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PUD Leery of Power Consolidation

by Christopher Schwarzen, Times Snohomish County bureau
Seattle Times - October 20, 2004

The Bonneville Power Administration and large private utilities in the Northwest may create an independent organization to operate and maintain a majority of the electric transmission lines in the region.

But local public utilities such as the Snohomish County Public Utility District (PUD) fear that proposal will be too expensive, boosting the rates they pay for Bonneville's electricity.

Bonneville, PacifiCorp and Idaho Power think a single operator of transmission lines could ease costs associated with transporting power throughout Washington, Oregon, Idaho, Montana, Wyoming, Nevada and Utah.

The three power providers account for more than 80 percent of the transmission-line ownership in the region. Add BC Hydro in British Columbia, which is interested in joining the program, and the single operator would have control over 90 percent of the transmission lines in the seven states and B.C.

A vote to create the individual entity, known as Grid West, is scheduled Nov. 4. Plans to formally hand over control could take two more years, Bonneville officials say.

But the Snohomish County PUD, which buys 80 percent of its electricity from Bonneville, and other members of the Washington PUD Association are asking Bonneville and a regional board made up of Northwest utility interests to postpone that vote until more studies can be done. They say initial studies show costs outweighing the benefits of a combined operation.

As the system works now, each utility that owns transmission lines operates, maintains and makes decisions on how its system should work.

Though individual utilities still would own the lines, Grid West operating under a board independent from Bonneville and other utilities would direct how electricity is shipped through the transmission system. It also would have the authority to approve expansions and repairs of the transmission system as growth occurs in the Northwest, charging members for associated costs.

Many smaller utilities on the fringe of the Northwest's transmission system say the single operator could save them costs associated with buying power from Bonneville. If a small utility in Idaho buys power from Bonneville but it has to be shipped through Idaho Power's lines to get there, the small utility must pay Idaho Power a user fee.

A single operator potentially eliminates those extra user fees known as pancaking in the industry by combining costs into one bill. "It's like an air traffic controller looking over the operators," said Allen Burns, Bonneville's vice president of industry restructuring. "Now we try to coordinate [the different transmission systems], but we don't always see eye to eye."

Burns says this leads to redundancies, holes where transmission lines aren't kept up and congestion when too much power is available. He also says one entity controlling the transmission lines could make sure power is shipped accordingly to prevent future blackouts.

The Snohomish County PUD says the annual cost of membership would be $122 million more than the benefits derived from Grid West. An independent board would be maintained, new employees would need to be paid, and costs for turning the grid system over to one operator would be expensive.

Burns countered that the PUD's costs are inflated because they are an average of other regional transmission organizations across the United States. He acknowledged, however, that a cost-benefit analysis by supporters won't be completed until after the Nov. 4 vote.

Once the board is created, PUD officials fear, it will be hard to convince Bonneville that Grid West is a bad idea.

"If we can't get them to slow down now, we're not very convinced we'll be able to talk Bonneville into the more dramatic step of withdrawing later," said Steve Marshall, the PUD's assistant general manager of power and transmission.

Marshall also said he is unsure how Bonneville, a government-run agency, can hand over control of its transmission system without congressional approval.

"We're troubled that Congress has not given its authority to Bonneville to turn over its transmission system to another organization," he said.

A U.S. Department of Energy opinion supports Bonneville's decision to consider the proposal, Burns said.

"We're not handing over control of the switches, but contracting for them to make certain kinds of decisions," he said. "We also have the ability to withdraw at any time."

The Public Power Council, which lobbies for public utilities in the Northwest, hasn't taken a position on the formation of Grid West because its membership is split, said the council manager, Jerry Leone. It has, however, asked for a delay of the Nov. 4 vote.

"This is just being run through like rodeo riders," Leone said. "We're seeking more time to consider the mountain of information, problems and different positions before a vote is taken."

Leone said there will be costs associated with Grid West, but how much is still in question.

"Under Grid West, that doesn't mean the transmission will be free," she said of pancaking costs. "You'll just get one bill."

Related Sites:
Grid West

Christopher Schwarzen
PUD Leery of Power Consolidation
Seattle Times Company, October 20, 2004

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