Region’s Governors Accept Power Plan It Could Give Consumers Freedom To Select Suppliers

The Northwest’s four governors on Thursday accepted a new blueprint for the region’s energy system while recognizing the plan has a king salmon-sized hole.

If implemented, the plan would give every consumer in Washington, Idaho, Oregon and Montana the freedom to choose their energy supplier by mid-1999.

More importantly, said its authors, the restructured system would shield the region’s cheap federal hydropower from covetous outside interests.

“We have a system that is very much in jeopardy,” said Chuck Collins, who chaired the 20-member steering committee that conducted the Comprehensive Review of the Northwest Energy System.

The governors created the committee last January. Members were authorized to recommend ways the region could smooth the transition to a more competitive energy market.

Fish issues were not on their agenda, which prompted a torrent of criticism from the leaders of wildlife groups and several area tribes.

“The economic riches that some have enjoyed from the river must not come at the expense of the natural riches that are the heritage of all,” said Jay Minthorn, board member of the Confederated Umatilla Tribes.

But economics, and a widespread concern the region will lose control of what Collins called a “world-class asset,” was clearly the order of the day.

Collins said new electricity suppliers are undercutting the Bonneville Power Administration, which sells the hydropower produced by federal dams on the Columbia and Snake rivers.

Although that power is cheap, Bonneville also carries a burdensome debt to the U.S. Treasury, as well as holders of bonds issued by the Washington Public Power Supply System.

The result is electricity priced higher than that produced by turbines running on cheap natural gas, Collins said.

Some customers are defecting, weakening Bonneville’s ability to repay its debts.

Collins said Bonneville competitors will enjoy a $350 million annual cost advantage in the years immediately following expiration of existing power contracts in 2001.

At the same time, he said, a Congress desperate for money to shore up the Medicare system and jealous of the Northwest’s low electricity rates, will be looking for assets to sell.

Northwest dams and transmission lines - Bonneville owns 80 percent of the region’s grid - could go on the block.

“If we lose that, we lose the best economic engine this region has ever had,” Collins said. “This review is about presenting a united front.”

The recommendations are sweeping.

Bonneville’s marketing and transmission functions would be separated to bring the agency into compliance with new federal regulations.

The split also would prevent Bonneville from denying potential competitors access to its grid. The agency has already indicated its willingness to join a new group that would manage all transmission in the region.

Utilities that buy their power from Bonneville would have to subscribe for service beyond the year 2001 in five- to 20-year increments.

Those willing to take more power early, when other vendors can under-sell Bonneville, would have a greater claim to that same power later, when the WPPSS debt has been paid off and Bonneville is again among the low-cost suppliers.

Public utilities would get first crack at the power.

Collins estimated Bonneville will have a $1 billion positive cash flow by 2010.

To have access to the federal power, utilities would have to dedicate at least 3 percent of their revenues to conservation and renewable energy.

The plan also recommends the region adopt five-year fish and wildlife budgets that stabilize recovery efforts and give Bonneville customers some certainty those costs, which have exploded in recent years, will not get out of control.

But the absence of greater attention to fish issues inspired the one no vote against 13 cast in favor by committee members.

Rick Applegate, representing Trout Unlimited, said in a dissenting report that the committee should have determined whether improvements to the power system will enhance or imperil fish.

The Columbia, he wrote, “is a biological system, not just an economic engine.”

But Montana Gov. Mark Racicot, in the most extensive response from the four governors, said he is not satisfied with the results from the huge expenditures already made for fish.

“Accountability has been the missing ingredient,” he said.

Washington Gov. Mike Lowry seconded Racicot, but added that Bonneville customers sinking one-third of their bills into WPPSS debt repayment also should be able to guarantee a quality river environment.

Lowry, who surrenders his position next month to Gov.-elect Gary Locke, said his own 10 years of experience in Congress tell him Bonneville is at risk if the Northwest does not unite behind a plan to preserve the agency.

Following the presentations, the governors voted to organize a four-member team to develop a strategy for implementing the report’s recommendations.

John Harrison, a spokesman for the Northwest Power Planning Council, said the team is expected to finish its work by mid-February.

Simultaneously, he said, the governors or their representatives will meet with federal and tribal officials to consider creating a new entity charged with managing the Columbia River system.

Collins told the governors they will have to replace the visionary leadership of everyone from President Franklin Roosevelt to Oregon Sen. Mark Hatfield who has built the system into what it is today.

“What you have here is as good a deal as possible,” he said of the report.

“For you, it is the beginning.”

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