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Final Recommendations on the Future Role of Bonneville
Council document 2002-19 (replaces draft
recommendations 2002-17) |
December 17, 2002
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Summary
For the past several months, the Northwest Power Planning Council
(Council) has participated in the Regional Dialogue on the Future Role of
the Bonneville Power Administration in Power Supply. At least two
immediate factors were the impetus for the Regional Dialogue. First,
the power supply contracts of Bonneville's Direct Service Industrial (DSI)
customers expire in 2006. The companies must know if they can expect
service from Bonneville after 2006, and Bonneville must know how much
power to supply in order to secure the necessary resources. A second
and very significant factor is that after more than a year of discussions,
the majority of Northwest utilities, both public and investor-owned, large
and small, urban and rural, appear to have coalesced around a proposal
that would significantly alter Bonneville's future role in power
supply. It is significant that these disparate interests would agree
on a number of issues that have been in dispute for many years. This
fact alone deserves careful consideration.
These interests did not come together by accident. They came
together out of recognition of a set of problems that, if not resolved,
could threaten the reliability of the regional power supply and the
ability of the Northwest to retain the benefits of the Federal Columbia
River Power System. These problems are not the fault of the
Bonneville Power Administration. Rather, they are the consequence of
a mismatch between how Bonneville is called upon to operate and the
realities of the evolving electricity system. The problems include:
- Periodic lack of clarity regarding load-serving responsibility;
- Lack of clear economic signals to many parties in the region
regarding the true costs of new power supplies and the value of
alternatives;
- Exposure of Bonneville to high electricity market risks resulting
from the periodic ability of customers to place load on or take load
off of Bonneville;
- A perception of inequality in the distribution of the benefits of
the federal power system within the region.
- The financial risk to the U.S. Treasury and the resulting political
risk to the long-term interests of the region if at some time,
Bonneville is unable to absorb the risks of uncertain loads, a highly
variable hydroelectric system and a potentially volatile wholesale
market.
These observations are not new. They were recognized formally
more than seven years ago during the Comprehensive
Review of the Northwest Energy System, which was authorized by the
region's governors.[1]
Many of the aims of the proposals on Bonneville's future that were
offered by the Joint Utility Customers and the Public Interest Groups
during the Regional Dialogue reflect conclusions reached in the
Comprehensive Review.
The Council participated in the Regional Dialogue public meetings
around the region and reviewed the written comments
and proposals that were submitted. In light of those proposals
and comments and the Council's own analysis of Bonneville's situation,
the Council makes the following recommendations for Bonneville's
consideration as it prepares a blueprint for its future role in
power. The Council's recommendations primarily are concerned with
issues of efficiency and less with issues of equity. However, if
equity issues are not adequately addressed in any final proposal, the
likelihood of success will be small.
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