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Hearing Focuses on BPA Power Allocation Post-2006 by Mike O'Bryant Columbia Basin Bulletin - October 7, 2002

Forty-one people commented Monday evening on one of four proposals about how the Bonneville Power Administration should divide up benefits of the Columbia River power system for twenty years after 2006.

Both the proposals and comments were made this week at the last public meeting sponsored by BPA and the Northwest Power Planning Council exploring the topic.

The agencies held the workshops to explore what the public thinks BPA should do long-term regarding who gets access to BPA power, including Northwest aluminum mills, and whether BPA should take part in the region's power development.

Of the proposals offered by Northwest utilities, Alcoa, the United Steelworkers and environmental groups, none suggested that BPA stop funding its mandated fish and wildlife programs. However, each suggested various degrees of benefits to salmon.

"Some would have us choose between low cost electricity and the survival of one of our most cherished resources," said Andrew Englander, policy analyst for the Save Our Wild Salmon. "Northwest citizens need not make that choice."

He said that BPA has failed to meet its legal obligations to protect and restore salmon and that the joint proposal by the utilities also fails the test. The legal obligations include those imposed by the Endangered Species Act, the Northwest Power Planning and Conservation Act and tribal and international treaties.

He, along with a coalition of conservation, environmental and fishing groups, suggested BPA's future role should follow five principals. Those principals include meeting legal obligations; recognizing conditions may change (such as removal of four lower Snake River dams to achieve salmon recovery goals); removing economic and operational incentives to violate salmon recovery requirements; giving salmon an equal voice in river decisions; and removing the pressure on the hydrosystem to crank out megawatts by reducing electricity demand with conservation by 175 average megawatts per year and by supplementing the power system with 175 aMW per year of renewable energy, such as wind, solar and geothermal energy resources.

The joint proposal by both public and investor-owned Northwest utilities supports BPA's current level of salmon recovery spending, but it mostly focuses on how federal power will be shared by utilities. According to Pat Reiten, PNGC Power (Pacific Northwest Generating Company) president and chief executive officer, public utilities would buy a piece of the BPA power system (BPA's Slice product) and then would be on their own to purchase or develop power to meet future load growth. Or, some utilities that get all of their power from BPA now could choose to continue that arrangement. More than 50 percent of public utilities would likely choose the Slice product.

The Direct Service Industries would also be allocated BPA power, but not under the Slice product. They would be given 600 MW of power to be divided up among six aluminum mills and 150 MW to three other DSIs. Historically, the DSIs have received up to 3,000 MW of BPA power. In addition, BPA would offer financial support to the DSIs to develop the power needed to meet their full requirements.

Investor-owned utilities, such as Portland General Electric, PacifiCorp and Puget Sound Energy, which account for 50 percent of Northwest load, would simply receive a payment to replace the current Residential and Small Farm Exchange agreement, which is a paper exchange of power favoring IOUs, but not a direct exchange of money. That payment could be worth up to $370 million per year (based on a sliding scale).

Reiten said that BPA fish and wildlife requirements would not change.

"BPA will continue to have control of the river," Reiten said. "In the event of a power system emergency in this region or California, BPA takes over."

Eric Bloch, Oregon member of the Council and facilitator for the public meeting, called the joint utilities' proposal regarding fish a "do no harm" approach.

Appealing for a larger share of inexpensive BPA power in order to compete in the worldwide aluminum market, Jack Spear, director of Northwest Power Issues at Alcoa, asked that his company be given 700 MW of BPA power for its two facilities, one in northern Washington and the other at Wenatchee on the Columbia River. He said aluminum mills outside the United States pay an average of 18 mills (1.8 cents) for electricity, whereas Alcoa is paying more than 30 mills.

"Aluminum is a strategic metal and needs to be produced onshore," Spear said. His company filled four buses with employees from its two plants, pushing attendance at the standing room only meeting to well above 200 people.

Spear also proposed that aluminum mills develop their own power sources, but sell the power to BPA at cost and buy back the same amount of power from BPA at the federal agency's melded rate. "We can invest in these resources," he said. "But we can't afford to make aluminum with these resources."

Spear said Alcoa is working with the utilities to reconcile its proposal with their joint proposal. "We're hung up on the amount of power we need," Spear said. "They're talking 650 MW and we're talking needing that much ourselves. But, it's not an impossible situation." He is worried, however, that the utility proposal is for one round of contracts for the DSI's (through 2011) and "then we go away."

The United Steelworkers' proposal called for 100 MW for each aluminum plant, similar to the utility proposal, but to augment that power by extending credit to the facilities to develop power resources. Bob Woodward of the Steelworkers said that Alcoa's Intalco plant through the rates it's paid to BPA has spent $10 million on fish and wildlife programs over the past ten years.

The Steelworkers proposal includes aluminum mills using more power during off peak periods, interrupting service to the mills when severe drought would impact fisheries operations, BPA making adequate investments in conservation and renewable resources, BPA meeting its legal fish and wildlife obligations, and investing in Northwest jobs.

"Keep in mind, we're talking about real people with real jobs," said Delbert Nicholson, a steelworker from Golden Northwest Aluminum. "These are long-time and family wage jobs."

But, Liz Hamilton, executive director of the Northwest Sportfishing Industry Association, said DSI jobs are not the only ones lost in the Northwest as a result of the federal hydropower system.

"I'm sympathetic to jobs lost," said Hamilton. "Unfortunately, when we talk about energy, we're also talking about salmon. We have lost 10,000 jobs because of salmon losses. These are hydrosystem casualties."

"There will be great costs and damages if BPA reduces its energy to Alcoa," said Douglas Todd, who works at Alcoa's Wenatchee plant. "Millions of dollars are going to alleged salmon saving plans through BPA revenues. Taxpayers are already overburdened with the costs to save salmon. Why now jobs?"

In supporting the environmental proposal, Cindy deBruyler, executive director of the Columbia RiverKeeper, commended the Steelworkers for remembering salmon and conservation in their proposal. "I urge BPA to seek creative solutions to these problems," she said. "We can have our cake and eat it too. We have for a long time." She called on BPA to pay attention to renewables and to allow the tribes to have a say in operations of the Columbia River hydro system.

Glenn Vanselow, executive director of the Pacific Northwest Waterways Association, agreed that environmental stewardship is a part of BPA's role, but he asked for increased cost-effectiveness for salmon recovery measures. "BPA should invest in actions that result in more fish," he said.

Bloch said BPA and the Council would accept written comments through Oct. 18 and BPA will formulate a written proposal in early 2003. After that, it will hold another round of meetings and proceed to a record of decision. Comments should be e-mailed to comment@bpa.gov.

Related Sites:
BPA -- www.bpa.gov
Save Our Wild Salmon -- www.wildsalmon.org