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PUDs: Too Much, Too Fast by Kathy Gray The Dalles Chronicle, April 1, 2007

Twenty-five percent renewable power by 2025? Northern Wasco County PUD and some other utilities are saying "not so fast."

Gov. Ted Kulongoski's plan to push Oregon to get 25 percent of its power from renewable energy by 2025 could face a vote in the Oregon Senate as early as the end of this week.

But members of Northern Wasco County PUD's leadership team say the bill is poorly designed and doesn't consider what it will cost customers, or the bill's impact on economic development.

Generally speaking, the new bill would require larger electrical utilities to get 25 percent of their power from renewable energy - wind, wave, biomass, geothermal, etc. - by the year 2025, with intermediate goals set every five years starting in 2010.

The issue comes at a pivotal time.

Within Wasco County, unprecedented growth is placing greater demands on PUD power. Within the Pacific Northwest region, the Bonneville Power Administration has set 2010 as the date when it will determine what allocations utilities will receive from the federal power production system of mostly hydropower dams.

After that, utilities must find their own ways to meet demands for power beyond that set amount. How Oregon's larger utilities will meet that need is what the governor's renewable portfolio standard is all about.

Northern Wasco County PUD doesn't currently fall within that "larger" category, which includes utilities accounting for 1.5 percent or more of the state's power load. But it could by 2009 or 2010 at current growth rates, particularly from industrial users on the Discovery Substation.

Not only that, but the "25 percent by 2025" legislation (now Senate Bill 838) requires any utility that invests in coal power generation to comply with the renewable rules, no matter its size.

That's exactly what Northern Wasco County PUD is proposing to do in two ballot issues due for a vote in the May 15 special districts election. They're asking voters' permission to purchase up to 10 megawatts of power from proposed coal plants in Washington and Utah.

At around $53 a megawatt hour and meeting all current pollution control requirements, the coal plants offer the most affordable option to PUD customers, says Dwight Langer, PUD general manager, with the unanimous agreement of the PUD board.

Those plants are expected to start producing power shortly after Bonneville's allocation limits take effect.

The plants use what Langer describes as "clean coal technology." Coal is the most abundant fuel source, Langer adds, and learning to use it as cleanly as possible requires it to be used.

"That's the only way we learn to use any kind of fuel," he said.

An advisory standard preferred

At the same time, Northern Wasco has agreed to purchase 1 megawatt of wind power from Bonneville Power Administration, which would amount to about 10 percent of the PUD's new power purchase.

"We're not opposed to a renewable portfolio standard," said Langer. "We're in favor of a renewable portfolio standard. We're developing renewables and will be investing in renewables in the future."

But Northern Wasco would prefer to see an advisory standard that allows it and other utilities more flexibility to chart their own future.

Joe Taffe, power manager at Clatskanie PUD, agrees.

"PUDs have a pretty good pedigree of developing [renewables];" Taffe said, "[look at] all the little things they're able to do individually without having a state mandate."

Taffe offers Clatskanie as a prime example. Partnering with the Eugene Water and Electric Board, Clatskanie has developed an $80 million steam co-generation plant inside a nearby paper mill. It uses the steam generated by the paper production process and burning of wood waste to power the 36-megawatt generator. Clatskanie is selling its power now while it pays off the construction bonds, but the power will be available for Clatskanie and Eugene use in 2016.

They're also looking at investing in a new small hydropower plant in Idaho. At the same time, Clatskanie has also invested in a gas turbine that allows it to "firm up" both hydro and wind power. Taffe thinks utilities need the flexibility to use fossil fuels to ensure the capacity to meet load demand and avoid open power market price extremes.

Federal hydro excluded

Northern Wasco County PUD's philosophy and purpose "is to provide our community with as competitively priced energy as possible with reliability, and with stability and predictability of price."

That's what PUD customers want, Langer notes, referring to 2006 customer satisfaction survey that show more than 80 percent of customers want to strike a balance between cost and renewable generation.

Owning its own power generation plants has been a mainstay of the PUD's philosophy. As a result, the PUD had developed two hydropower plants at dams along the Columbia River.

But only a portion of that generation will be taken into consideration under current provisions of the 25-25 bill. Conservation and energy efficiency rebates, as well as the $91,000 premium over usual rates for wind power purchases, bring the PUD's investment in green considerations up to $1.9 million.

"Ten percent of our budget is completely ignored," Langer said. Taffe backed that up, saying already existing investments in renewable energy, no matter how old they are, need to be counted toward compliance with renewable standards.

The bill also doesn't adequately consider the fact that most electricity in the Pacific Northwest already comes from renewable hydropower, say Taffe and Langer.

"We take a more radical point of view," Taffe said. "We think all the big federal projects should be counted as renewable and instead of '25 by 25,' we should be calling for '95 by 2025.'"

A recent Oregonian article set the amount of Northwest power produced by hydro at two-thirds. Northern Wasco's portfolio is greener still. It gets more than 80 percent of its power from Bonneville Power Administration, and about 85 percent of that comes from hydropower. The agency also gets power from its own hydro plant at McNary Dam, so the figure is even higher.

Money matters

Langer says the 25-25 bill's ultimate motivation is money.

"It's motivation is to inject huge amounts of money for a long period of time into renewables," he said.

Added Taffe, "Wind is the big thing being pushed. RPS is not Renewable Portfolio Standards, it's Renewable Promotion Standard. It is a tax the state government is putting on utilities to promote development of wind power."

And that money would come from customers of utilities, Northern Wasco's customers included.

"If we had to purchase 25 percent of our needs today from wind, it would result in a minimum 25 percent rate increases," said Dwight Langer, the PUD's general manager.

That's the absolute worst-case scenario, and the scenario the PUD has been presenting to local agencies and civic groups as it seeks their support for its position. It does not factor in cost limitation provisions of SB 838.

The bill, as it passed out of committee last week, phases in requirements over almost 20 years and includes some cost capping and alternative investment mechanisms.

PUD officials also say high concentrations of wind, the Northwest's most developed renewable power resource, would undermine the reliability of the power system.

Wind doesn't blow all the time, and often doesn't blow during peak power demand times - when it's very hot or very cold. Current estimates of its reliability as a power source range from 15 to 34 percent. That means wind towers rated to be able to produce 100 megawatts of power are likely on average expected to produce 15 to 34 megawatts.

As a result, wind power can't be used on its own to meet power use demands.

"You've got to have resources to back it up," Langer said.

That's what Langer says the coal power they hope to buy will do: provide a stable, more affordable foundation onto which the PUD can add renewables. Affordable is a big part of the key.

At present, Northern Wasco County PUD enjoys some of the most affordable power rates in the Columbia, at $60.68, almost $7 lower for 1 megawatt hour than its nearest competitor, Hood River Electric Co-op at $67.50. It's more than $30 lower than Portland General Electric at $94.94.

No matter what the power source, rates are expected to go up when the PUD must get its power from somewhere besides Bonneville. Bonneville's current rate is about $32 per megawatt hour. The two coal plants are predicted to come in at about $53, and average wind cost is about $78 per megawatt hour delivered to the utility, according to estimates from Jeff King, of the Northwest Power and Conservation Council. King was part of the team that headed up technical analysis for the Northwest wind integration report. That rate could rise by about $12 if the federal production tax credit is phased out in 2008, henoted.

Higher costs can be disastrous for economic stability, Langer said.

"Not one business looking at coming here has asked us how green our power is," Langer said. "They want to know about price."

Immediate efforts to meet renewable power standards could have a damaging effect on efforts to recruit new business to the community and maintain economic stability, he said.

"Baseload resources will best serve our needs now," Langer said. "They will actually save money for our customers later on. Those decisions need to be left with the electrical utilities."