Power council addresses cost concerns

The Public Power Council (PPC) spoke recently with Wahkiakum PUD commissioners about the changes in the distribution of electricity here in Wahkiakum county and throughout the Northwest.

The PPC is the umbrella organization representing 140 electrical utilities that deal with the Bonneville Power Administration (BPA) Additionally, the company works with public utility districts to negotiate power contracts.

“A part of our goal,” said PPC Executive Director Scott Corwin, “is, because not all PUDs have the same problems, is to try and get customer consensus on power issues.”

Many issues affect the cost of power and the PPC helps its members stay fully informed. The organization provides technical and legal advice to the PUD. Corwin said the PPC also advocates on behalf of the PUD.

The PPC looks at the bottom-line cost to publicly owned utilities like Wahkiakum’s.

“We look at BPA’s debt,” said Corwin, “and what we see is the BPA borrows money from U.S. Treasury that then has to be paid back with interest. Only Bonneville never pays off the debt. In effect the agency just keeps refinancing old debt.”

Bonneville has $4.5 billion in borrowing authority, and the spokesperson said Bonneville’s largest expense is the interest it pays on its debt to the US Treasury, which the PPC says could be considered an additional hidden tax to rate payers.

“A substantial amount of what ratepayers are charged goes to pay interest on Bonneville debt. Isn’t that right?” asked Commissioner Bob Jungers.

“Yeah, the federal government is making a return on the amount that they’ve loaned to the BPA,” said Corwin.

Using its bond issuance authority, Bonneville sells its bonds to the US Treasury for Capitol works projects. The bonds continue to accrue interest.

“Right now the BPA’s current interest payment to the federal government is about $1 billion,” said Corwin, “that’s your PUD consumers making payments back to the US Treasury with no subsidy.”

The PPC intimated that there is no will in BPA management to pay off the debt, therefore no light at the end of the tunnel unless the region’s PUD’s insist the debt be reduced.

Corwin told commissioners the PPC worked with Bonneville to find savings in each of their finance modules. The result led to short-term borrowing agreements with the US Treasury Department that helped hold down cost of electricity. The PPC said it was one reason Bonneville didn’t raise its rates higher than the 7 percent announced in September.

The PPC representatives also said Bonneville spends about $681 million on fish and wildlife recovery and they think it's now clear that spilling more water from the dams, as some environmentalist and fish biologist have recommended, has reached a point of diminishing returns.

“As one biologists said, ‘If we spill any more water from the dams we’re going to oxygenate it to the point it will kill the fish,’” said Corwin.

The science of spilling water over dams to save fish is, at best, murky and there is no definitive answer, Corwin said, adding that there are also the arguments over the economic costs to hydro generation and the question of cost to the ratepayer.

“When you add all the different costs to the BPA’s fish recovery plan it totals about a third of its entire budget,” said Corwin.

The PPC also wants to keep Bonneville’s transmission rates as low as possible. Surprisingly one of the costs driving up utility rates is wind generation. Bonneville’s transmission grid is a balanced grid system meaning it always has to have a balanced electrical load flowing through its lines.

“The unfortunate thing about wind power,” said PPC’s Policy Analyst Nancy Baker, “the way wind power works is that it cycles up and down in relation to the speed of the wind which requires the BPA fills the gaps from other sources.”

Baker went on to say that when the wind cycling of power happens, power from the Grand Coulee Dam has to balance the wind generators cycles, and that constant transmission cycling drives up the power transmission cost for everyone.

Corwin said the PPC gets protective of the utilities it represents and when Bonneville tries to drive up the cost of power by building less efficient power generation facilities, or using flawed or faulty data they step in. “That’s the base of our mission,” said Corwin.

The PPC’s current battle with Bonneville over the rise in the cost of power comes after the release of the Northwest Regional Power Council’s (NRPC) draft plan. The plan attempts to predict future power needs for the Northwest.

The power council represents Oregon, Washington, Idaho and Montana. Their plan sets the tone of the discussion, and their recommendations and predications weigh heavily on the future cost and development of electricity in the Northwest.

The NRPC recently released its sixth draft plan and there are few definite solutions to the rising cost of power. Some of the NRPC’s ‘Key Summery’ numbers don’t add up, yet the mistake will still cause power rates to increase.

The summary says that by 2030 the region’s population will have increased by almost 28 percent. That population increase will be focused mainly on the baby boomer population 65 and older. The costs to maintain them to the grave will drive up the cost of electricity.

The “boomer” generation began at the end of World War II and social scientists say the population explosion ended around 1957. According to the US National Center for Health Statistics, today there is an estimated 77 million people alive born during the boomer demographic period. The first boomers are now in their mid 70’s and their deaths are beginning to take their toll on the generation.

The Center for Disease Control’s data also shows that beginning now about 14 percent of the boomers in the Northwest will die off every decade. Based on the numbers, the NRPC’s growth numbers should actually predict a decline in population which then should reduce the cost of electricity.