Grant PUD good model for region

A half-century ago, one president, and the father and grandfather of another, put a tremendous opportunity in the hands of the Grant County Public Utility District. The PUD grabbed hold with both hands, and customers have enjoyed some of the lowest electricity rates in the country as a result.

But even one of the best utility deals of all time does not come without a little grief.

The utility district owns and operates the Priest Rapids and Wanapum dams on the Columbia River. The U.S. Army Corps of Engineers had dibs on the two sites upstream from the Hanford Nuclear Reservation, but in the early 1950s, then-President Dwight Eisenhower decided to give non-federal developers a crack at them. The Corps and U.S. Bureau of Reclamation had already completed massive projects like the Bonneville and Grand Coulee dams, and many smaller ones besides.

To get the rights to Priest Rapids and Wanapum, the PUD enlisted the help of a Connecticut senator by the name of Prescott Bush, who was the chairman of the Senate Public Works Committee. Bush, like his progeny, a Republican as well as a former banker, hailed the enterprise shown by the utility. Even if a public utility district is not private enterprise, at least the $364 million in bonds the PUD would sell to finance the projects would be sold in the private sector.

Public Law 83-544, authorizing PUD takeover of the Columbia dam sites, passed in 1954. Five years later, Priest Rapids produced its first megawatts. Wanapum’s turbines started spinning in 1963.

But PL-544 was no blank check. As you might imagine, the almost 1,800 megawatts the two projects are capable of generating was more than a rural county like Grant could possibly consume even if residents hung the sagebrush with Christmas lights. The law required a “reasonable portion” be made available to other utilities.

The original licenses for the Priest Rapids and Wanapum projects limited the PUD’s share of the output to 36.5 percent. The rest was sold to Avista and 11 other utilities under long-term contracts. All was pretty quiet until the mid-1990s, when Kootenai Electric Cooperative and a few other Idaho utilities asserted claims to some of the cheap hydropower they thought the law said should be theirs. The Federal Energy Regulatory Commission agreed – kind of – in 1998.

The kicker was a stipulation the Idaho cooperatives purchase the power at “market” prices, not cost, as they do from their primary supplier, the Bonneville Power Administration.

As Kootenai General Manager Bob Crump says, “What good is a priority for market-based power? That’s no priority at all.”

Meanwhile, the 50-year-old licenses the PUD received to operate its two dams are up for renewal. Grant County needs a lot more power today, so its proposed share of dam output will jump to 70 percent, leaving far less for others, be they long-timers like Avista or newcomers like Kootenai.

In order to balance competing demands for its power, the PUD has spent the last two years designing a marketing plan for the remaining 30 percent, with a unique auction as its centerpiece. Earlier this month, a $21 million bid from Portland-based Constellation Energy Commodities Group Inc. topped tenders from a long list of competitors, including Avista Utilities. Constellation gets 6.25 percent of whatever megawatts Columbia streamflows make available over a 14-month period.

If the region does not get rain and snow, Constellation will have an expensive product on its hands.

And, it turns out, the losing bidders are actually winners. The PUD will get some of that $21 million in payment for services associated with the power sales, but most of the revenue will be rebated back to the other customers.

Kootenai Electric, for all its troubles and litigating, will get about $600,000 cash, Crump estimates, which the cooperative will use to buy power from Bonneville or other suppliers.

Jeff Atkinson, the PUD official largely responsible for coordinating all these moving parts, says officials have had to conduct seminars and produce internal training materials just so their own employees could keep track of process and why it was necessary.

It might make a good handbook for all of the Northwest, which continues to face energy challenges not envisioned back when the solution often just boiled down to building another dam.

“We’re in a new world now,” Atkinson says.