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NW Power Officials Keep Close Guard of Hot Commodity by Chris Mulick, Herald staff writer Tri-City Herald, January 2, 2001

The answer seemed so simple to a small group of irrigators huddling two months ago in Kennewick to work through the Northwest's energy problems.

If there's not enough cheap juice being generated at federal dams to go around, why doesn't the Bonneville Power Administration simply run more water through turbines instead of spilling it for fish?

But Jim Sanders, manager of the Benton Public Utility District, offered a chilling scenario that rendered the question moot.

If BPA starts charging its wholesale customers the going rate, energy prices in the Northwest could mimic California, regardless.

"It won't matter how much water is going down the river," Sanders said. "We could be in a hell of a mess."

At first, such threats didn't register. Northwest stakeholders have spent the better part of the past two years jockeying with one another while negotiating new Bonneville contracts, trying to get a bigger cut of the cheap energy the dams produce.

Now, they were being told it all could be lost.

It's a prospect Northwest power managers don't like to think about. Some fear too much talk about the region's wealth of cheap hydropower will only draw attention from kilowatt-craving lawmakers elsewhere.

"We have a tremendous advantage that we don't want to trumpet a lot," said Steve Johnson, executive director of the Washington PUD Association.

But the wolves already are at the door. A group of congressional lawmakers from the Northeast and Midwest, known simply as the Northeast/Midwest Coalition, has long lusted for Bonneville's cheap hydropower and the jobs it brings.

They think the agency should be sold off to private interests or forced to sell power at market rates.

The pressure escalated this summer when California went into an unprecedented electrical tailspin. Prices shot to heights never before seen.

In early October, three members of California's congressional delegation -- Rep. George Miller and Sens. Dianne Feinstein and Barbara Boxer -- sent a letter to Energy Secretary Bill Richardson that called, in part, for a review of how BPA power is dispersed.

They called the current formula, which favors Northwest utilities and aluminum companies, "archaic and unfair."

"Nor ... is it fair to lock in at artificially low rates the power for a select group of consumers to the detriment of tens of millions of others," they wrote.

The uprising led to no immediate change but signaled a renewal in the attacks against Bonneville and other federal power marketers.

"I would feel a lot better if Slade Gorton were still in the Senate," Sanders told the irrigators. "He would have had a lot of influence over what would happen."

Washington stands pat

Rather than simply play defense, some in the Northwest continue to talk about buying the agency themselves, assuming its massive debt while retaining cheap power. Conceptually, only Washington stands in the way.

Oregon, Idaho and Montana largely agree the four Northwest states should band together to develop a plan to take to Congress. That could be divisive and painful if it involves a reallocation of BPA power. Aluminum companies and private utilities likely would renew efforts to get more. Each state would lobby on behalf of its residents.

"We contribute 40 percent of the water, and we don't receive 40 percent of the asset," says Montana Gov. Marc Racicot, referring to the fuel that powers the federal system of hydroelectric dams.

All the states need to compromise, he said, and agree to share the wealth with one another so they don't have to share it with anyone else.

"We believe the Northwest has paid a very large price," he said, referring to debt payments ratepayers make in their electric rates. "The people of the Northwest have the rights to secure the benefits of the system."

But Washington, which has the largest concentration of Bonneville's preference customers -- public utilities and rural electric cooperatives -- has yet to commit.

Gov. Gary Locke, realizing Washington has a lot to lose, told the Northwest Power Planning Council this summer that he wants to wait until Bonneville power contracts are negotiated before talking about whether to purchase the agency. There's been little discussion about the matter since, said Dave Danner, who advises Locke on energy issues.

The Northwest already may be undermining its strategy to keep Bonneville power even before it develops one.

Contract negotiations already have been littered with squabbles over who gets how much. Customers have haggled over relatively minor rate differences when consumers in other regions are paying at least double.

"When we can't agree, it makes it a lot easier to get picked apart," Sanders said.

Northwest political strength in doubt

With the exception of Washington's political elite, consensus remains that the Northwest should come up with some sort of plan. Stakeholders agree they need to unite even as they duke it out in contract negotiations.

The Columbia River Inter-Tribal Fish Commission has proposed to build more of the Northwest's multimillion-dollar fish costs into rates rather than appropriate the money from the general treasury. That would boost rates, making Bonneville power less attractive for congressional plundering.

"Bonneville's and its customers' short-sighted desire for unrealistically cheap power ... has placed the agency in danger of having its authority seriously gutted," wrote Donald Sampson in an October letter to then-BPA Administrator Judi Johansen. "It is time that Bonneville, its customers, and the region got serious about paying for the damage the hydrosystem has caused. The true costs of mitigation would make Bonneville's power less attractive to interests outside the region."

But even environmental groups don't back that plan and would rather the region negotiate to acquire Bonneville.

Washington state Rep. Kelli Linville, who sits on an interstate council of lawmakers that is discussing strategies, is critical of the state's passive stance. She believes the four states could exert more influence over Bonneville through the Northwest Power Planning Council without having to buy the agency or force painful talks about reallocating its power.

But there's no consensus for that, either.

Even if there were, the region would have a tough time selling a plan to Congress without the influential Gorton, said John Saven, executive director for Northwest Irrigation Utilities. All the more reason not to go to Congress in the first place, said Johnson of the PUD association.

"When you've got a lot of strength in Congress, that's a time to make a move," he said. "When you're weak, stay out of these fights."

In the meantime, it might be tough enough just to prevent the agency from being sold to someone else. California's entrance into the fray could prove significant.

"The landscape has changed," Linville said. "California is a big state with a lot of congressional votes. I don't think we can ignore them anymore."