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BPA Plans to Respond to Critical Evaluation by Chris Mulick, Herald Olympia Bureau Tri-City Herald, July 4, 2003

The Bonneville Power Administration says it already is trying to meet the recommendations of an internal review team that reported in May the agency is responsible for its own financial mess.

That report, posted on the BPA Web site without notice, was made public this week in articles by the industry publication Clearing Up and the Herald.

BPA spokesman Ed Mosey said Bonneville has appointed the senior member of the review team. Terry Esvelt, the agency's vice president for employee and business resources, will lead the effort to implement the recommendations over the next two to three years.

The report, compiled after interviews with 72 BPA executives, managers and staff, said the agency often lacks long-term vision, doesn't understand business and risk management concepts, shirks accountability and fosters a culture that discourages alternative views, among a lengthy list of shortcomings.

BPA Administrator Steve Wright requested the report in January to determine why 3-year-old financial forecasts used to set rates through 2006 were so far off.

"This is a messy business," Mosey said. "We got what we expected.

"What Steve wanted was an opportunity for the employees to sort of vent."

The agency is being criticized for planning a rate increase for the fall, two years after it raised rates by an average of 46 percent, beginning an energy crisis hangover that could linger for years.

The review team made 11 recommendations that generally seek to clarify BPA's mission, specify objectives and better organize the agency.

In addition, Mosey points out the agency already is the subject of three federal inspections. The BPA also hired consultants last fall to analyze how the agency handles risk -- a key criticism in the internal report -- and is forming an advisory panel of customer utilities.

BPA stakeholders say the report confirms what they've been saying all along, including that the agency is too easily swayed by political winds. Such criticism is unfounded, Mosey said, because those stakeholders campaign aggressively to steer those winds in their favor.

"The only way you can change Bonneville is by going to Congress, going to the press," said Steve Weiss, a senior policy analyst with the Northwest Energy Coalition, an organization of governments and environmental groups. "Bonneville reacts almost entirely to political pressure. Everybody knows that, so that's the game you play."

Others said the report accurately reflects shortages in managerial competencies, culture and vision.

"Clearly, Bonneville has made a large number of errors over the past few years," said Kevin O'Meara, a senior economist for the Public Power Council, which represents public utilities in the Northwest. "It is sort of an agency that has lost its way."

Critics also point out that Bonneville made no attempt to publicize the document even though it sent out a news release about another report released earlier that blamed the agency's financial woes on uncontrollable market conditions.

"There was no breaking news there," Mosey said of the May 6 report. "What are we going to do, put out two press releases? It's there for everyone to see. It's posted."

Related Sites:
The report is available at www.bpa.gov/corporate/kc/home/docs/2003/Report_to_administrator.pdf