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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. BPA’s grid is connected to Sierra Pacific through the 345-kV Reno-Alturas Transmission System, which was energized in November 1998. The line runs from Sierra Pacific’s system at Reno to BPA’s grid at Malin Substation in southern Oregon. Malin is a major link in the alternating-current intertie connecting the Northwest power grid with California’s. 

Some industry observers note that the combined transmission resources of Sierra Pacific, Nevada Power and PGE make up most of a transmission path between Northwest and Southwest power markets. PGE owns a segment of the alternating-current intertie from Grizzly to Malin substations, plus lines from the Trojan nuclear plant on the Columbia River, through and around Portland, over the Santiam Pass and connecting to Grizzly north of Redmond, Ore. Sierra Pacific owns transmission throughout northern and central Nevada, connecting to PacifiCorp and other utilities’ lines in Utah. The former Nevada Power portion of Sierra Pacific includes transmission around Las Vegas in southern Nevada that connects to lines in Arizona and southern California.


 Northwest aluminum owner Brett Wilcox and consultant Jim Litchfield held a meeting last week on their proposal to have customers buy BPA. Those attending were mainly direct-service industries and investor-owned utilities. Public power and other constituents largely stayed away, which is probably a sign that this particular proposal is not getting off the ground. The group, which meets again Dec. 16, is aligned on only three points. 1. BPA benefits need to be distributed more widely (read more to IOUs, DSIs). This could have implications for public preference. 2. Fish and power issues should be more closely linked. For example, in good water years, there'd be more dollars for fish, while there'd be fewer in poor water years. That's an idea that's been around for some time but has never taken off, largely because of pressure against it from environmentalists. 3. BPA should legally separate and move toward an RTO.  

RURal Areas Are Offered Fiber Cable

The Wall Street Journal
November 10, 1999
by Rob Eure, staff report of The Wall Street Journal

The Bonneville Power Administration is offering to provide rural communities in Washington with ultra-cheap 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 says. 

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 Portland. 

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.

 Mr. Johnson of the state PUD association asserts the PUDs and BPA are entirely within their authority, adding, "Without this help, these rural communities will be left on the dark side of the digital divide."

United stance preserves an escape clause on deregulation

Legislation no one really wants gives the Northwest room to keep cheap regional rates flowing from the BPA

Portland Oregonain
September 19, 1999
by Jim Barnett
(This article originally appeared on the Oregonian web site.)


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 BPA. 

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 deregulation. 

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 support. 

"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 mechanism." 

Despite last-minute reservations, 14 of 17 members from the four Northwest states met and agreed to endorse the title, according to people who attended the meeting.  Then, on Oct. 27, Barton's subcommittee approved the deregulation bill. With that, the BPA and its customers were off the legislative hook. 

"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.

"We could shape the debate in such a way that we could benefit from an orderly transfer to the region as opposed to just defending against attacks," DeFazio said. 


Direct-service industry 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.   BPA 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 there’d be no where else for the power to go. Hill-watchers suggest the solons don’t want to pressure BPA to do more for the DSIs, but do want the issue to go away.  

Direct service industry members (aluminum companies) have been visiting congressional offices.   It appears that their push on the hill is aimed at getting BPA to offer surplus firm power in the region at a cost-based price before it is sold into California at a market-based price. This particular issue is not about buying firmed-up surplus power, although some DSIs have been interested in negotiating with BPA on a product that would firm up surplus firm. DSIs understand this firming up service would be provided at a negotiated, market-based rate. They are in favor of BPA purchasing firm blocks of power so it could offer them more power at the IP (industrial) rate. But, given the perception that BPA's cost-based rates will be below market in the post-2001 time period, the current push on the hill is for BPA to offer surplus energy when it is available at a cheap, embedded cost-based rate in the region before BPA seeks the market price in California.





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