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Regional Review

Comprehensive Energy Review
Steering Committee

Thursday, October 17, 1996

Red Lion Lloyd Center, Portland, Oregon

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THE COMPREHENSIVE ENERGY REVIEW steering committee took comments on its draft recommendations for restructuring the Northwest energy system from panels representing different interests. All committee members, except Sharon Nelson and Bob Gannon, were present. The audience averaged about 50.

Next Meeting: October 31 in Portland (Red Lion Lloyd Center.)

In This Issue:

Opening Remarks
"Work Miracles," Urges DeFazio
Tribal Perspective: Recommendations Far Short of the Mark
Hardy Reacts to the Proposal
Competition and Public Purposes Comments
Power Marketing and Transmission Comments
In Closing

OPENING REMARKS: Opening Remarks

Steering committee chair Chuck Collins pointed out that the public hearing process will end on November 13 in Spokane and that there are less than two months to go in the committee's life. One theme I've been picking up, he said, is that whatever we do in the end, we should be candid. We should not pretend there is a consensus if there is not. We're here to identify our differences, not to celebrate them, Collins quipped. He introduced Jim Curtis of the Bonneville Power Administration, who has taken Walt Pollock's place on the committee.

"Work Miracles," Urges DeFazio

Congressman Peter DeFazio reiterated what he told the committee in July: "No one should assume the status quo is a viable option." I'm dubious about the minimalist approach, he said. We can't stand on the sidelines of the coming legislative battles and hope we'll be overlooked, DeFazio stated.

I've sat in hearings with liberals in Congress who are proposing sales of the power marketing administrations (PMAs) and making such sales viable by exempting them from environmental laws, he noted. We'll attempt to educate them, but we won't be overlooked in the upcoming battles, DeFazio said.

November 5 is an important day, he stated. If Republicans maintain control of the House, John Doolittle of California will chair the subcommittee with jurisdiction over BPA. He wants to sell the PMAs and wants no subsidies to irrigators, DeFazio noted. If Democrats take the House, I will chair the subcommittee of jurisdiction, he added. Even though there may be some who aren't happy about that, the committee would have a Northwest-friendly bent under my guidance, DeFazio stated.

We can get allies in the Administration if we put forward a reasonable proposal, he suggested. The key is not increasing costs and risks to the U.S. Treasury and showing that we'll carry a fair burden of costs and live up to our environmental responsibilities, DeFazio stated.

Several bills on restructuring have been introduced, but it's not a done deal that we will roll a major retail wheeling mandate through Congress, he said. There are questions that have to be addressed with respect to BPA and the PMAs, but I know that if we leave a vacuum, it will be filled by other forces, DeFazio said.

Any real separation of BPA's transmission and generation will require legislation, he noted. It's hard to see how we can agree on separation without resolving issues such as stranded cost recovery and funding for public purposes. I doubt that any administration would support separation without a mechanism to protect the Treasury against assuming the region's nuclear debts, DeFazio said.

The allocation scheme requires legislation, as does resale of federal power, continued DeFazio. A new agreement with the Treasury on salmon recovery cost allocation will also require legislation. There are significant legislative hurdles no matter who controls Congress or the White House, DeFazio observed.

In July, I advised you not to focus on dividing up the benefits of the federal system, but to focus on the matter of real or potential liabilities to the U.S. taxpayer, said DeFazio. To keep the benefits in the Northwest, we need to prove we are responsibly putting in a mechanism to pay for nuclear debt and other liabilities, he stated. Your proposal is strong on sharing the benefits within the region, but not on dealing with the liabilities, DeFazio said. "I think that will set off alarm bells," he added.

More Work on Stranded Costs Needed

The report doesn't give cognizance to the possibility that BPA's offerings won't be fully subscribed, said DeFazio. If the system is not fully subscribed, there is no fallback for equitable sharing of stranded costs throughout the region, he said. The stranded cost issue needs more attention and discussion, DeFazio advised.

He noted that California dealt with stranded costs by giving 100 percent cost recovery, and that the legislature put a guaranteed rate reduction for residential and small business customers on the state's credit card by calling for a $5 billion to $10 billion bond issue. DeFazio termed that "a bizarre construct" for dealing with the problem. Our stranded cost problem is more difficult than in other states because we have to account to ratepayers, the Treasury, and the Congress, he suggested.

I have concerns about the report's conservation funding proposal, said DeFazio. I think conservation has been a great benefit to the Northwest and continues to be viable. I don't think a 3 percent voluntary charge will be adequate, he stated. I could be mollified if all public utilities would make firm commitments in their BPA contracts for such expenditures by November 13. If not, the steering committee must come up with an alternative funding mechanism, DeFazio said.

As for fish, I've argued that there is a federal responsibility that goes beyond this region, he stated. But I'm not sure we can sell a limit of 50 percent exposure to the Treasury, when they might perceive a downside of 50 percent and an upside of only 20 percent. It needs dealing with, he said.

"We've come full circle," observed DeFazio. Your proposal requires significant and controversial changes to the Regional Act and its underlying statutes. You can't avoid that, he said. We'll have to come together as a region. The minimalist approach may not work -- we'll need to put a significant proposal on the table, and I need to be able to sell it to my debt-conscious colleagues, DeFazio stated. "I urge you to work miracles," he concluded.

DeFazio Q&As

Do we need to make a better case on how our proposal balances risks and benefits? asked Bill Drummond. I'm more concerned about saying we expect BPA will be fully subscribed and that there won't be stranded costs, replied DeFazio. If we don't have a backup on stranded costs, OMB will say "wait a minute" -- you have debt and a shrinking customer base to service it, he predicted. You also need to give more thought to the fish cost-sharing percentages, or maybe you need to explain it more, DeFazio said.

To what extent can the region come to Washington, D.C. and talk about alternative scenarios? We can paint a fully subscribed system, and there are other scenarios, such as a do-nothing approach. Do we have some flexibility with regard to Treasury and working with the delegation? asked John Saven. That's an excellent line of discussion, replied DeFazio. If we move legislation, people will learn the status quo is not viable, he added. The question of where BPA is going to come down is delicate, and we have to deal with it, said DeFazio. You can be the messengers, and we can provide some credibility behind the message, he stated.

In Idaho, we have encountered concerns about how state and local governments will retain their discretion with respect to retail competition. To what extent do you see the opportunity to retain local control? asked Todd Maddock. The Shafer bill mandates a date certain by which all states will have retail wheeling in place, responded DeFazio, adding, "he'll have a hard time with that." We may be able to hold off such mandates. There are states' rights people on both sides of the aisle, he noted.

The Markey bill gives more authority to state PUCs, said DeFazio. With California's move to retail wheeling, some think it must be inevitable, but as people look at retail choice more carefully, and things like the California bond issue and the New Hampshire experiment, there are concerns out there, he said. And as more members of Congress hear them, there will be more attention to state concerns, DeFazio predicted. It's excellent to allow a few states to go forward and be the experiments, he said.

How do you assess the Northeast and Midwest legislative push now that the Northwest's legislative clout has diminished? And if that push is rebuffed and no comprehensive regional solution is proposed, how do you think Northwest issues will do? asked K.C. Golden. I've pointed out that liberal members of Congress from the Northeast can't stand the heat on proposals to sell the PMAs that waive environmental protections, replied DeFazio. He predicted "tortured maneuverings" to sell the PMAs, but he noted that if one can say billions of dollars would be gained by PMA sales, that's a problem. Our side is defensible, said DeFazio, but "when they gang up on us, we'll need allies," he added.

If there is no consensus from this group, do all the issues roll into the legislative debate on restructuring? asked Golden. There are jurisdictional questions, said DeFazio. There have to be changes with respect to the role of BPA -- its relation to FERC Order 888, for example -- there are some major things that Congress has to deal with, no matter what happens, he said.

Are you concerned that repayment reform initiatives will resurface if people find that privatization of BPA is not a viable option? asked Ken Canon. BPA has done refinancings and gone to market rates of interest -- it's done, and we're less exposed, DeFazio replied. The Northeast-Midwest bill exempts BPA, he pointed out, but he added, some members want BPA included.

Could you suggest a rough number to advance to the federal government for fish risk? asked Rick Applegate. If we carry out the Independent Scientific Group's recommendations, the costs are estimated to be in the hundreds of millions, he added. Is it realistic to ask Treasury for $50 million, $100 million, or does it depend on a variety of factors? inquired Applegate. DeFazio suggested looking at the formula for sharing between the region and the federal government for Corps projects.

"There is no tide that has shifted more among this bunch" than the issue of whether legislation is required, observed Collins. You haven't changed in what you're telling us from what you said in July, he told DeFazio. To what extent does the delegation share your sentiments? Collins asked. If we sat down as a delegation and made the arguments we've made today, most in the delegation would say "yes, we need to do something," DeFazio replied. Even the minimalist approach opens the legislative door, and that raises the stranded cost and fish issues, he suggested.

We should develop a comprehensive approach, and then if we have to drop back to a minimalist approach, that's okay, DeFazio added. Your charge is still there. It's not to do or die, but it is to be a bulwark for the region against unknown changes in the next couple of years, he said.

Tribal Perspective: Recommendations Far Short of the Mark

Collins noted that some members of the tribal panel had been unable to attend. Mary Verner, natural resources director for the Spokane Tribes, said membership on the steering committee has been imbalanced from the beginning and that the tribes haven't been involved. We have not been afforded the opportunity for meaningful participation, she said. Only a brief slot has been allotted to us today, Verner noted, adding, it's unacceptable treatment for tribal governments.

Much of the committee's effort has been misguided to strategies that won't fly, Verner said. The draft recommendations fall far short of the mark. They are not a sound basis for the future of BPA and not a suitable road map for amending the Regional Power Act, she commented. The subscription process would set up a restraint of trade for federal power purchases, with the industry dominated by a handful of firms that will make a lot of money, while the rest of the market will be "sick," she said.

Treatment of fish and wildlife costs as a risk to the system perpetuates a dubious accounting system, Verner stated. She suggested trying to identify costs to the system of such uses as flood control. The authority of the customer advisory committee will encroach on the authority of the sovereigns, she said.

The transmission system should be used to accomplish public purposes, not for the benefit of a few, Verner stated. The transmission recommendations are seriously flawed, she added. Verner suggested the committee revisit consideration of access charges and exit charges. The transmission system should be used as a tollgate to collect charges for public purposes, she said.

Our concerns go beyond salmon, Verner stated. They include resident fish and wildlife, sovereignty, a reliable and economic electricity system for the region, and cultural resources, which are damaged every day by the hydro system, she said.

The draft report falls far short of a regional consensus document, Verner said. It doesn't address contingencies such as what if utilities don't voluntarily provide funding for low-income needs, what if there is significant undersubscription, or what if "utility giants outside the region ambush our plans?" We and the other tribes are ready to work on developing a new proposal, she stated.

Hardy Reacts to the Proposal

BPA Administrator Randy Hardy said the agency supports the framework of the draft recommendations and subscribes to the report's philosophy to secure the benefits of the Columbia Basin system for the Northwest into the future. BPA would like to see the recommendations grant the agency marketing flexibility "at the margin" and some stranded cost recovery capability, he noted. While we have suggestions, Hardy said, "this is not a subterfuge for BPA walking in at the 11th hour and taking over."

I'm sobered by the legislative risks we have before us, said Hardy. To make this work will require an unprecedented amount of cooperation among customer groups like I have not seen in the 20 years I've been in this business, he said. I'm not saying we can't do it, but if the subscription process is anything like tiered rates, BPA will end up a loser, Hardy stated. He added that his remarks were aimed at clarifying which parts of the report could be accomplished administratively and which would require legislation.

With respect to an Independent Grid Operator (IGO), my preference is for legislative separation of BPA into two entities, but this has to be weighed against the legislative risks, Hardy said. If we settle for administrative separation, it is manageable, but not without complications, he stated. As for BPA's participation in the IndeGO, or some other IGO, we could negotiate up front and agree how to do some things, but we can't delegate policymaking to a non-federal entity, Hardy pointed out. You would end up with a looser knit organization that will sacrifice coordination benefits and maybe reliability benefits, compared to what you would have from a strong IGO, he said.

Whoever the IGO is, dispatching and scheduling functions have to go together, or "we're in deep weeds" with reliability problems, Hardy asserted. It does not appear that is happening now, he said.

Hardy noted four concerns about the proposed subscription process:

1) It is doubtful we could have 30-year contracts without legislation, he said.

2) The preference language raises several issues.

3) The five-year callback for certain sales creates a class of customers that can't have 20-year contracts, creating an equity problem, he noted.

4) Limitations on resale of power.

These are technical issues, but they are at the heart of the matter in seeing whether the proposal would work, Hardy said. Of the four issues, he stated that numbers 1 and 3 are not "finessable" and would require legislation.

With respect to treatment of fish cost risk, Hardy stated that while there are a lot of creative things we can do, it is not possible for Treasury to forgive debt without legislation. If the arrangement were attractive to the federal taxpayer, Treasury could administratively "share" increased costs by reimbursing BPA for fish costs or by postponing BPA's annual repayment, he said.

Hardy outlined a four-phase subscription process that BPA could undertake without legislation:

1) Regional loads of public systems, with contracts of five or 20 years.

2) DSI and IOU residential and small farm loads, with contracts of five or 20 years. As long as the Federal Base System (FBS) is not fully subscribed, it will work, he said. But as soon as BPA power becomes attractive, you'd have IOUs with a superior in-lieu right over the DSIs; either the IOUs would have to waive that, or the DSIs would get lesser priority. It's a clear issue that's out there, Hardy said.

3) Other regional loads, including IOU commercial/industrial, with five-year contracts.

4) Extraregional loads, with a seven-year limit on duration of sales. I recommend BPA sell this power at market rates, said Hardy.

BPA's Four Modifications

Hardy identified four areas of the proposal that need modification:

1) Marketing flexibility at the margin. BPA needs this to show Treasury we can still pay our bills, he said. We need to be able to enhance the value of nonfirm sales by making short-term system purchases that facilitate marketing of the existing federal resource base, Hardy stated. BPA needs to be able to price unbundled products at market, and surplus power left unsubscribed and nonfirm power should also be sold at market prices, he said.

2) Stranded cost protection. If things don't turn out as we hope and BPA costs are still above margin, we have to demonstrate the region isn't getting all the benefits and Treasury taking all the costs and risks, said Hardy. BPA needs stranded cost recovery comparable to the protection that regional IOUs receive, he stated. 3) Sliding-scale option fee. Hardy suggested a simpler subscription process that gives priority within each customer class to long-term contracts, reinforced by a sliding-scale option fee, might be more constructive than setting "a hard-and-fast target level" of long-term subscriptions. He recommended front-end loading the options fee, so that if you go short, you pay a higher fee, and if you go long, you don't pay anything. You "let people self-select," Hardy said.

4) Public benefits dividend. In addition to the "20-percent kicker" to the Treasury if conditions are good, Hardy suggested a dividend -- that after BPA builds its reserves over an amount, such as $800 million, a mechanism be developed to share the benefits three ways, with Treasury, ratepayers, and additional funding of public purposes. I'm not pushing this, but if it's helpful, it's something we can do, Hardy noted.

In conclusion, Hardy said, we can do a lot administratively, but it's less than optimal, and it depends a lot on regional waiving of rights. It is BPA's objective to give information -- we are not advocating an administrative or a legislative approach, he added.

I've had customers, especially the publics, ask me, how am I better off with this proposal? Hardy said. "You're not" is the answer, but it's the wrong question. The more pertinent question is, he suggested, will I be better off five years from now than I would be without it?

The risk, Hardy said, is not so much with BPA privatization, given the WPPSS debt, but it is going to Congress and having Congress decide to auction off the FCRPS to pay down the national debt. It will be the Federal Communications Commission's auction all over again -- that's "a clear and present danger" that the WPPSS debt can't prevent, he stated. In closing, I want to ask the governors' representatives to think about what's next after December 12 and what BPA's role will be, said Hardy.

Q&As for Hardy

Absent the regional review and absent legislation, I'd like to know if you think the next round of what BPA would do would be less contentious and easier, said Saven. How do you view that versus doing "this"? he asked. It's probably equally contentious, but maybe less damaging to our core customer base, and that's what I'm concerned about, Hardy replied. I have visions of tiered rates all over again, he added. If there were not a regional review, we'd probably have to face it anyway since we have a "huge cliff problem" in 2001 when "the coach turns back into a pumpkin," Hardy said. We'd be talking with the publics and the DSIs anyway soon, he noted.

You said you want contingent stranded cost protection like the IOUs get -- what if they get 50 percent? asked Canon. Then that's what we get, Hardy replied. I'm not seeking 100 percent recovery; my goal is to seek comparability. I'm looking for recognition of the issue -- "two sentences could do the trick," he said.

Does your view assume or advocate the insulation of transmission from fish and wildlife costs? asked Applegate. It could go either way, and there are different issues, depending on which way it goes, Hardy answered. Stranded costs might include WPPSS debt or fish costs, and if you assume the transmission system is an appropriate vehicle to recover such costs, what you can do as a practical matter is very limited. If it's more than half a mill, it severely distorts the market, Hardy said. "I'm an agnostic at this point," he added.

What customer groups would your stranded cost approach apply to? asked Roy Hemmingway. It depends how you do it, said Hardy, adding, the publics are probably the most exposed.

I appreciate the sliding-scale option you mentioned, stated Chuck Hedemark. What are the pitfalls of our looking again at whether there should be 20 or 30-year subscriptions? he asked. The Bonneville Project Act is pretty specific on 20 years, Hardy responded. You could have a limited legislative package aimed at allowing 30-year contracts, but you would probably end up putting more on the table, he said. It's a question the committee and the governors' reps need to focus on. We spent three weeks trying to figure out how to get around the 20-year language in the Project Act and had trouble finding anything, Hardy noted.

How will BPA control costs if there is no legislation? asked Brett Wilcox. As long as the market is below our costs, it's pretty self-regulating, replied Hardy. The problem is when the market is above costs. The customer board and the arbitration process have some significant legislation problems associated with them, he added. I'm not optimistic you can get the degree of control that will make a difference, Hardy said. You might be able to use some of the incentives for cost control developed in the tiered rates discussions, he suggested.

Competition and Public Purposes Comments

Panel 1

Jim Litchfield, Consultant, Investor-Owned Utilities: The IOUs generally support all the public purposes goals you've enumerated, he said. The 3 percent number needs a broader validation with the general public, and the method for collecting the dollars must be market-neutral, Litchfield stated. We think this will take regionally consistent state legislation, he added.

The voluntary aspects of your proposal won't work in a competitive world where promises can too quickly be obviated by the marketplace, Litchfield suggested. It's not a stable way to deal with the issue. Decentralized acquisition of renewable resources would be better than your approach, Litchfield stated. He recommended using the same amount of money, but as a billing credit. Litchfield said renewables under contract should be in the financial package.

As for customer choice, the draft is vague about who should do what, said Litchfield. It's like a weather forecast -- it advises you to take an umbrella because something is going to happen, but you don't know what. We think you should recommend that each state pass legislation to have retail choice by 2001, he said. We agree that divestiture is not necessary and that there should be a fair opportunity to recover legitimate, non-mitigable stranded investments, Litchfield concluded.

John Carr, Direct Service Industries: Customer choice is the foundation for the future; it's inevitable, and we suggest you endorse it as good public policy, he said. There are some tough transition issues, Carr acknowledged, and distribution-level issues are more important than transmission-level issues. There needs to be more attention in the report to how to get to customer choice in a short period of time, he added. We recommend that the final report endorse customer choice and competition as a highly desirable end-state -- let's strive for consensus and put the governors in a leadership role, Carr urged.

As for public purposes, we support energy efficiency and a local voluntary approach to conservation and renewables, Carr said. We recommend relying on the competitive market to the maximum extent possible. We support the concept of a small, limited-duration market transformation activity, he added. If the region decides to extend it beyond 2001, we need to consider changing the way it is funded, Carr said. Funding of non-economic renewables takes away scarce capital, he pointed out. We need to recognize the valuable renewable hydro resource we have in the region, Carr stated.

The bottom line is we need a balance between the benefits of customer choice and their attendant lower rates, on the one hand, and the funding of public purposes, which will drive rates up and take away customer choice, at least in the short run, on the other, Carr said.

Ralph Cavanagh, Natural Resources Defense Council: I want to reinforce the view that the status quo is not an option and that we can't afford to have this effort fail, he said. Cavanagh read an excerpt from a letter NRDC's Washington, D.C. office received from the Northeast/Midwest Congressional Coalition. The letter noted the introduction of legislation to auction off the assets of the PMAs and said that the PMAs distort the marketplace and that their subsidized electricity encourages waste.

The industry is on the verge of seismic change, said Cavanagh. If we don't emerge with recommendations, we are doomed to something much worse, written by people who know nothing about the Northwest, he warned. When you are done with your report, I believe we will have the most promising energy efficiency initiative under way, Cavanagh said, adding, you're doing good you don't even know about.

My constituency was disappointed with the 3 percent number in the report, Cavanagh stated. We expected the Northwest to be a leader, compared to other states involved in restructuring, he said.

Cavanagh noted the NRDC's and Northwest Conservation Act Coalition's skepticism about the voluntary approach to conservation, and he called on every utility in the region to make a commitment to conservation by November 13. If that doesn't happen, I hope the review will recommend a minimum standard, he said.

With respect to renewables, Cavanagh cited a recent NRDC study which looked at the financial exposure of the utility industry to future carbon dioxide regulation. It pointed to a 20-30 mill/kilowatt-hour charge for coal-fired power plants, compared to the half of one mill you've proposed for renewables, he said.

Cavanagh urged the committee to look again at the issue of low-income services and to pick one of the two approaches described in the report. He suggested that the Regional Technical Forum be constituted as a technical advisory committee to the Northwest Power Planning Council. Cavanagh summed up his comments by saying, "we're not going to let you fail."

Steve Klein, Tacoma City Light: Tacoma recently restructured along strategic business lines to be consistent with FERC Order 888, he noted. We've given market access to our larger customers, published an open-access transmission tariff, joined the IndeGO, and are unbundling new products and services, Klein said. We believe more choice and competition, done properly, will be good for all customers and for public power, he said.

It's too early in the transition for some of the recommendations in the public purposes section of the report, Klein suggested. The centralized renewables program funded by customers to develop projects that produce power that costs two to five times the market "sounds like a boondoggle," he said. Green power marketing is a better way to support renewables, Klein stated. The recommended voluntary commitment to public purposes is good, he said, adding, a legislative mandate at the state or regional level would violate the local control principle, and we would oppose it.

Klein said the proposal to collect a public purposes tariff in a "competitively neutral" manner is a laudable goal, but he pointed out energy is a national market and that businesses in Tacoma that use electricity as a key raw material compete with businesses in Texas and Florida. Klein stated that Tacoma City Light's 1997-98 funding for public purposes meets or exceeds the goals in the committee's draft report.

As for competition, the dangers of cost shifts noted in the report are valid concerns, Klein said. There's a public impression that all efforts that give market access to large customers will come at the expense of small customers, he noted.

To conclude the distribution function must be separated from the electric service function ignores the differences between IOUs and consumer-owned utilities and jeopardizes the market's competitive health, Klein said. Consumer-owned utilities have historically been aggregators, often serving small or isolated customers ignored by the marketplace, he noted. A forced separation which may disallow or encumber a public utility's ability to aggregate load is a violation of local control, Klein stated.

He expressed concern about the problem customer choice will present with respect to restrictions on the private use of assets, such as transmission or generation facilities, financed by tax-exempt bonds. Until the issue is resolved, public power utilities face a "Catch 22" of mandated competition and open access, with federal tax statutes that restrict competition through private-use limitations, Klein said.

Tacoma is prepared for open competition by 2001, he stated. Tacoma has indeed "stumbled onto" some of our new ideas and products, Klein said, but he added, keep in mind that you can only stumble if you're moving.

Competition and Public Purposes Panel 1 - Q&As

Rachel Shimshak asked Carr if he had an opinion on how to impose a public purposes charge. He said he hadn't given thought to how to collect it after 2001. Maybe it should be voluntary after that, Carr suggested.

Canon asked Cavanagh about the conditions for imposing a minimum standard for public purposes. We need all of the IOUs and the majority of the public load by November 13, replied Cavanagh. If any of the significant market players stays out to gain an advantage, we're dead, he added. That doesn't mean every single distribution company, Cavanagh said, adding, generators are of the greatest concern.

What's your solution if the voluntary response is insufficient? Drummond asked Cavanagh. Cavanagh mentioned legislation in Rhode Island and California which sets a minimum investment standard so that "no one gets an advantage by abrogating this responsibility." If everyone steps up, a mandatory effort will be held in abeyance for a while, he added.

Mike Kreidler asked Klein what he thinks public power will do about making a voluntary commitment. And if there were to be a voluntary commitment, would there be an objection to making it mandatory through legislation? Kreidler inquired. The Public Power Council supports the voluntary commitment idea, Klein replied. I mentioned what Tacoma is doing, and I'm sure Seattle City Light is meeting or exceeding the goals, he said. I feel positive utilities will come through in that area, Klein added. If there is going to be a mandate, my preference is that it be national, he said.

Golden asked Carr about Klein's comment that separation of the distribution function is not necessary. There will need to be more of a split; I'm not driven to the idea it has to be spun off, Carr answered. There's been a lot of work done on transmission, and it's led to the creation of some things. That's the kind of effort we'll be seeing for the distribution level in the next few years, he predicted.

What's the range of funding public purposes you said we are in the middle of? Jim Davis asked Cavanagh. In terms of mills per kilowatt-hour, you're at one to one and one-half; California is at three mills, Massachusetts at four, and Rhode Island at 2.3, he replied.

Competition and Public Purposes Comments - Panel 2

Tim Stearns, Save Our Wild Salmon Coalition: Like Mark Twain's death, the reports of consensus on these recommendations have been exaggerated, he said. If I were to give you a grade on what you've done, it would be an incomplete, Stearns said. The report doesn't add up to what I would like to see, a world in which we are paying our costs and using resources as efficiently as possible, where we are investing in the future, implementing sound biological salmon recovery, and protecting the least fortunate, he stated.

We would oppose this proposal in its present form, and we challenge you to modify it, said Stearns. He stated that the Corps of Engineers is proposing to spend $175 million to modify the lower Snake projects, while others in the region are studying their removal. That $175 million could be invested in fixing John Day reservoir as the ISG recommends, said Stearns. This proposal doesn't address the misallocation of money, he added.

As for an administrative vs. legislative solution, you can do a lot administratively, but you haven't, Stearns stated. He referred to the "buzz words," "voluntary," "choice," and "local control." Do we really want a voluntary splitting of the transmission system? Can each of us have a choice? he asked.

The proposal as written doesn't end the uncertainty, and it doesn't fully integrate fish and energy, Stearns said. The major issues of governance, funding, and moving toward one fish and wildlife plan are not addressed, he continued. You can't go to Congress until you address these things one way or another, Stearns said.

The report doesn't address subsidies or the stranded debt problem, Stearns noted. The proposal to separate generation and transmission is not tenable, he added. You have put together something that doesn't put us in a better position to satisfy public purposes, and it doesn't bring us together, Stearns concluded.

Alice Schlenker, League of Oregon Cities: Cities and counties are aware that open access will not guarantee a fair competitive marketplace and that competitive markets do not generally achieve the most appropriate public policy goals, she said. With some of the lowest rates in the nation and sound environmental policies, why should we rush into deregulation and restructuring? she asked.

While some large customers may obtain bargain prices, much of the savings and greater choice cited by competition enthusiasts may not reach most consumers, Schlenker suggested. Smaller and rural communities must be assured of reliable service and equitable access at reasonable rates, she said.

She noted many cities have franchise agreements with electric utilities for the use of public rights-of-way, and many cities collect fees and taxes from utilities. Oregon cities collect franchise fees from electric and gas utilities, and in many cases, these fees are a significant portion of a city's general fund. Retail wheeling, she said, will result in substantial revenue losses, and the losses will be unpredictable as electric utility customers may or may not choose alternate suppliers of power.

This issue, Schlenker said, is a major one that relates to one of the governors' goals, the equitable distribution of costs and benefits. Cities' management of rights-of-way and their authority to receive compensation for the use of rights-of-way must be components of any restructuring scheme put forth, she said. Local governments' ability to serve as aggregators should not be limited or restricted, Schlenker stated.

She noted local governments have been leaders in implementing conservation programs and urged that stable funding for conservation be provided. She recommended the report describe how stable funding would be achieved and how funding for public purposes would be obtained from all power suppliers. We support BPA's continued presence in conservation, Schlenker said.

John Glascock, American Association of Retired Persons: We feel it is terribly important that the steering committee reach a consensus so the Northwest is united in its appearance before Congress, he said. We think the report's competition proposal favors large industrial and commercial users, not residential and small business consumers, stated Glascock. In California and Massachusetts where a transition to retail access is proceeding, the restructuring plans begin with a 10 percent rate reduction for residential consumers, and there is no such guaranteed rate reduction in this plan, he noted. Stranded investments should be shared fairly among stockholders and all customers contributing to the need for plant capacity, Glascock said.

The universal service portion of the report is "a disgrace" and must be changed, he stated. It essentially eliminates utility costs for rate assistance programs for those on low and fixed incomes. This draft simply will not pass muster if the most vulnerable people on the Northwest energy system are told not only that they are not guaranteed benefits from restructuring, but their safety net is guaranteed to go away, Glascock asserted. He urged the committee to guarantee universal service by mandating a collection mechanism.

Glascock said residential and small farm customers of IOUs must have access to BPA contracts before the DSIs, and that access to the BPA system should be direct and must not pass through any privately owned, vertically integrated utility. The proposal must address the demise of the residential exchange and the associated "significant rate hikes for substantial populations in Oregon, Washington, and Idaho," he said.

The voluntary public purposes funding mechanism will not stand the competitive strains of the market, Glascock stated. He urged a mandatory collection mechanism and said the committee should reject the arbitrary statutory cap on regional investments in conservation, renewable energy, and low-income weatherization.

Dick Tyler, Weyerhaeuser Company: You've defined the questions, and many of your recommendations are innovative, he said. Electric power is an extremely important component in many of our business units, and until the recent past has provided a competitive edge for industry in the Northwest, Tyler said. Weyerhaeuser believes that all customers should be able to choose electricity power suppliers and products in a free and open market. Even smaller customers are beginning to see the benefits of competition, he noted.

Weyerhaeuser endorses the goal of a competitive market driven by consumer choice, Tyler said. Our significant difference with the report is in timing -- by 2001 is far too late, he said. Some large consumers are stranded customers of utilities who choose not to participate. Stranded customers can't afford to live with this disadvantage for another five years, Tyler stated. Delaying the process until 2001 will put this region well behind the rest of the nation and many other countries, he said.

Weyerhaeuser agrees with the need for standardized and unbundled billing information and the development of voluntary green power marketing programs, Tyler said. If stranded costs are a problem, utilities should be given a fair opportunity to recover them. Costs should be determined on a case-by-case basis and equitably apportioned to utility customers and shareholders, he said. The transition period should be as short as possible, Tyler added.

Weyerhaeuser has a long history of implementing renewable forms of energy and cost-effective industrial conservation, Tyler stated. We endorse locally controlled programs for cost-effective conservation on a voluntary basis, he said.

We don't concur with the 3 percent tax on utility revenues to support these special purpose activities in a competitive market, Tyler stated. It doesn't recognize the voluntary programs already in place, he added. The Northwest already has one of the largest renewable resource bases in the world, he said. Weyerhaeuser recommends letting customers decide on appropriate portions of the public purposes proposal they are willing to support over the next 10 years, Tyler said.

Darryll Olsen, Columbia/Snake River Irrigators: I want to focus on the cost allocation at federal projects, specifically irrigation pumping, he said. The committee should recognize that significant efforts were made to review the public purposes costs within the committee's workshop process, and the information was reviewed by Northwest Power Planning Council, BPA, and Reclamation staff and industry representatives, Olsen noted.

He referred to charts that, among other things, show the annual direct net benefits of irrigated agriculture at $1.5 billion, and sport and commercial fisheries at $25 million to $40 million. Olsen noted that irrigation benefits in the Horse Heaven Hills area of Washington are $40-$70 per acre-foot, compared to foregone hydropower costs at John Day/McNary of $5 per acre-foot. Benefits in southern Idaho, Olsen said, were $60 per acre-foot, compared to $30 in hydropower costs above Brownlee Dam.

What this says is there is no net economic loss to society for the use of water for irrigation pumping versus power production, stated Olsen. The committee should not engage the issue of "other public purposes" related to the hydro system -- it is beyond your authority as an advisory body, he said. If the committee elects to engage in a review of other public purposes, through a GAO or Council study, and it is pointed to irrigation, we recommend that it be a comprehensive assessment of all impacts to the river system, including economic benefits and costs, and that it include an investigation of the Council's fish and wildlife program, Olsen said.

Competition and Public Purposes Panel 2 - Q&As

Jason Eisdorfer asked Stearns, since you gave us an "incomplete," could you list the things we need to do to get a passing grade? The committee should make it clear to the governors that they need to make progress on three things, Stearns replied. A governance program that puts tribes, states, and the federal government at the table with full dispute resolution, the power to make decisions on measures, and a funding package, he said. The Administration has "toyed with" the notion of an Executive Order, Stearns noted. You also have to address cost issues like WPPSS, and you have to look at investments in the system and move to make uses like navigation and irrigation pay their fair share. They are legitimate public purposes, but they don't deserve a blank check, he said.

What happens to benefits if the $3 million navigation subsidy goes to zero? If the subsidies go away, does the benefit go to zero? Applegate asked Olsen. No, replied Olsen, you would need to calculate what it would be. Applegate suggested that he make those calculations.

Drummond asked Glascock why he said the proposal is "disgraceful" with respect to low-income services. The problem is that it is voluntary; it needs more certainty, Glascock replied.

Golden asked Schlenker if there is a "fix" beyond general language for the problem with franchise fees. We're concerned about the domino effect once the gate is opened of not paying franchise fees, she replied, adding, we'll forward our ideas to you.

Applegate asked Stearns whether the governance matter needs to be resolved by a forum other than the committee. You can't come up with an energy solution without a fish solution -- you have to resolve the huge uncertainty, Stearns answered. You can't solve it at this table -- the Administration has to step up to the bar and do it, he added.

Power Marketing and Transmission Comments

Panel 1

Dick Tyler, Weyerhaeuser Company: Weyerhaeuser supports a mechanism to retain the benefits in the region over the long term, but 30-year subscriptions may not be in the best interest of many customers, he said. It is not practical to expect utilities to forecast requirements out 30 years, especially when their customers will be making separate choices, Tyler noted. Only shorter, less than 10-year, non-renewable agreements should be offered to out-of-region customers, he recommended.

Tyler suggested renewable subscriptions of shorter terms, such as five or 10 years, with no option fee, be offered. Option fees for shorter term subscriptions may be an unjustifiable expense for a large class of BPA customers, he said.

We agree that BPA shouldn't acquire new resources to serve load growth, except on a bilateral contract basis, and we encourage BPA to downsize and control costs, he said. BPA's proposed Business Services endeavor is "questionable," Tyler added.

We agree with the transmission recommendations in the report, he stated, noting that all customers expect safety, reliability, and efficiency. Assuming BPA's marketing and transmission functions are separated, we would support BPA as the IGO for the region, but the interests of all parties should be represented through an IGO governing board, he said. Fish and wildlife costs are not appropriate transmission costs, Tyler said.

Weyerhaeuser supports replacing the Northwest Power Planning Council with a new body that has one representative, not two, appointed by the governors, said Tyler. It would be underwritten by all who participate in the Northwest power market, not just BPA, he added.

Don Clayhold, Benton County PUD: He said he was "not enthralled" with the recommendations. The political climate is such that we should not take initiatives back to Congress -- it's easier to defend, advised Clayhold. The report's recommendations "tear at the fabric" of preference, he asserted.

Local control is the essence of public power, Clayhold explained. Without it, why would communities elect to get into the electricity business? he asked. It's not "a buzz word," it's a bottom line for us, Clayhold said.

Recent initiatives and cost-cutting have improved BPA's financial position, put the probability of Treasury repayment at a high level, and lessened the need for a "BPA fix," observed Clayhold. This is not a status quo recommendation, he asserted, but we are fearful of the region's ability to control a legislative program at the federal level. Radical reform is not necessary, and desirable changes can and should be done administratively, he said.

Clayhold cited these objections to the report:

• The loss of public preference as it currently is embodied in federal statutes.

• Requirement for 30-year subscriptions. The allocation method is inflexible, current statutes give us greater flexibility, and the current authority for 20-year contracts is sufficient, Clayhold said.

• Federal power pricing above cost. Many of these issues have national implications, according to Clayhold, and federal power pricing over cost is one of them. It is contrary to current national policy, he said.

• Radical reform when the future is cloudy at best. Our crystal ball didn't work in 1980 with passage of the Regional Act. What makes us think we can forecast out to 2030 any better this time? Clayhold wondered. We need to remain flexible rather than carve these things in stone in legislation, he stated. Breaking apart BPA presents no advantage to public power over the functional separation that is now occurring, he added.

• Breaking apart BPA. No other utility, private or public, will be required to divest its transmission or generation systems. We see no advantage to public power in breaking BPA apart, he said.

• Unclear message about BPA's ability to market federal power. BPA should continue to market surplus power at the wholesale level, Clayhold said. Private utilities are trying to convince the region that BPA shouldn't compete, he said. It's an attempt to grab market power to the detriment of public power, Clayhold stated.

Jim Litchfield, Consultant, Investor-Owned Utilities: The question is, are we better off playing defense or offense? he said. Your draft has an offensive agenda, he noted. The IOUs believe that regionalization is the right direction to head in, Litchfield said. The biggest concern is the risk that could remain to the federal government as a result of short-term subscriptions -- if 50 percent go short-term, we'll need another regional review, he said.

I liked Randy's suggestion about option pricing, Litchfield stated. Options should be priced by the seller, and prices set to compensate for risk caused by short-term contracts. There should be no obvious advantage to go short, he said. There should be broad resale rights as long as benefits remain in the region, and allocations should be based on historical purchases, not on future contract rights, he added.

The IOUs think the subscriber board should have the authority to control costs and operations, that BPA should not enter retail markets except for the DSIs, and that BPA should not develop a competitive energy service business. You're headed in the right direction on transmission, Litchfield said. The IOUs recommend transmission not subsidize generation and that BPA transmission be regulated by FERC in the same way FERC regulates IOUs.

Tim Stearns, Save Our Wild Salmon Coalition: Sitting in for Lori Bodi of American Rivers, he said, fish prefer maximum revenues and fish-friendly operations. Your proposal contains "challenges" for us, he noted. The hydro system is a potent economic actor, Stearns stated, and the question is, can it continue to support certain subsidies and WPPSS costs? If transmission just carries transmission costs, BPA will be a hobbled competitor and a hobbled actor in fish recovery, he stated.

The IGO has to be truly independent and has to operate under some fish protocols, Stearns said. Drawing a comparison with the Council's Protected Areas program, he suggested that the transmission and marketing functions need to provide incentives to "put fish-friendly deals on the wires first."

Fish can't be the backup system, Stearns asserted. We can't repeat The Dalles incident. We must resist the temptation of turning the system on and off, he said.

As for local control, unless it ends at jurisdictional lines, it can't be absolute, said Stearns. We are a region, and local control must include regional accountability, he said.

We need to integrate salmon and energy and invest in the future, not prop up the past, said Stearns. We must deal with the mistakes we've made, and move things from the promises column to the commitments column, he added.

Power Marketing and Transmission Panel 1 - Q&As

What do you mean by "maintaining benefits in the region?" Davis asked Litchfield. That the advantages of the hydro system end up in Northwest consumers' pockets, he replied. It's conceptual -- it can't always be tracked in a competitive market, Litchfield said.

Are the IOUs going to take substantial allocations, long-term or short-term? Saven asked Litchfield. I wish I knew, he replied. It's a problem that needs more work, Litchfield acknowledged, adding, it's unrealistic to assume we can go to Washington, D.C. and not know who'll do what.

If we gave you a clean sheet of paper, would you see any legislative paths that make sense? Wilcox asked Clayhold. I wouldn't do a legislative proposal -- it will swing out of control regardless of what you go back with, he replied. BPA has the flexibility to accommodate what we want to do administratively, Clayhold added. Under the current proposal, no one is getting excited about 30-year, take-or-pay subscriptions, and if the power is sold to California, it will be politically impossible to get it back, he said.

How broad and deep is this feeling in public power? asked Wilcox. The preponderance of us are worried about this, Clayhold responded, but he noted that all of public power hardly ever gets on the same bandwagon.

Curtis asked Litchfield about the comparability of BPA and IOUs with respect to recovery of costs with transmission. He replied that BPA may be obligated to recover fish costs with transmission as a last recourse, while FERC can tell the IOUs not to put those costs on the wires.

If there is a move to auction off the PMAs, doesn't it make sense to define a position to show what the larger Northwest community can embrace? If we withhold judgments, don't we run some risks? Kreidler asked Clayhold. Any threats to the PMAs will get serious opposition on both sides of the aisle across the country, he replied. I don't disagree with "having something in our pocket" if we all agree to it, Clayhold added.

First, I was miffed by public power's rejection, stated Hemmingway. But then I realized that they are behaving like customers. They want BPA to be an option, but not to be required. If customers are going to act like customers, why shouldn't we expect the federal government to act like a seller and sell at market? he asked. BPA is doing the people of the region a disservice by not telling them that politically this relationship won't last, Hemmingway said.

"Thanks for the sermon, Roy," said Clayhold. We are acting like requirements customers. We just signed contracts. We view the FBS as our resource that we have financial equity in, and we intend to hold onto it, he stated. We understand we'll go through a short-term period of struggle. We'll have a balanced portfolio, but we are not abandoning BPA -- we don't intend to turn our back on a system we've paid into all these years, he said.

What operations would the subscriber board control? Applegate asked Litchfield. Not river operations, he replied, adding, it's an area of the draft that is weak. To get people to take 30-year subscriptions, they will want some control, Litchfield said. They'd have nothing to say on fish operations expenditures, he added. Can the line be drawn between the two? asked Applegate. Yes, if you establish the fish obligation -- that ought to be available for fish agencies to use as they see fit, Litchfield said. Applegate asked him to "lay that out for us" in more detail.

Power Marketing and Transmission Comments - Panel 2

Nancy Hirsh, Northwest Conservation Act Coalition: The dangers of not developing a regional solution are real, she said. We need a unified regional plan, but the proposed plan fails to do the job, stated Hirsh. Without improvements, it doesn't meet the governors' charge, she added.

We support the IGO, and a truly independent IGO only comes with separation of transmission from generation, said Hirsh. Transmission revenues must be available to contribute to the BPA fund for fish and wildlife, WPPSS debt, and conservation and renewables, she stated. Transmission owners must not be on the governing board of the IGO, Hirsh said, suggesting the model used in Wisconsin.

The federal power marketing proposal does not solve BPA's revenue uncertainty, Hirsh said. The committee should have addressed the massive subsidies to the aluminum, shipping, and other industries, she said. There needs to be a backup system to collect the WPPSS debt if the system is not fully subscribed, Hirsh stated. The option fee for short-term contracts must be increased and an exit fee established for those with historic load who leave the system or take much less power than their historic load, she said.

We favor advisory committees to give the public access, Hirsh noted. The customer advisory committee's responsibilities and authority should be carefully defined so they don't interfere with fish and wildlife implementation, she recommended.

Northwest residents must have access to the benefits of the hydropower system before the DSIs, Hirsh said. Restructuring must improve the environment and the economy, she added.

Glenn Vanselow, Pacific Northwest Waterways Association: We support the committee's priority to keep the benefits of the federal system in the region, he said. His comments focused on the "cost allocation at federal projects," specifically the question the report poses, "should the GAO be requested to investigate cost allocations among the various purposes of the projects?"

Our answer is no, said Vanselow, for three reasons:

1) Issues relating to other federally authorized purposes are beyond the scope of the committee's charter. He noted that is "precisely what we were told" when our request to participate on the committee was denied.

2) Other federally authorized purposes should not be considered as costs to the power system. The authorizations for the multipurpose projects were based on the combined benefits of all the authorized purposes, and therefore, one purpose does not have precedence over another, he said.

3) Goal 3 of the report, "retain the long-term benefits of the system for the region," is directly counter to requesting the federal government to investigate the benefits and costs of this system, and where and how those benefits and costs should be allocated.

Vanselow urged the committee to remove the section on cost allocation at federal projects from the report.

John Carr, Direct Service Industries: The transmission section is a good job -- you captured the importance of choice, he said. We're not convinced you have to have legislation for BPA to participate in a regional IGO, Carr noted.

The federal power marketing section is "a beginning," Carr said. With the rapid escalation of salmon costs fresh in everyone's mind, cost control is key, he said. The DSIs recommend that there be a board of directors with control over costs of the federal power marketing entity, instead of the customer advisory committee.

He also recommended consideration of a strong "opt-out provision" in the long-term contracts to impose some market discipline on costs. Carr suggested adding another round of subscriptions that would provide Northwest customers with an opportunity to subscribe long term to federal power at market-based prices during the early years. After the four phases have been offered at cost, long-term contracts would be offered in the region prior to offering the system for purchase outside the region. If BPA costs went below market prices during the later years of this contract, the difference would be shared with the customer, Carr suggested.

Carr also observed that many things in the report, such as the 20 percent provision and cost-sharing of salmon costs, are "tactical bargaining positions for the Treasury." You may be better off, he suggested, by leaving them out and leaving the region with the flexibility to negotiate contracts or a legislative package acceptable to customers.

Marc Hellman, Oregon Public Utilities Commission: Residential and small farm customers of IOUs ought to be able to purchase BPA power before the DSIs, he said. DSIs will benefit by direct access, and their size and financial ability make them able to look out for themselves, Hellman asserted.

Customers with the option to purchase BPA power should be able to purchase power at no more than the average of their purchases from BPA over the 1997-2001 period, he recommended. Noting that the residential exchange is likely to end in 2001, Hellman suggested that these customers should be second in line for federal power.

He recommended the report encourage the formation of residential-only aggregators to purchase power on behalf of residential customers in states where direct access is implemented. Hellman suggested the public power benefit should transfer as customers switch power marketers, similar to vouchers for universal service.

With respect to transmission, Hellman said the PUC supports legal separation of BPA's generation and transmission, and that the governing board of the IGO should be completely independent from transmission owners. Direct access is a state issue, he said, and decisions about it should be left to the states. Membership in an IGO should be mandatory for transmission owners, Hellman suggested, or at least, there should be substantial incentives or risks to induce owners to be members. Transmission-owning companies must cede all control of their transmission systems to the IGO, he said.

Tom Blanchard, Idaho Local Government Energy Committee: Noting that he represents a small county in Idaho, he said there will be impacts from the proposal we are convinced we will be asked to pay for. Competition needs to be structured to protect public benefits, Blanchard said, and the marketing plan has to assure benefits come back to the region. We support separation of generation and transmission for BPA, he said, adding that the transmission system has a responsibility to carry some fish and public benefits costs. BPA would be a good candidate for the IGO, Blanchard stated.

We think that BPA customers who withdraw as a result of restructuring should pay a withdrawal fee, Blanchard said. I liked Randy Hardy's idea of "flexibility at the fringe" -- it's "another buzz word we can take home and confuse people with," he said.

When we talk about fish costs, we need to talk about the upper Snake and the whole Columbia River system -- all utilities need to be assessed, Blanchard emphasized. Idaho Power is reaping enormous benefits, but not being asked to pay fish costs, he said. They get "a double bonus, a windfall." You can't go to the federal government with a proposal when that is going on, Blanchard said.

Power Marketing and Transmission Panel 2 - Q&As

Saven asked Carr to elaborate on the sharing of benefits and the short-term market price in the new subscription phase he proposed. Leave it to the customers when it comes time to negotiate the actual arrangements, Carr suggested. You can lay out general policy parameters and leave some flexibility for negotiations, he said. A market round is an interesting notion, observed Collins. I'd like to see some work on expanding public purposes funding if profits come out of that round, he added.

Why would you drop the fish cost-share and dividend sharing with Treasury from the report? Applegate asked Carr. Let's leave in maximum flexibility when we sit down to cut the deal, Carr replied. Remember, the customers are going to have multiple other market alternatives, he said.

Shimshak asked Hellman about his voucher idea. He said he hadn't put together the details, but the idea is if BPA is a good deal and costs are below market, you would allow the benefit to transfer with the customer when the customer changes supplier. If customers wanted to buy a renewable resource, they could purchase BPA power melded with renewable power, he said.

Kreidler asked Carr why the DSIs should be treated differently from other industrial customers. There are industrial customers that are in the first tier through their public utilities, Carr replied. Isn't that an option for the DSIs? asked Kreidler. Equity is in the eye of the beholder, said Carr, adding, I don't want to drive wedges between industries.

IN CLOSING:

At the next meeting, we have the BPA Energy Services matter to conclude, Collins said. We'll hear from BPA and from affected industries, including the IOUs, and then make a decision, he stated. If a majority votes one way or another, we won't try to achieve a consensus, Collins suggested. My sense is we're pretty divided, he added. This area is outside the fundamental business of what we're about, so a vote is okay, Collins said. Congress asked us to "comment on the matter," and I want to conclude this at the next meeting, he stated.

Also at the next meeting, Collins said staff would present alternatives for option prices, a matter which he said, "I have the notion is increasingly at the heart of the matter." Staff will provide information on the consequences for the Treasury and maybe suggestions for different structures for the subscription process, he indicated. Collins also suggested that committee members should lay out their issues and where they are at the next meeting.

Collins noted that the December 12 meeting is to be "ceremonial," a "bookend" to the meeting in January. Our intention is to adopt something November 21-22, Collins said.

Meeting Adjourned

Steering Committee Members: Chair Chuck Collins, Colsper West Corporation; Al Alexanderson, Portland General Electric; Rick Applegate, Trout Unlimited; Ken Canon, Industrial Customers of Northwest Utilities; Jim Davis, Douglas County (WA) PUD; Bill Drummond, Western Montana Electric Generation and Transmission Cooperative; Jason Eisdorfer, Citizen's Utility Board of Oregon; John Etchart, Montana Governor's Representative; Bob Gannon, Montana Power; K.C. Golden, energy consultant; Charles Hedemark, Intermountain Gas; Roy Hemmingway, Oregon Governor's Representative; Mike Kreidler, Washington Governor's Representative; Todd Maddock, Idaho Governor's Representative; Sharon Nelson, Washington Utilities & Transportation Commission; Walt Pollock, Bonneville Power Administration; John Saven, Northwest Requirements Utilities; Rachel Shimshak, Renewable Northwest Project; Brett Wilcox, Northwest Aluminum Company; Gary Zarker, Seattle City Light.