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Northwest Power Under Siege by Editors The Oregonian, August 6, 2000

As power rates soar, more states want part of Columbia hydro system;
perhaps it's time to regionalize the resource

Gov. John Kitzhaber and state Sen. Gene Derfler, R-Salem, are working hard behind the scenes on a proposal to seize control of the Columbia River's vast hydroelectric resources, thus preserving cost-based rates for Northwest citizens.

When this idea was first floated eight years ago, it sounded pretty ridiculous. Indeed, we were skeptical about regionalizing the hydroelectric system for a couple of reasons.

First, the political threat in Congress then to force Northwest consumers to pay market-based rates for their electricity was not as serious as it is today. The Northwest also had a lot of political clout then.

Second, it was inconceivable that the governors of Oregon, Washington, Idaho and Montana would ever agree on taking on a federal agency -- the Bonneville Power Administration -- that owes $7 billion to the federal treasury for Columbia Basin dams and transmission lines, plus another $6 billion of debt for stranded nuclear power plants.

It just didn't make sense that Northwest ratepayers and taxpayers would be willing to absorb so much red ink. After all, this is the region known for its up-and-down economic swings, and also responsible for the largest bond default -- the WPPSS nuclear fiasco -- in U.S. history.

But the situation is changing rapidly. The odds that the Northwest could lose its cheap-energy benefits over the next two to four years are narrowing to the point that it could happen, perhaps as soon as the next Congress, as part of a national energy restructuring bill.

We're already seeing signs of that. Just last week, Rep. Brian Bilbray, R-Cal., angry over the 10-fold increases in electricity rates this summer for his constituents in San Diego, said he plans to introduce a bill in Congress to do away with the Northwest's regional preference clause. Preference power from the Columbia dams, which provides public utilities with guarantees of cost-base power that is running well under the market price, is seen by the majority of states not served by a federal power marketing agency as a subsidy.

Reps. Bob Franks, R-N.J., and Marty Meehan, D-Mass., introduced legislation in the 106th Congress, supported by some 250 House members, to move BPA and other power marketing agents to market-based rates. In the Senate, Sen. Daniel Moynihan, D-N.Y., introduced a similar bill. Those efforts will be renewed next session and by all accounts, will be hard to stop.

The economic value of the Northwest's cheap hydropower heritage is estimated to be more than $25 billion. The Northwest economy could be devastated by such a steep economic hit.

For that reason alone, the Kitzhaber/Derfler proposal to restructure the BPA and take control of the Columbia River power system is worth developing and pursuing, although there are many impediments, some of them constitutional obstacles, to overcome.

It's not the only option, though. The Northwest congressional delegation also should make preserving the benefits of the Columbia River for the people of the Pacific Northwest a top priority in the next Congress.

If it fails, then regionalizing the BPA's power system could serve as a needed insurance policy against a power grab from political forces outside the region.