest to fill the energy gap solely with gas-fired power plants -- putting too many eggs in one energy basket is what got us into trouble in the '70s with nuclear. Natural gas prices have tripled in the past year and aren't expected to dip anytime soon to their 1998-99 levels.

But those prices have sparked new interest in renewables by making them more economically competitive. Just this week, two Northwest utilities said they have plans to add 500 to 1,000 megawatts of renewable energy (most likely wind power) to our supply in the next five years.

The conservation effort we need can be built around weatherizing homes and businesses, improving the efficiency of machines and appliances and reducing hot-water and heating uses. At today's prices the economic impact of conservation will be double, to 3,000 megawatts, what was forecast in the Northwest Power Planning Council's 20-year energy plan, and that's all for the good.

These efforts can lift the Northwest through the current crisis, but they will not occur in a vaccum. The energy marketplace exerts powerful pressures, as California is discovering these days. Tomorrow, we'll discuss how those forces should play out in the Northwest.