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Download the full text version of the PNUCC Special Report.THE 20-MEMBER STEERING COMMITTEE charged with carrying out the Comprehensive Review of the Northwest Energy System gathered for the first time January 4 at the Wyndham Gardens Hotel in Seattle. The four Northwest governors, who appointed the committee, each spoke about the significance of the effort and expressed optimism about its productive conclusion.
Next Meeting: January 18 in Portland.
Washington Governor Mike Lowry said the Northwest is becoming a "booming region--we're doing better than anyone in the country." We came today, he said, because we realize that energy, conservation, and the environment are important elements of continuing the good news. He suggested the steering committee agenda should include protection of ratepayers and rural customers of BPA, and he urged the committee not to forget conservation and renewables. We need to think of the future, not just the present, Lowry said.
Montana Governor Marc Racicot called the effort critical to economic development, the environment, and the Northwest way of life. It's a golden opportunity for us to guide our future, rather than be victimized by it, he said. Only in the Northwest is this kind of cooperation still possible, Racicot observed. It's routine for us to look at regional issues this way. He said the review would strengthen relationships among the four governors.
Racicot said we must keep the low-cost, reliable electrical distribution system in the Northwest available to us. We've seen great benefits from coordination of the hydro system, and we want those benefits to continue. We want the benefits to come to all, including rural and isolated users, he added.
I favor deciding important policy questions close to home, Racicot declared. Those to be impacted have the best opportunity to bring about solutions to difficult problems--we are the ones who will have to live with the solutions, he said.
Idaho Governor Phil Batt said the study could be pivotal for the Northwest, noting that the Columbia River and its tributaries drive the region's economy and have helped the Northwest develop into what it is today. The Columbia River system has made us competitive, he said. Now for the first time, he noted, private power is competitive with BPA, and federal laws are changing how electricity is marketed. Our task, said Batt, is to recognize and analyze the new forces and decide if the region needs to take action. Maybe legislation will be recommended, and maybe only market and economic forces will be needed, but we need to take a look at the situation, he said.
Oregon Governor John Kitzhaber said the issue that brings us here is change. The challenge is to ensure that the new competitive environment delivers benefits to our citizens in a way that protects the environment and quality of life, he said. Kitzhaber cautioned the committee not to assume the transition to a competitive environment will be smooth. There has to be a transition process for those who relied on the "old rules," he said. We must assure that the federal government, which built the generation and transmission system, is repaid in full and on time. Kitzhaber observed that the competitive market does not mean abandoning public values, such as the widespread use of electricity at affordable rates and a diverse and efficient power supply. The Northwest is a leader in energy conservation, and we must continue that, Kitzhaber emphasized. We must be aware of the value of fish and wildlife to the Northwest, he said. There are those in the marketplace without the public good in mind, he noted, adding that we must recognize natural gas is a non-replaceable fuel with environmental costs. Some say that planning and a competitive marketplace don't mix, but that's not true, said Kitzhaber. This effort is to plan how to have a competitive marketplace, and "this is our one chance to do this," he concluded.
Steering Committee Chair Chuck Collins said the Columbia River and the kilowatts that flow from it are unique--"electricity invades our life like few places in the world," he observed. This invasiveness of kilowatts in our lives makes it a public business in ways it wouldn't be in other places, he added.
This is a period of change, he said. I've come back, and the world I left has turned upside down, Collins said, referring to his return to the energy arena. The axioms and imperatives have all changed. Citing events like Columbia River firm energy load carrying capacity being reduced by 3,000 MW, and the closing of the N-reactor and Trojan, Collins said, "I feel not unlike Rip Van Winkle after a 40-year nap."
The questions to answer, Collins suggested, include: What is competition? What is an open market? What does deregulation mean? We need to separate fact from cant, and reality from exaggeration, Collins said. We must recognize what is inevitable and what can be shaped, so that we don't try to hold back the tide of the inevitable, he added.
I'm glad to report the crisis of six months ago with respect to BPA has abated, at least temporarily, he said. The good thing about not being in a crisis is we have time to examine and shape things, to be deliberate, and to try to capture multiple values. In military terms, he said, we are not decisively engaged--the generals can still influence the battle. But on the negative side, he noted, not being in a crisis could mean we are not compelled to act. In that vein, Collins read a quote from "management guru" Peter Drucker:
A major industry rarely puts its best brains to work on basic changes. It will rather tend to fritter away its energies on desperate efforts to keep yesterday going just a little longer.
These are the best brains in the Northwest on this subject, and we have a good chance to make the changes needed, Collins said, as he introduced the Steering Committee members. All but Sharon Nelson, chair of the Washington UTC, were present. "We have 11 months--the journey begins," Collins concluded.
Energy consultant Jim Litchfield told the committee "comprehensive review" does not connote the task at hand. The region is asking you to develop a future deregulated structure for the electric power industry that for 100 years hasn't had such a structure, he said. You will need to start with a clean piece of paper, advised Litchfield, and you will need to craft a new structure for that industry. It will have to be compatible with what's happening today with the bulk power market throughout the U.S. You will have to look at institutions and agencies that grew up under a completely different economic model, he stated. Peter Drucker is right, he noted--there is a lot of effort going into trying to maintain the past.
Litchfield recounted the origins of the electric power industry as a natural monopoly. Today the infrastructure is built, and we now have the luxury to consider if a vertically integrated structure is the right one, he said. Litchfield noted that the age of competition began with passage of the Public Utility Regulatory Policies Act (PURPA) in 1978, which opened the door for independents to compete with utilities. Passage of the Energy Policy Act of 1992 created an open access transmission system, he said. It ordered open access to transmission and established the principle of comparability. Comparability means utilities must treat themselves as they treat their competitors--it's the "golden rule of FERC," said Litchfield. The Energy Policy Act also opened up the competitive market in bulk electric power, allowing power to be sold at market prices, not at cost, he noted.
Retail Wheeling Will Come Here Sooner Than Other RegionsWe are likely to see competitive bulk power markets and retail wheeling quicker here than in any other region in the U.S., Litchfield predicted, and the transition will be easier and faster. I think the steering committee will need to spend a lot of time focusing on transmission issues, he said, suggesting they look at PNUCC's transmission project, which is laying out the full spectrum of possibilities for the regional transmission system.
The other thing you'll have to focus a lot of time on is BPA, counseled Litchfield. It is governed by many statutes and Congressional directives, some of which have been layered one on another over time. You should look at all of them and see where they are consistent and where they are not, he advised. And, said Litchfield, the "philosophical threshold question" for you is: "Should a federal agency have the characteristics of a competitor, and if so, what should they be?"
He also added a caution, saying there are numerous side fights you'll hear about. Don't take any of those "rabbit trails," he recommended--they'll divert your time and efforts. As an example, he said the committee should not try to get involved in the numerous technical measures for salmon recovery being discussed in the region. But, he said, there is an overriding salmon management question that the committee will need to deal with--you will have to consider how to integrate overall salmon management with restructuring of the industry.
"This is a one in 100-year opportunity," commented Litchfield. We've been on this industrial model from its beginning, and it's coming unraveled. We need to look at where we're going and what we should do. We're either going to do it for ourselves or have it done to us," he concluded, wishing the committee good luck.
My role is to deliver the environmental blessing, quipped Ralph Cavanagh of the Natural Resources Defense Council. Litchfield has framed the questions, and now I'll tell you how to succeed, said Cavanagh. He cited three reasons for optimism about the review: there are no entrenched positions yet; the committee is the "most thoughtful and best qualified group" to address these questions; and there is no inherent conflict between meeting the competitive market and also meeting public interest values. Cavanagh reiterated the importance of the equity and environmental dimensions of electric power issues--"if electricity is just another commodity, then oxygen is just another gas," he said.
The historic source of the region's competitive advantage has been the "low-cost, palpably finite" advantage of the hydro system, Cavanagh said. The old mandate of BPA was to ensure the widest possible use of the hydro system, he said, but now it has quietly evolved to the "wisest possible use."
As for the Northwest's leadership in energy efficiency, Cavanagh noted that the region has hit the 1,000 average megawatt mark of energy saved, at an average cost of 2 to 2 1/2 cents per kilowatt-hour. "It's a public-private success story," he observed, adding that low-income citizens were able to benefit from the savings.
We have a one and one-half times greater potential to get more savings, said Cavanagh. We must remember that hydro is not the only renewables opportunity in the Northwest, we need to do better in meeting stewardship obligations to fish and wildlife, he stated. It's clear that the comprehensive review will not draw in fish and wildlife treaties or laws, or try to micromanage fish and wildlife, he said, but I assume the review will look at the implications of its institutional recommendations for fish recovery.
The most pressing challenge, according to Cavanagh, is to find a way to integrate public and private interests. The solutions that worked in the past won't necessarily work when distribution and generation may not even be under the same roof, he said. And nothing will work if utilities, beset by short-term pressures, stop making long-term investments, something that appears to be happening now, he added.
We've learned how not to do restructuring from the California experience, Cavanagh noted. I hope you will beware of anyone who says the outcome of this effort is pre-ordained, he cautioned. The question to answer is: What does deregulation mean? And we get to decide that, he pointed out. These are choices the Northwest can make, provided we can find a path we can collectively support. We can't just turn this job over to the steering committee and expect they can create and execute it--the committee will need support, Cavanagh stated. There's a real penalty for inaction, he warned.
BPA Administrator Randy Hardy said the industry is undergoing deregulation driven by the Energy Policy Act, the energy surplus, and record low natural gas prices. Competition is all at the wholesale level, he said, and since BPA is 100 percent wholesale, its entire load is at risk, while its competitors have much less load at risk.
He recounted how 18 months ago, the "competitive bogey we were shooting at" was 35-mill power from new gas combustion turbines, but now it's gotten to 20-24 mills nominally, and BPA is competing against existing resources, not new plants. People are signing five-year contracts with BPA customers and others, assuming the low cost of natural gas will support those contracts, he added.
We've responded to this new competitive world in four ways, Hardy said. We've focused on customer service, reorganizing and creating account executives. We've unbundled our products, tried to increase our revenues, and cut costs. We've also launched legislative and contractual initiatives, and as a result, compared to the crisis we were in six months ago, we're better off today for three reasons, he pointed out. First, we have a fisheries agreement in place, which puts a $435 million limit on fish costs and includes a contingency fund with OMB worth $325 million. That agreement is worth 20-30 percentage points in Treasury repayment probability, Hardy said.
We've signed contracts with the DSIs, Hardy said, ending up with load commitments of 2,100 MW, which are take-or-pay contracts. The Energy and Water Appropriations bill, passed in October, lengthened the callback provisions on out-of-region sales, he noted, and repealed the Bonneville Project Act prohibition on resales. These three things have enabled us deliver a rate proposal with a rate decrease and an 80 percent Treasury repayment probability, he said.
"We probably expended more political capital than any Administrator should have to expend in a lifetime," he commented. I took these actions for the sake of short-term financial stability, he explained, and to preserve options for the comprehensive review. We still may end up being privatized--I'm not ruling that out, said Hardy, but at least it would be the result of this process, not outside pressure due to some political miscue we made.
Hardy flagged three things BPA has under way the committee should be aware of: the rate case, power sales contracts discussions with public utilities, and the functional separation of transmission and generation. We will try not to foreclose any options you have, but these three will have to be concluded before your recommendations will be made, he admitted.
Hardy observed that "change will happen"--the choice is will the market and FERC drive it, or will we drive it? If it is the former, it will be Darwinian, he predicted. You have one year, Hardy remarked, which should "work politically," allowing the chance to introduce legislation into the new Congress in 1997. But you need to get to a consensus, he urged.
BPA will support the review, but not try to steer it in any particular direction, Hardy said. He noted there is "a huge degree of paranoia in BPA about what's going on here," but he added, that's my management problem, and I'll deal with it. He also said the scope of the review needs to be broad--it's not just a BPA exercise, he emphasized.
The Northwest Is Not An IslandUnder this heading, Hardy pointed out that the Federal Columbia River Power System is inexorably linked to Canada and that the bulk of the storage is in Canada. He said national policy considerations at work will also affect the review. And he noted California is an important player as a market and a competitor.
Hardy mentioned that other countries, such as the United Kingdom, New Zealand, Norway, Chile, and the province of Alberta have gone through restructuring exercises. The committee may want to learn about their experiences, as well as what's gone on in California with respect to restructuring, he suggested.
In the "lessons learned" department, Hardy said:
He enumerated four goals for the process:
Hardy offered three "final thoughts." The enormity of the task at hand can't be understated--you are determining the economic and environmental future of this region, he said. Second, be optimistic, he urged--consensus is possible. In fact, "you've got so many interests at the table, you've got a lot of genetic material to trade off," he quipped. The harder challenge, he noted, will be to legislate the solution through in the "post-Hatfield Congress." Finally, Hardy urged the group to "be statesmen and lead." You need to represent your constituents, but also to stretch and trade off in the larger regional interest to be successful, he said.
Q & A's for HardyEnergy consultant K.C. Golden asked how BPA would interact with the "federal family" during the review. Hardy replied that Walt Pollock will speak for BPA, and DOE has appointed Kyle Simpson as liaison to the review. The "DC bosses" would be delighted, he surmised, if the committee could solve the problems at hand, as long as public purposes were preserved and the "no increased cost to the taxpayer" caveat was observed.
Roy Hemmingway, Governor Kitzhaber's representative, asked if Hardy had talked with OMB and the Administration about the financial separation of generation and transmission, and if so, what would it do to repayment risk? Hardy replied that he had not had those discussions, but he thought, if done correctly, it could enhance our ability to make our payments. It's a wide-open area, he said, and one that should be discussed and debated.
Mike Kreidler, Governor Lowry's representative, asked about BPA's traditional role with smaller utilities and whether Hardy had any insights on how to get through the transition. The issue of postage stamp rates and service to rural areas will be important and difficult, Hardy answered. It's a challenge, given the way FERC is driving us in the NOPR process, he acknowledged. We've tried to eliminate specific subsidies, but we are not anxious to go much further than that, he said, adding, it quickly gets into a social policy issue.
Brett Wilcox of Northwest Aluminum asked for thoughts on whether a federal PMA should be a competitor. Hardy responded, if BPA can't compete, we can't raise the revenues to support our budget. We'd miss Treasury payments and couldn't fund our public purposes even to the extent we do now. I think we have to sustain a budget level sufficient to meet our payments and public purposes, he said. That question should get a lot of attention, Hardy added. He urged the committee to "define the rules of the game."
John Etchart, Governor Racicot's representative, asked about the status of contract offers to public utilities. Hardy said there have been talks on general principles, and that detailed discussions would begin in 30-60 days. We're looking at May-June before we have conclusions, he added.
John Hoehne, chief of staff for Idaho Rep. Mike Crapo, told the group "we respect your process" and are hopeful it will achieve results. Since what you come up with may require Congressional action, it makes sense for members of Congress to be involved from the very beginning, he said.
There's been concern that what we are doing may be a barrier or a competing process to yours; I'm here to assure you that's not the case, said Hoehne. He distributed a summary of the goals of Rep. Crapo's Energy and Power Task Force on Energy and Deregulation, Columbia River Power System, and Anadromous Fish Recovery. He noted Randy Hardy had participated in a task force hearing held in Idaho Falls. He concluded by saying Rep. Crapo has a deep interest in these issues and that he is committed to regional control. Kreidler stated that the new Congress needed someone in the House to step up to this role and that Rep. Crapo's voice of moderation on issues in 1995 was "duly noted and appreciated by many of us."
Before getting down to a list of "housekeeping" items, Collins explained that his commitment to the review is six days per month. He introduced Bob Kahn, of Robert D. Kahn & Company, a Mercer Island-based public relations firm. Collins said Kahn would field calls and correspondence for the review, and that Collins would be in daily contact with Kahn.
The committee then considered whether to have designated alternates. Chuck Hedemark of Intermountain Gas Company suggested it might be important to have them, but after a discussion, the group concluded that members are committed to being present whenever possible and that alternates would not be formally designated.
Collins said he asked the Council to make a "chief of staff" available, and that Steve Crow would be that person. He noted that Al Wright had played a "damn helpful" transitional role for the review. Collins added that there is a "staffing process" to be done to add one or two more people besides Council staff to support the review. He asked the audience to let him know if they had ideas on this.
Collins asked the committee how they felt about having a facilitator. Kreidler said the committee meetings may not need one, but there might be a need for one to do some work in between meetings. Ken Canon of Industrial Customers of Northwest Utilities said shuttle diplomacy can be helpful, but maybe it should come later down the road, if it is needed. As far as traditional facilitation during the meetings, I'm looking at that as the chairman's role, he said. Wilcox agreed, noting that the "heavy lifting" will ultimately be done by the governors.
"We're all big kids here," said Jim Davis of Douglas PUD. We have to get to know each other and build relationships--I think a facilitator would be an impediment, he added. Collins said there may be a point where we need that kind of person, but we have a lot of definition to do before we run into "collisions among us." Kreidler suggested laying some groundwork by asking for proposals now so that information would be available if a facilitator is needed. Collins said Crow would follow through on this issue.
On expense reimbursement, Collins said, if you need it, the committee has some money to pay, but the preference is for your group or company to pay expenses. He added that Etchart and Hardy would prepare a budget for the review and run it by him. "If it raises problems, I'll run it by you," Collins told the committee. Etchart pointed out he is trying to convince Council members it's appropriate for the Council to contribute to the review budget since this work postpones some required Power Plan activities. It's not approved yet, but I'll try, he promised.
Collins indicated the committee would meet from 10 to 4 every other Thursday between Jan. 4 and Feb. 29 at the Portland Airport Sheraton. If the hotel is not available, we will meet at BPA, he said. Collins distributed a proposed outline of activities and a schedule.
Because there's a need for common information, he suggested the next meeting (Jan. 18) be a "seminar" featuring presentations on evolving open electric markets in the U.S. We may try to get a FERC representative, he said.
A Plan to 'Break Through the Folklore'What we need to do, said Collins, is "break through the folklore" and "tease out the differences between reality and folklore." We need to understand what's happening and what is and is not controllable. That will enable us to devote our energy to things we can influence, he said.
At the third meeting (Feb. 1), the committee would look at transitions in the electric utility industry in other countries, Collins said, and also transitions to competition in other industries. He envisioned Meeting 4 (Feb. 15) as an open discussion by the committee of the nature and extent of competition in the Northwest electric utility industry. Meeting 5 (Feb. 29) would be devoted to defining the characteristics of an ideal Northwest utility system and the constraints that would be put on such a system.
The idea, said Collins, is to define what an ideal system would look like--what's a perfect outcome? Then the committee would develop an inventory of "significant buts," for example, one might be the need for postage stamp rates. The "buts" could be called transitional issues or impediments, he said.
Noting that the governors will want to put the committee's report out in a public process, Collins suggested a draft report would have to be given to the governors by October 1, so the committee's preliminary decisions on recommendations would need to be made by Sept. 1. The work space is really quite short, he noted, so "we need to have this sized by February 29." Working groups would be determined on Feb. 29 to work during the next six months (March-August), Collins noted.
Etchart described the first phase of the public involvement process to provide public access to the review, obtain public input into defining an ideal Northwest electric utility system, and help the committee determine public values regarding the power system. We have to make a real effort to engage everyone and anyone who is interested and feed that input back into the process, Etchart said. He noted that each state will design and conduct its own process.
Etchart said it is important to make it easy to follow what's going on with the review, suggesting the committee should make easy-to-read proceedings available "on a print basis," and also make a more comprehensive body of information about the review available to the public electronically. The work groups will also allow us to engage people from the outside, Etchart said.
Collins expressed an interest in having reports on steering committee meetings similar to those PNUCC publishes summarizing the proceedings of Council meetings. He said unless there are any objections, we'll go ahead and arrange to have such reports. He also said, I'm interested in getting information about the review up on the Internet. We're negotiating on that and should not have any problem getting it worked out, Etchart noted. What about video conferencing? Bob Gannon of Montana Power asked. Collins said Crow would look into that possibility.
Todd Maddock, Governor Batt's representative, commented that there are lots of stakeholder groups with concerns about the review. Some may think they are not represented on the committee, he said. When the public involvement meetings are held in our respective states, he added, we'll encourage those stakeholders to offer their observations. "The energy of the process will be derived from the energy of those folks," he said.
Golden said he appreciated the emphasis being put on public involvement and noted two challenges: to involve the interests who may have wanted to be at the table, and to raise the general level of awareness of the public and get information to them, which is a bigger challenge. A "y'all come attitude" will get some people, but not all, and we'll have to take the initiative to reach people who don't even know the issues, he recommended. Rick Applegate of Trout Unlimited asked if they have considered using the public affairs work of the Council to help with outreach. Collins replied yes, that would be helpful.
But What Are the 'Buts?'Collins said the outline envisions designing an ideal system, with a series of "buts" that conflict with it--we would be mediating those "buts" against the ideal system. There are a whole lot of decisions involved with those "buts," and that's what would happen between Feb. 29 and Sept. 1, he said.
Walt Pollock of BPA suggested rather than seeing the "buts" as being public purposes, that the ideal system might be designed to include public purposes, and that some of the "buts" might be technical constraints. Canon noted that he liked the idea of using a broad definition such as "electric service industry," rather than using the term "electric utility industry."
Applegate wondered if nonpower obligations could be a feature of an ideal system, or are they "buts?" In either case, we'll need to start a discussion on cross-subsidies and activities that remove power revenues from the system, he said. We need to discuss the extent and kinds of subsidies in the system and the nonpower obligations. I'd like to see them come up early, he added.
We need a more elegant term than "buts," Collins acknowledged, to compare an idealized system "in the clouds" with what's on the ground. To me, the ideal system is inextricable from the public purposes, Golden said. They can be defined broadly, such as benefits on behalf of all the people who live here and use the system, he added.
Waiting until Feb. 29 to decide what we want to fix may be too late, Golden said. I'd like an early sense of what's important to the people around the table--what they need and what they think "is broke," he added. An alternative approach to the review, Collins suggested, would be for everyone at the table to say "what's broke and how to fix it." I agree with K.C., said Al Alexanderson of Portland General--Feb. 15 would be a good time to hear what steering committee members want and need.
I'm impatient about waiting until the 29th to see if there's a consensus about our goal and what we're trying to achieve, said Rachel Shimshak of the Renewable Northwest Project. Asked for an example of a goal, she mentioned maintaining a competitive power system, conservation, renewables, fish and wildlife as well as equity among rate classes. Let's look at the term "stakeholder," John Saven of Northwest Requirements Utilities suggested, and allow people to say what they think the significant stakes are. It would help me if I understood their perspective in a general sense before we get to crafting the vision. There's a human dynamic here--we need to understand what makes us tick, he added.
The more committee members can interact and talk among ourselves, the better, said Collins--don't consider that dealing outside the table. So there's a consensus, he continued, that we want to get more meat out of the meeting on the 15th. We can do that, he said. Collins asked for more discussion of Shimshak's suggestion of establishing an overall goal for the committee.
To use a military analogy, I don't want to "overrun our supply lines," Davis said. We're not going to get away from the public purposes in defining an abstract new utility system, he said. I think the approach contained in the outline allows us to brainstorm, he added.
The question is, said Collins, do you want a guiding principle at the outset? It's a little early for that, Alexanderson responded, adding, I want the opportunity to try to persuade others. Canon said, we could agree on a very broad goal, but we'd each have our caveats, and I'm not sure it would be meaningful. Shimshak said, it's like when you write a paper, you need a title and opening paragraph--at some early point, we should establish principles that we should check on all the way through the process.
What do you want to see on the 15th to enable you to say what you would like to see in an ideal system on the 29th? asked Collins. Kreidler suggested the debate could be narrowed by presenting ideas, but without specifics. Pollock commented, it would be interesting to look at an idea piece from each of us on what we're going to do on the 29th--how we're going to frame the product. We could talk about these on the 15th--I have a hunch we'd each have a different perspective, he added.
Should We Build A Castle in the Sky?There are two approaches, said Wilcox. One is to define what's broken, and one is to "paint the castle in the sky." We could try to define the ideal system on the 15th, and do the "buts" on the 29th, he suggested. Is the "castle in the sky" a useful approach? inquired Collins. It is, replied Bill Drummond of Western Montana Electric G&T--it enables us to start with a clean slate. It's better to start with the elements of an ideal--we can keep that vision in mind and learn from it as we go on, he said.
I'm unsettled by the concept of coming up with an ideal, commented Gary Zarker of Seattle City Light. I'm not certain we are that close to a common description of the "castle in the sky"--it may be better to get things out on the table. Designing a "castle in the sky" may be a good place to start, but I'm skeptical, he said. The approach allows us to say, what would we want to create with the assets we have on the ground if we didn't have the institutions and laws that we have? said Canon.
Maybe it's the "values" that we would like to get out of the electric system in the future--maybe we need to identify sets of values that we care about, said Hemmingway. If we don't know what we care about, we'll focus on "what's broke" the whole time, not where we are trying to go, he added.
I don't think trying to fix what's broken is reality, said Gannon. There are some given facts about the reality that will affect devising a new set of institutions, he continued. I endorse understanding the basic facts; they're here, let's deal with them, he said.
Markets are brutal things, commented Collins. My guess is we're going to find out there's more that is inevitable than we'd like to believe, he said. There are things that you can manage and shape, and that's where we should put our energies. We're trying to tease out characteristics of what we'd like to see if we start from bare ground--that may include the public purposes of the Regional Act. If you can do that, then you can judge the constraints against that. There is what's inevitable, what we'd like to see, and what we can control, Collins said. Identifying that would be a lot to try to do on the 15th, he concluded.
"Inevitability" is kind of a raw nerve for me, stated Golden. If we could emerge on the 29th, not with an ideal structure, but with what we want the system to deliver, with what we value highly, then we have a shot at creating a system that can deliver it, he said. On the 29th, I'd like to have a list so we can say we place these values most highly, and these are what we'd like to see the system deliver, he said. The role of the constraints, he continued, is to take the raw "what do we care about" and go from there to fashioning a realistic goal.
What each of us wants to bring to the table is what we want to get out of the electric system, suggested Hemmingway. People should identify what they want out of the system, for example, certainty of supply for small customers or resource diversity. Can we meld all these values, and when they clash, can it be resolved? he said.
So the output could be a set of characteristics with consensus and a set without? asked Collins. And how to resolve the differences and then how to transition from today to there, added Hemmingway.
With the values approach, we'll end up with Section 1 of the Regional Act--it's more realistic to do it the other way, stated Wilcox. "I vote for Roy's scenario," said Jason Eisdorfer of the Citizen's Utility Board of Oregon. I need to know what it is that everyone wants--it's not just "mouthing the Act," it's something more honest than that, he added.
We've got a difference of opinion, said Collins. I will work with Brett and Roy to try to define the two approaches and see if there's that big a difference. I'll try to put together something that carefully describes what we'll do at the next meetings; essentially, "we need to find a way to get into this thing," he said. And we want to make sure that what we do dovetails with the governors' public processes, he added.
What about liaison with the tribes? asked Drummond. We've invited the tribes to design a way to relate to this on a government-to-government basis, just like the federal government is doing, replied Hemmingway. Each state is meeting with tribes, and we're working to have an adequate relationship, he said.
We've overlooked our Canadian friends, Etchart noted. We should establish a relationship and make them feel welcome, he added. Collins asked Etchart to work on doing that.
I'm really excited about this process, said Golden, as the meeting wound up. "It's our best shot as a region." This summer, he suggested, we might want to go on a rafting trip together. It's not the sum of all the people we represent, he commented, it's bigger than that--to do a good job will require getting to know each other and being willing to take risks, he suggested.
We've got to get onto new ground, Collins agreed. Right now, we've no idea where it lies, but if we aren't on new ground at the end, we will have failed. But I'm optimistic, he added.
So we've adopted the proposal before us and will see that we get "more meat" into the meeting on the 15th, based on Brett's and Roy's comments, Collins summed up.
Etchart noted that there's some concern in the region about whether the Council has "clean hands" in providing support to the review. We need to know if this is a problem, and if it is, people should let us know us soon, he said.
Collins bade good-bye to "Spaceship Regional Review."