Nuclear Debt Plan Debatedby Chris Mulick, Herald staff writer
Tri-City Herald, December 9, 2004
PORTLAND -- Questions raised by Snohomish PUD have reopened the debate over a massive debt refinancing program that has Energy Northwest delaying repaying nearly $3 billion in nuclear construction bonds.
With the Bonneville Power Administration's wholesale power rates pushing retail rates to never-before-seen heights for consumers, Snohomish PUD is asking why the savings aren't being used to help lower rates instead.
But other public utility representatives huddling Wednesday with Energy Northwest and Bonneville at a Portland airport hotel supported the refinancing program, even though most agree it was developed below their radar.
"They did hatch this program a bit in secrecy during the energy crisis," said Kevin Clark, who monitors Bonneville power contracts for Seattle City Light.
At the request of Bonneville, Energy Northwest in 2001 began an annual program of refinancing bonds used to build the Columbia Generating Station and two other nuclear power plants that never got finished.
The old bonds, which were to have been paid off by 2012 or sooner, are being replaced with new ones that will be repaid between 2013 and 2018.
Until that period, Bonneville is using money that would have gone to pay off the now-deferred nuclear debt to pay down its higher-cost debt with the U.S. Treasury.
That debt, another $10 billion, was issued to build and operate the federal dams on the Columbia and Snake rivers.
In doing so, Bonneville frees up room to issue more federal debt to build new transmission lines.
But Snohomish PUD is asking whether it's even legal to use money from Bonneville's power customers to build lines that serve transmission customers.
Though utilities buy power and transmission services from Bonneville, some rely more or less on one service than the other.
Washington's largest public utility district also wants to know, among other questions, which transmission projects will get built with the next round of bond refinancing.
"We have to look at every dollar Bonneville spends," said Steve Marshall, Snohomish PUD's assistant general manager for Power and Transmission Services. "One of the reasons Energy Northwest has this debt to begin with is questions weren't asked."
Other public utility representatives generally stood behind the program Wednesday, though they also expressed concerns about it being developed so quietly.
"It wasn't officially rolled out to customers in a public process," said John Saven, chief executive officer of Northwest Requirements Utilities, which represents small public utilities that collectively buy a quarter of the power Bonneville sells.
Jim Curtis, BPA's chief financial officer, acknowledged the program was put together "thoroughly in a small, closed environment" and that "we didn't do it in an open enough environment."
But he strenuously defended the program's goals and pointed to annual interest savings of more than $100 million a year by paying down higher-cost debt first.
"We have turned what is a huge liability into an asset," he said, noting the program provides Bonneville with needed financial flexibility. "This is smart business."
Even so, there could be far more interest in the subject when Energy Northwest considers refinancing yet another series of bonds this spring.
Rick Lovely, manager of Grays Harbor PUD, questioned whether public utility ratepayers are only building transmission lines that could be used to primarily benefit investor-owned utilities should an independent operator be formed to run the Northwest power grid.
"This is not explained to the customers very well at all," he said.
And Jack Janda, chairman of the board of utilities that participated in the first three of the former Washington Public Power Supply System's five-plant nuclear campaign, asked the renamed Energy Northwest not to extend the repayment period beyond 2018.
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