NORTHWEST ENERGY REVIEW TRANSITION BOARD MEETING SUMMARY
Thursday, June 25, 1998
NWPPC Conference Room, Portland, Oregon
The Northwest Energy Review Transition Board took public comment on proposals for FERC regulation of BPA’s transmission and a contingent cost recovery mechanism. Fish advocates said they are willing to take the Northwest’s problems onto the national stage if that’s what it takes to get a comprehensive fish recovery plan with adequate funding. Opponents of a transmission surcharge said they are loathe to pay the taxes while others enjoy the benefits. The board will take written comments on the proposals until June 30. All board members were present; the audience was about 50.
Next Meeting: July 23 in Portland.
• FERC REGULATION AND COST RECOVERY PROPOSALS TAKE SOME HEAT. Several representatives of fish advocacy groups delivered comments on the Transition Board’s proposals for FERC regulation of BPA’s transmission and contingent cost recovery. According to Jim Baker of the Sierra Club, the collective message is "these pieces are not adequate," unless they are part of a comprehensive package that includes salmon and steelhead recovery in the Columbia River Basin. Bill Arthur of the Sierra Club said salmon recovery and BPA’s operations are intertwined -- you cannot extract one part from the other and fix it. If we continue to worry about BPA’s finances and not about fish, the advocacy groups will bring this issue to the attention of the rest of the country, he indicated. We are "agnostic" about BPA’s future, Arthur said, adding that if the agency’s mission does not include protecting public values, we don’t care if it "lives or dies."
Chris Balliet of Save Our Wild Salmon recommended that the trigger on a cost recovery mechanism be linked to the level of reserves BPA needs to meet its Treasury payment long term. The cost recovery mechanism should allow for raising BPA’s rates to market prices, and there should be no caps on the recovery amount, she said. We fear BPA is embarking on a subscription process that does not do what it needs to do for salmon, according to Dan Rohlf of the Pacific Environmental Advocacy Center. Fish need to be treated equitably with other uses of the river, Rohlf said. Jeff Curtis of Trout Unlimited cautioned that the decisions made on subscription could foreclose options to fund "the more robust proposals" for fish recovery.
What you say is fundamentally accurate, Roy Hemmingway observed. My state says, if BPA behaves as a power company, it will be sold, and if so, we won’t object, he stated. If it behaves as a public agency and goes about solving problems, including natural resource problems, we ought to keep it, Hemmingway said.
Steve Weiss of the Northwest Energy Coalition said there has been "a significant and cynical altering of the terms of the debate" in the region and in Washington, D.C. "BPA’s troubles have been blamed on fish," he stated. By framing the debate as a fish, rather than a nuclear issue, those for whom BPA incurred the nuclear obligations can avoid paying them, according to Weiss. Jason Eisdorfer of the Citizens Utility Board said BPA customers have an interest in seeing a resolution of issues related to salmon recovery, stranded costs, the IOU residential exchange, and the public purpose role of BPA. If the interests I represent don’t see that we have anything to lose, "I don’t mind going to Congress to get a fix, even if it means the whole region loses," he said.
Pam Jacklin, an attorney for PacifiCorp, said the board’s proposal on FERC regulation of BPA transmission should include some regulation of power. BPA could set a power rate that is anticompetitive, she stated. IOU consultant Jim Litchfield questioned whether it is really necessary to shift power costs to transmission. It’s not right and will create a backlash, he said. If BPA needs to modify any of the transmission contracts, consider modifying those that deliver subscription power, Litchfield suggested. Otherwise, some without benefits will pay to support the benefits of others, he said.
Paul Murphy, who represents aluminum companies, took issue with the contingent cost recovery mechanism, calling it "unfair, unnecessary, and counterproductive." The proposal is an attempt to preserve the benefits for power customers, while the transmission customers may pay "a tax" without getting any of the benefits, he said. Ken Canon of the Industrial Customers of Northwest Utilities said the cost recovery proposal does not align the benefits and risks, and it does not avoid cost shifting. Drop the tax, have a cost recovery adjustment mechanism that goes to market rates, and go through subscription first to see if there is a problem, he advised.
Public Power Council Manager Jerry Leone told the board its proposed Northwest chapter would be positioned best as "high-level legislative principles," rather than drafted in statute form. She said the rate adjustment clause could reduce the appeal of BPA’s power products. As for FERC regulation of BPA’s transmission, BPA’s enabling statutes cannot simply be overlaid with the FPA, Leone cautioned. Someone would have to comb through the organic statutes before that could happen, and it would be difficult no matter what, she stated.
• UNRESOLVED ISSUES DELAY FEDERAL POWER SUBSCRIPTION.
BPA will briefly delay subscription to resolve the issues of availability, residential exchange, rate differentiation, and acquisition, according to Syd Berwager of BPA. These issues overlap and have to be dealt with simultaneously, he said. We have to resolve them before we start subscription, either by regional consensus or by BPA proposing a solution, Berwager stated.
Please Note: This summary is based on detailed reports of the meetings of the Northwest Energy Review Transition Board. The reports are prepared by Resource Writers Northwest and distributed by the Northwest Power Planning Council. The Pacific Northwest Utilities Conference Committee (PNUCC) contributes financial support for these reports. To request a copy, please call the Council at 1-800-452-5161.