Bpa Chief Wants Cap On Fish Costs Hardy Says Escalating Costs Could Drive Customers Away

Pending revisions to rules guiding efforts to rebuild Columbia River salmon runs are likely to add $100 million or more to Bonneville Power Administration costs just when it is struggling to hang onto even its most loyal customers, Administrator Randy Hardy said Wednesday.

Hardy, speaking before joint energy committees of the Washington House and Senate, said fish costs have already increased by $200 million - to $350 million - in just the last few years.

The National Marine Fisheries Service is preparing rules that will add to that sum, he said, while competitors have entered the market with energy nearly as cheap as that Bonneville can deliver from the Northwest’s vast hydroelectric generating system.

“In the last two months, the market has moved substantially,” Hardy said. “We’re up against a threshold.”

Bonneville sells a kilowatt-hour for 2.8 cents, with a rate increase likely next fall. Hardy said competitors can sell the same power from natural gas-fired turbines for about three cents, and those costs are coming down.

If irrigators or users of Bonneville’s transmission grid are not required to pick up some of the costs of saving salmon, “Customers will start voting with their feet,” he said.

As customers leave, Hardy said the revenues Bonneville loses will jeopardize its ability to make annual Treasury payments that cover debt issued to pay for construction of Northwest dams. The new Congress will not look favorably on an agency that sells the cheapest power in the country while reneging on its debt obligations, he said.

“Us missing a Treasury payment with this Congress would be real trouble,” he said.

Although the Northwest’s Congressional delegation fought off a Clinton administration bid to privatize Bonneville, he said, the idea may get new impetus in a disgruntled Congress.

Spreading or capping fish costs, he said, is the solution.

“Somebody other than Bonneville is going to have to pay. We can’t without driving Bonneville out of business,” Hardy said.

Another possibility: Deducting some fish costs from the annual debt payment, he said.

If Bonneville and the region are unable to resolve its problems, Hardy warned that California utilities would probably be the winners in any bidding war for the agency’s assets.

“That fundamentally changes the institution,” he said, with a loss of regional control and benefits such as energy conservation programs.