Final Recommendations on the Future Role of Bonneville

For the past several months, the 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. 

[1] Comprehensive Review of the Northwest Energy System, Document Number CR96-26, December 12, 1996.

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