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BPA Talks Shaping Electricity in State by Bill Virgin, Seattle Post-Intelligencer columnist Seattle Post-Intelligencer - August 17, 2004

The Bonneville Power Administration is going around the Northwest posing some important and complex questions to the consumers, businesses and utilities that depend on it as the region's leading distributor of electricity.

Should BPA be strictly an electricity wholesaler, or should it also take a leading role in conservation and salmon protection? Should it help customer utilities find additional sources of electricity in the Northwest or should it simply market what is available from the Columbia River hydropower system? Should it find room for investor-owned utilities and aluminum companies under its umbrella, or serve only the public and municipal-owned utilities and tell the rest "tough luck?'

You won't find much unanimity on any issue relating to the electricity scene in the Pacific Northwest, but on these questions the region is uniting as with one voice to answer: "Yes."

BPA will be hearing that answer again tonight as it holds the first in a series of public hearings on its future at 6 p.m. at the Mountaineers headquarters, 300 Third Ave. W.

The hearings are part of what it's calling the "regional dialogue" on its future, not only after 2006 when some contracts expire but after 2011 when the rest do.

Regional dialogue is one of those earnest but dull terms beloved in the region for any public policy question. While such phraseology ordinarily induces eye-glazing stupor, in this case people have a much more direct motivation for taking an interest in this issue: their electric bills.

Those electric bills, or more properly the people who pay them, took a pounding in 2000 and 2001 when the West Coast energy crunch sent power prices soaring. While Enron and other miscreants in the power trading business are getting the blame for sending electricity prices to the stratosphere, there were lots of other factors -- increasing demand in California, little additional generating capacity, drought in the Pacific Northwest -- that would have sent prices up even without the assistance of Enron's Ken Lay and his minions.

That wouldn't have mattered quite so much were in not for the fact that BPA was itself overextended in the market, having signed contracts to supply much more power than it wholesales directly from the Columbia hydro system and Energy Northwest's nuclear plant. That meant BPA was out there scrambling to buy power in the overheated market.

That searing experience is still fresh in the minds of all involved as BPA starts gearing up for another rate case. Rather than careening from crisis to crisis, however, BPA is trying something different -- clearly defining what it will be doing over the next few decades, so that its customers have time to plan accordingly.

BPA's plan for the future is this: In the future BPA, will sell the power it has at the cost it takes to produce it. Power needs beyond that would be provided at prices in a separate tier, calculated according to what it costs to line up that power. Customer utilities could opt for that, or they could see how they do on their own.

That policy, admittedly outlined in the broadest terms, is getting some support. The Northwest Power and Conservation Council gave its endorsement. So did the federal Government Accountability Office (the former General Accounting Office). Kevin Clark of Seattle City Light says the municipal utility is "pretty happy with what they've proposed," both for now until 2011 and the longer term.

"As of now, everyone's swimming in the same direction," he says.

For now. But there's a lot of time and a wealth of details to be worked out, and plenty of lingering and fresh resentments that could dam the stream of cooperation.

Some publics, most notably Snohomish and Grays Harbor, have been sharply critical of Bonneville's spending, saying that if the agency had been more attentive to expenses, it could have given rate relief to its customers.

They're also on guard against any hint of what they see as an intrusion by investor-owned utilities onto the preferential position of public utilities.

Then there's the issue of what used to be called the direct service industries, the large industrial customers such as aluminum smelters who buy power straight from Bonneville. BPA's obligation to serve those customers runs out in a few years, and more than a few in the public-utility community are more than eager to wave them goodbye.

There aren't many of those aluminum operations left, but those in that area (such as Alcoa in Ferndale) will argue they need access to low-cost power to keep operating and save jobs.

Conservation, environmental and tribal groups, meanwhile, are already warning against cuts in salmon-run restoration and energy consumption-reduction programs. NW Energy Coalition says Bonneville should be the one to line up additional sources of electricity, arguing that leaving it to local utilities might reduce the commitment to conservation and renewable energy.

The regional dialogue and the drawn-out calendar over which it will occur seem like typically Northwest ways of dealing with any issue -- talking it to death. In this case, at least, the approach has considerable merit. So high are the stakes, so widespread the impacts of getting it wrong, so strong the sentiments and so numerous the opportunities for clashes, it makes sense to lay out the options now, let everyone understand well in advance what's going to happen and perhaps even reconcile some of the inevitable differences.

Otherwise, dialogue will become a fancy synonym for shouting match.