In materials announcing its PGE
purchase, Sierra Pacific has
mentioned improved access to Northwest power markets for its customers.
Sierra Pacific has not, hitherto, been a regular BPA power sales customer, but
it is a transmission customer. BPA also wheels power to some of its preference
customers in northwest Nevada through Sierra Pacific. BPAs grid is connected
to Sierra Pacific through the 345-kV Reno-Alturas Transmission System, which was
in November 1998. The line runs from Sierra Pacifics system at Reno to
BPAs grid at Malin Substation in southern Oregon. Malin is a major link
in the alternating-current intertie connecting the Northwest
power grid with Californias.
The Bonneville Power
Administration is offering to provide rural communities in Washington
fiber-optic cable-a move that is being embraced by the communities but
criticized by telephone companies.
The Portland-based federal agency, which is laying thousands of miles of lines in the state as it upgrades its communications system, is offering to lease extra capacity to public utility districts in sparsely populated areas for $5 a mile. While the price is a bargain, business and civic leaders say what's more important is that the fiber will be available at all, as the private sector is years away from even starting to wire rural Washington with high-speed lines.
With those lines, they say,
small towns will be better able to compete for businesses that demand
up-to-date communications systems. "Having high-speed
communications capability is right up there at the top of what companies
want," says Sharon Hart, executive director of the Lower Columbia
Economic Development Council in Skamokawa in southeast Washington.
Treading on Turf
But GTE Corp., which
supplies local telephone service to 30% of Washingtonians, doesn't like
the idea of government stepping on its turf.
"It appears that Bonneville and the local public utilities are getting ready to build a second phone system in rural Washington," says Richard Potter, manager of state affairs for Everett-based GTE Northwest Inc., a unit of the Dallas company. "We welcome competition, but if the PUDs are going to build this system using electric-ratepayer money, we have an issue with whether this is a level playing field."
Terry Vann, executive vice president of the Washington Independent Telephone Association in Olympia, which represents 16 small carriers operating phone systems in 21 rural areas of the state, says Bonneville's price "is probably six times less expensive than we can get to rent fiber. We are going down the road of socialized rural telecommunications here, and it could be very difficult for small private companies to survive."
Mr. Potter says GTE doesn't
intend right now to ask the courts or the Washing ton Legislature to
stop the BPA program, but is keeping its options open.
Don Godard, manager of the Grant County Public Utility District and chairman of Northwest Open Access Network, a nonprofit group working with the BPA on the fiber-optic program, says GTE can't complain unless it's willing to offer high- speed service to rural areas.
"These are not
communities where fiber already exists," Mr. Godard says. "If
the private companies want to do it, we'd gladly stand aside. But if
they can't-or won't- then they should get out of the way."
Mr. Potter says GTE hasn't
received any requests for fiber from rural areas in Washington. The
company has provided fiber for several of its smaller communities, but
only when the area's population and demand make it practical, he
Denver-based U S West Inc.
which provides about 60% of the phone lines in the state, has similar
concerns about "taxpayers funding a service that competes with
private industry," says Bill Prows, a company spokesman in
The BPA made its offer to the Washing ton Public Utility District Association on Sept. 28, and so far 16 PUDs out of 28 have signed up to lease the fiber.
'Outside That Box'
Steve Johnson, executive director of the Seattle-based utility district association, says PUDs will offer to sell access to the BPA lines to anyone, even local telephone providers, "as long as they are willing to pass it on [to customers] at cost.
"The companies that object are trying to kill off something that is targeted at areas they don't want to serve for business reasons," he says. "But I say we should think outside that box."
The BPA distributes 40% of the Northwest's power with electricity generated from 29 federal dams and owns 80% of high-voltage transmission lines in the region. It can make the fiber cable available at low cost because it's laying new lines anyway for its own use, according to Ed Mosey, an agency spokesman.
The old system of microwave
towers that regulates the dams and switch energy loads to meet peak
demands is wearing out, so Bonneville began stringing fiber in 1994. It
now has 2,000 miles in place, primarily in Washington, but also in
Oregon and Idaho, and plans to add an additional 1,800 miles in the next
two to three years. The agency hopes at some point to offer the same
deal to PUDs in other states.
"This is expensive wire to hang, but you can add additional capacity for very little cost," Mr. Mosey says.
The fiber that the BPA will
lease won't be active; a PUD will have to make an investment of $70,000
or more to buy and install the switching equipment that will make the
lines useful. Mr. Godard says that Northwest Open Access Network is
investigating financing options, including loans from banks, bonds or
grants from state or federal rural-development funds.
Mr. Mosey says that the BPA is following its original mandate in offering the low-cost fiber to rural areas. The agency was formed by Congress with the 1937 Bonneville Project Act, which directed the agency to use the power to supply rural homes with electricity. So just as the agency brought lights to homes and farms in the Northwest, Mr. Mosey says, it's now offering access to new technology.
The BPA is offering the fiber-optic deal "only to counties with fewer than 100 people per square mile," Mr. Mosey says. "We hope that what we are doing is creating or accelerating the market in these areas."
Need for Redundant Line
In Port Angeles, on the
Olympic Peninsula, Bart Phillips, executive director of the Clallam
County Economic Development Council, says that the lack of a fast, modem
communications system has hurt the community's chances of attracting new
businesses. Although he says that U S West is planning to bring a fiber
line to the town, "these communications businesses want a redundant
line so that if something happens, they don't lose business."
Mr. Potter at GTE
questions utility districts' authority to move into the telephone
business, citing a 1998 opinion from Washington Attorney General
Christine Gregoire that said PUDs don't have the right under Washington
law to offer Internet access and telephone service.
In that opinion, however, Ms.
Gregoire said that a PUD may sell or lease any excess capacity from a
fiber-optic cable, as long as it is primarily used for the PUDs' needs,
for instance, to manage electric demand and monitor system performance.
Legislation no one really wants gives the Northwest room to keep cheap regional rates flowing from the BPA
WASHINGTON - Rarely have so
many members of Congress from the Northwest invested so much time and
brokered so many compromises to craft a single piece of legislation.
They just hope it never becomes law.
The legislation, called the Northwest
Title, is part of a bill that would set national standards for
competition in the electricity industry. The title is intended to
preserve the region's access to discounted hydropower from the
Bonneville Power Administration.
But keeping $2 billion a
year of BPA electricity flowing is about all that Northwest members and
their constituents can agree on. While everybody in the region wants
cheap power, BPA's competing customer groups disagree sharply over terms
of the legislation.
One provision is particularly controversial: It allows the BPA administrator to assign responsibility - and set transmission surcharges of as much as $100 million a year - in the unlikely event that the Portland-based agency runs out of cash.
Why would BPA customer
groups relent? If the title failed to give the BPA clear authority to
cover its costs, it would have been stripped from the bill, Northwest
members said. Then, the agency's fate would have been left in the hands
of political enemies.
Indeed, stakes for Northwest consumers and businesses in deregulation are greater than for most regions.
While leaders in other
states see competition as a force for cutting rates, counterparts in the
Northwest are preoccupied with protecting the status quo. Many figure
that rates already are so low, the risk of rate increases in a
competitive market is greater than the potential for reductions.
The region depends on its
cheap electrical rates, the nation's lowest, to help attract industry
and fuel the regional economy.
The prospect of losing
BPA's benefits in the national drive to deregulation helped quell
complaints, Nethercutt and DeFazio said. But the members also made an
unusual sales pitch: The deregulation bill containing the Northwest
Title had little chance of being approved.
"We tried to say, 'Quit your worrying it's not going to happen,"' Nethercutt said.
Each BPA customer group
has its own objection: Publicly owned utilities object to the broad
discretion given to the BPA administrator. The BPA's industrial
customers consider new transmission fees to be tantamount to a tax. And
residential customers of privately owned utilities want a firmer
guarantee that BPA will continue to subsidize their rates as required by
the 1980 Northwest Power Act.
Nevertheless, DeFazio and Nethercutt are delighted that the title remains part of the deregulation bill. Its survival proved to be a textbook lesson in old-fashioned back-scratching politics.
No members from the
Northwest sit on the House Commerce subcommittee on energy and power,
which is debating deregulation. So DeFazio and Nethercutt met with its
chairman, Rep. Joe Barton, R-Texas, to negotiate a proposal to protect
Barton, who assumed the
subcommittee chair last year, has been under immense pressure from the
full Commerce Committee's chairman, Rep. Tom Bliley, R-Va., to take
action this year despite regional rivalries that have stalled
As the subcommittee
prepared to mark up its deregulation bill last month, Barton said he
would fight off amendments that force the BPA to charge higher rates
based on market demand. In return, Northwest members pledged their
"Barton told me,
'If you're not all together, you'll have no title, and I can't stop
whatever might happen,"' Nethercutt said. "So
we said, 'OK, we'll have a title.' It's a good defensive
reservations, 14 of 17 members from the four Northwest states met and
agreed to endorse the title, according to people who attended the
Then, on Oct. 27, Barton's subcommittee approved the deregulation
bill. With that, the BPA and its customers were off the legislative
"The bill that came out of subcommittee is a dead letter, and it's going to be totally reworked," De Fazio said cheerily last week "I was just talking to Chairman Bliley. He says it's a disaster."
The deregulation bill has little chance of being approved by both houses of Congress before next year's elections. But if BPA customers remain nervous, it's because the title could do more to reset the balance of power among BPA customers than any legislation since the 1980 Northwest Power Act.
DeFazio is optimistic, however, that the region could use its reprieve to come up with a better plan for its energy future. He hopes to put together a proposal to transfer control of the BPA to the four states, a goal recently echoed by Oregon Gov. John Kitzhaber, a Democrat.
representatives visited Congress last week. They reportedly tried
to create the impression that BPA unlawfully sells power to California
because it's such a profitable market, and thus BPA shortchanges its own
regional industries and the economic welfare of the region.
only sells surplus nonfirm that's offered in the Northwest first. It's
unclear if the DSIs want BPA to firm up the surplus power, which would
mean purchasing power and that would push up rates. Or, they could want
to force BPA to sell surplus only within the region -- at rock-bottom
prices, because everyone would know thered be no where else for the
power to go. Hill-watchers suggest the
solons dont want to pressure BPA to do more for the DSIs, but do want
the issue to go away.
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