Download the full text version of the February 29 meeting.
Download the full text version of the February 29 meeting.THE COMPREHENSIVE ENERGY REVIEW STEERING COMMITTEE met briefly to hear presentations on public outreach meetings in each state. The subgroups spent several hours working on templates, and at day's end, reported to the full committee on their progress. Sharon Nelson and Al Alexanderson were absent; the audience was about 70.
Next Meeting March 14 in Portland. :Subgroups will present their template work and explore areas of agreement and disagreement.
Steering Committee Chairman Chuck Collins announced that he had asked Al Wright and Jim Litchfield to get involved with figuring out which work groups would be needed. While acknowledging that the work groups should be a product of the template exercise, "we're in trouble with the schedule," Collins said. In order to stay on track, the groups must be in place and functioning by April 1, he said. Collins urged committee members and others, to contact him, Al Wright, or Steve Crow if they are interested in participating on a work group.
Mike Kreidler said several of the eight meetings in Washington were focused on particular interest groups, an approach that he said worked well. Hundreds of people attended the meetings, Kreidler reported. There was a wide divergence of opinion, but a remarkable interconnection of issues, as well, he said. There was strong belief in the concepts of competition and markets, Kreidler stated.
Kreidler categorized what he heard at the meetings into three topics: values, structure, and process. Among the values, commenters said that any changes should result in lower costs and greater efficiency, he reported. They also said the system's history should not be lost in the move to competition, Kreidler reported. In addition, there was strong support for least-cost resources; a desire for new resource opportunities; support for increased consumer choices; and concern about the removal of regulation and the creation of unregulated monopolies.
There was not much agreement on public purposes, Kreidler said; a common theme was fairness and equity for everyone. There were strong feelings on environmental protections and a desire that such protections be part of the change, he stated. Conservation and energy efficiency were significant themes, Kreidler said. There were questions about how to value the non-power uses of the hydro system, he continued, and a fear that deregulation may mean the end of rural and low-income discounts, he said. There was also concern about losing low-income assistance programs, Kreidler stated.
Among the structural issues, Kreidler said retail competition was not embraced universally at the public meetings. Skeptics worried about issues of equity and about "the chaos" retail wheeling could create, he reported. Commenters also addressed the importance of local control and the elimination of subsidies, Kreidler said. Everybody wanted to eliminate subsidies, but there was a variety of opinions on what the subsidies are, he observed.
Kreidler said commenters demonstrated a "love/hate" relationship with BPA. Everyone felt transmission would become separate, and there would eventually be a single system operator, he reported. BPA was identified as having an unfair advantage, he said, including tax status, immunity from antitrust laws, and low-cost financing, he said. Some suggested removing BPA's resource acquisition obligation, Kreidler stated.
As for the process, commenters thought the transition should be relatively short, one to two years, he said. A short period would be less disruptive, Kreidler reported, and benefits would be available sooner. There were reservations about prematurely deregulating the industry, he noted. Commenters said regulation would be needed to safeguard against monopolistic practices until the conditions are in place for competition, Kreidler said.
The future of the Northwest Power Planning Council was raised, Kreidler said. Some questioned its continued central planning function, but suggested the Council could have a role with regard to non-power issues, he reported.
Rachel Shimshak asked Kreidler which of the meetings he attended and whether he was surprised by any of the comments. He responded that he was at a Seattle meeting of about 140 people, a Spokane meeting of 70, and a meeting of about 100 in Olympia, where the focus was public power. Kreidler said he was surprised in a meeting with Northwest industrial customers that those present clearly preferred public power to private companies; local control seemed to be the issue, he said. There was also no reluctance to see BPA in the market as a competitive power marketer, he said. And, Kreidler added, he was surprised at how important the environment and conservation issues were to many commenters.
Shimshak asked about commercial customers. Kreidler said despite attempts at outreach, they didn't show up. "It's not on their Richter scale," he said. It's a small part of their budget, Kreidler observed, and we didn't hear from them. He also noted a lack of participation by waterway users and port interests.
Jim Davis said Kreidler did a "super job" in Washington, trying to be as inclusive and open as possible. Public power was "all over the place" with BPA, he reported, but the message "do no harm" was clear. We heard people ask Mike "to fire himself and the Council," Davis reported, and we heard something akin to "the Abilene paradox," he said, relating a story that illustrated how a group decision was made that had little support. In looking back, the group members realized that no one was actually in favor of the idea, but no one raised objections either. At the public meeting, the question was "are we going somewhere we don't want to go" because no one is objecting or questioning? Davis said.
The level of turnout was the most interesting thing, K.C. Golden said. People have the sense that a lot is at stake, he observed.
Gary Zarker said he heard people express "a great appreciation" for the industry. People know there is change, he said, reiterating that "do no harm" was a major message. The region depends on the system and the relationships it incorporates, Zarker said. People said, "don't unravel everything," he recounted.
Todd Maddock said there had been three meetings in Idaho. He expressed disappointment with the small response from residential customers and individuals. The review isn't widely understood, Maddock said, and our descriptions of the process itself were very important. There was real value in informing people what we are doing, he said. My feeling is this is "step one" in the dialogue, Maddock added.
Public commenters in Idaho thought markets would deal with public purposes, such as conservation, he reported. Public power organizations were more defensive of BPA, and IOUs expressed the most support for retail competition and the independent grid operator, Maddock said. There was also the suggestion that change is occurring so rapidly, "this process is irrelevant," he stated.
In Idaho Falls, which is home to the Idaho National Engineering Laboratory (INEL), there was support for nuclear power. Commenters said from an environmental point of view, we ought not to forget about nuclear power, Maddock reported. Industrial customers supported competitive rates, he said. One environmental advocate called for removal of the Snake River dams, Maddock noted. As for regional planning, he said commenters saw a role for the Northwest Power Planning Council as an "honest broker of information."
Bill Drummond, who conducted the Idaho Falls meeting, reported that the audience was knowledgeable about the system and there were several commenters associated with INEL. The sentiment was "pro-nuclear," he said, and there were concerns about the environmental implications of more gas-fired combustion turbines in the region. Local farmers were concerned about the BPA residential exchange and about losing the irrigation discount, Drummond reported. He noted that it was difficult to tell an audience "we don't know where we're headed, but what do you think?" and he suggested that future meetings could have more substance.
Chuck Hedemark said at the Boise meeting, there was a general discussion of deregulation. Idaho Power representatives were present, he noted, and they covered the topic well. There were also strong fish advocates among the 70 or so people who attended in Boise, Hedemark said. I was surprised that without a lot of publicity, there were so many in the audience, he added.
John Etchart said Montana approached public outreach a little differently. Right after the review began, we had a meeting in Helena, with a diverse set of people, he said. At that meeting, people were unclear about the value of the review and about the Montana Public Service Commission's "Notice of Inquiry." The confusion poses a problem for the public information effort, he observed.
Etchart listed several goals on which the Helena participants had found "substantial agreement." Commenters said:
There was support for protecting public interest goals, which Etchart noted "echoed the Governors' charge." There was agreement that the review should consider which public purposes are "still heartfelt" and determine how to achieve them; they may not be just a utility responsibility, he said. The Montana group also agreed that the review is an opportunity to consider whether the purposes of the Regional Act are still appropriate, he reported.
The group thought an affirmative effort to educate the public is an important part of the public involvement and that advocacy groups could aid the effort by communicating with their constituents about issues, Etchart said. There was also an "anxiousness about being involved in the work group product" the review will soon undertake to develop, he stated.
The Montanans agreed that BPA can't provide all the benefits of the past and continue to meet its financial obligations, Etchart said, and they felt the agency should return to its historic role of marketing federal base system resources. The group said transmission is a very important issue, and privately owned generation and transmission need to be functionally separated, he reported. Regional transmission rates should reflect transmission system costs and should not be used to recover stranded costs or collect revenues for other purposes, according to Etchart's report.
There was not a clear consensus on the following issues:
Etchart concluded that there would be much more input later in the Review process. Bob Gannon concurred that people said there should be another public meeting when the process is further along. With reference to Davis' story of the paradox, he said the region doesn't have the choice to do nothing. Events are forcing us to make choices, Gannon stated.
Drummond noted that until there is something to offer people, it is hard to seek their input. There was no one in the room that was not paid to be there, Drummond noted of the Montana group. Next time we need a broader reach, he said.
In Oregon, there were four public meetings, which drew about 250 people, according to Roy Hemmingway. None of them were paid to be there, he said, calling it a "citizen turnout." There were also meetings with organized labor and the League of Cities' energy committee, he reported.
Hemmingway reported that he drew three major conclusions from the meetings. First, he said, there is considerable anxiety about the fate of the public purposes the power system has attended to. Conservation, renewables, service to small communities, and municipal revenue from utility franchise fees were important to the commenters, he said. There was also "anxiety about the fate of our commitment to fish," Hemmingway added.
Second, he said, there was general anxiety about change in the power system. Although the economy is built on competitive free enterprise, and we have choice in most areas, there is worry about what this means in the electric industry, Hemmingway reported.
He said the anxiety reminded him of a story about [former Oregon Public Utility Commissioner] Mike Katz's Ukrainian aunt, who having spent all of her life under the Soviet system, came to the United States to visit relatives. She needed shampoo, and when taken to the store, was completely overwhelmed by the 50-foot-long shelf of bottles. In the Soviet Union, we only have one, she said. Which is the best? She couldn't make a decision; it was too much change, Hemmingway recounted.
The point is, he said, we are accustomed to making choices about shampoo, but there is a great deal of anxiety about choosing our electricity supply. Some commenters felt deregulation in other parts of the economy has not been that successful, and a lot of people said I hope it isn't like the telephone industry or airlines, Hemmingway said. They thought the result had been greater complexity and reduced service, he added.
There is not a lot of enthusiasm for the coming changes and a certain amount of denial, Hemmingway reported. Only "labor" spoke about the changes with enthusiasm, he said.
Hemmingway said his third conclusion was about BPA. There is a "bipolar attitude" about Bonneville, which he said he would not characterize as love/hate. The feeling is that those who take services from BPA want that option, but they don't want the responsibility for BPA's problems, Hemmingway explained. They want to be able to abandon BPA if its prices get too high, he said. There was also sentiment that as a region, we have a responsibility to see that BPA does not get "high and dry," Hemmingway reported.
Jason Eisdorfer said he attended the Portland meeting and heard overwhelming support for renewables and conservation. People offered to pay more in rates to ensure the values were maintained, he reported.
Golden asked for assurance that the public involvement comments would not be like the "Close Door" button in an elevator -- not connected to any part of the working mechanism. We need to put fears to rest and assure people the comments will be used, he said.
Collins called on Brett Wilcox to summarize the ideas in a paper he submitted to his committee colleagues. Wilcox began by saying that the 42-page paper "is not a DSI position," but an account of his own ideas. He said he agreed there is denial with regard to the changes afoot. From my perspective, industry change is inevitable, he said. It will be dealt with by the market or on a national policy level, and "we'll take what happens," Wilcox said. The region has a unique opportunity to address the situation, he added.
Wilcox said he saw the problem on two levels. First, there is a new competitive world coming, like it or not; how can we see that it preserves some of the historic public purposes? Second is what Wilcox called the "BPA problem." We have this new competitive environment, and BPA is put into it with its hands tied, Wilcox explained. The Enrons can take the agency's customers away while BPA can't seek out the customers of other utilities, he said. Other suppliers "cherry pick," Wilcox said, and BPA becomes the supplier "of last resort," providing whatever customers can't arrange elsewhere.
In the paper, Wilcox proposes a four-part restructuring. First, encourage a competitive bulk power market. I'm a strong proponent of retail wheeling, he noted, but in the paper, "I ducked the issue." Second, Wilcox proposes open-access transmission at cost-based rates. Third, he urges regaining regional control of the Columbia River. We share "the burdens and benefits" of the river, he said, and we should make decisions about it. Wilcox recommends creating a regional governing body to deal with the multiple river uses. Fish and wildlife protection is linked to power, and it would be best to look at balancing all of the uses instead of dealing separately with some, he suggested.
Fourth, Wilcox said, I see two options for BPA. One is to let the agency loose to compete in the open market; the second is to restructure, he explained. Wilcox proposes the second, turning BPA into a non-governmental cooperative, owned by its customers. The acquisition would be financed on the strength of the power sales contracts members sign, he explained. The "ultimate security is the stream of revenues" from the contracts, Wilcox said.
I'm convinced if we go that path, we as a region have the ability to cover all of the costs that BPA has, Wilcox stated, although not necessarily the non-power related costs. "The region needs to get realistic about those," he said. Wilcox called his proposal "self balancing;" as you were working through the negotiations, you would find a balance with the public purposes, he explained.
If BPA is a co-op, Wilcox continued, there would be excess revenues. Part could go back to the co-op members, and part could go back to state governments as a "social dividend," he explained. I know it's novel and controversial, Wilcox said of his paper. But it's one idea that's "on the table," he concluded.
On another topic, Ken Canon said he understood the proposed trip to Washington, D.C. had been canceled. To avoid confusion in the future, Canon suggested that if a D.C. trip is planned, steering committee members be notified; if the representatives are speaking for the committee, they need to report back, he added. Collins called Canon's comment "good advice" that will be followed.
Collins observed that the committee would "make or break" the first phase in the next two weeks, depending on what happens in the subgroups. Noting that he had talked to almost all of the committee members by phone, Collins said he'd been asked what consensus means. It means what it says in the dictionary, he replied. It doesn't mean unanimous, Collins explained; it does mean a strong majority.
Collins went on to note that in the template discussions, "we're starting to rub up against differences." Two tensions are developing, which he described as "Big Deals" and "Little Deals." The school of thought with Little Deals comes from system operators and those who have a history with the system. They see things in terms of incremental improvements, he noted. "These veterans don't see or they dismiss the sea changes," Collins continued, observing that the Northwest Power Act started out as a Little Deal. "No one ever dreamed the governors or Dingell would show up," he added.
At the end of two weeks, we'll be on a Big Deal or Little Deal path, Collins said. Be careful about dismissing big ideas, he cautioned. Big Deals are more difficult, they're messier, and they're higher risk, Collins said. And without a critical mass of support, it's difficult to get them through Congress, he added. But, Collins observed, I don't see how all of these Little Deals don't add up to a Big Deal.
If, within the next two weeks, we haven't gotten clear about which path we're on, we'll probably fail, Collins stated. Your judgment is how much the competitive world will blow in, he observed.
John Saven asked to what extent the subgroups are to struggle with the templates versus some other mechanism for emerging with a consensus on the topics at issue. If the template doesn't work for you, Collins advised, move off of it.
Saven reported on subgroup 3. We had a conference call early this week, and we've struggled with the templates to see if we had a common direction, he said. There was frustration with "the givens" and "the goals," Saven reported, and whether we had the appropriate starting position. The subgroup decided it was necessary to define the perspective on issues: were we talking about the answer from the BPA, IOU, or public utility point of view? We tried to be precise about what we were talking about in that regard, Saven said.
The subgroup discussed the public purposes, he said, and there was a surprising amount of consensus. There are issues that will call for "spirited debate," Saven said, but there are also topics on which there is agreement. We talked about the future of BPA and the Council, he said, and I threw out a straw proposal for what could shake out as distinct topics for work groups. Our expectation is we'll come back with the work finished and advance the topics "that capture the spirit of where we're going," Saven concluded. The group hopes to meet once more and prepare a document by the middle of next week, he added.
Drummond said subgroup 2 had met twice, starting with a discussion of whether the template was "the way to go." We agreed it was not perfect, but was an adequate tool to identify the issues, Drummond reported. We went on to whether there is a pressing need for change. The group struggled with a "problem statement," he said, and decided the statement would flow from the goals we establish.
Drummond stated that the group has identified the following as major issues: transmission, structure for BPA, and pooling. "We punted" on distribution, he said. We'll have another meeting and a conference call, Drummond said, noting that public purposes and brainstorming alternatives for BPA are on the agenda.
Subgroup 1 met once since the last steering committee meeting, Canon reported. We talked about how to use the template, and that resulted in several templates being created, he said. The group dug into the goals and givens, Canon said. We're trying to be sensitive to the issues before we get into structure, he observed.
The group's discussion has netted five central issues: wholesale market activity and national activity are having local impacts; interplay between government and utilities that has historically been successful now faces challenges; ownership, operation, cost, and control of transmission; public purposes are vulnerable in this change and process; governance of the power system and the river -- the system isn't working, and we need a new plan. Canon said the subgroup will meet again before March 14.
Collins said people had been working really hard at the task, and "there has been more progress than I would have expected." For the next meeting, Collins said he hoped the major topics would be divided into roughly four categories: consensus, general agreement, lots of confusion, and "badly split with disagreement."
There was considerable discussion on how to process what comes from the subgroups. Wilcox suggested the committee consider an electronic voting exercise, which he said could be informative. It will highlight graphically where things are, he commented.
Collins said he had been considering not trying to reconcile the three subgroups and going directly to the work group process. Kreidler pointed out that if all three groups are successful in reaching consensus, "you could meld it all together first." There may be great overlap, and it would get us a long way, he said.
Saven said he had no interest in voting, but wanted the committee to consider all three subgroups' work, so there is consensus on the issues. "Let's drive the three products to consensus," he urged, noting this would give the work groups a clear direction.
I've felt great pressure to get the work groups going, Collins acknowledged. A lot of people wanted on this committee, and in lieu of being selected, they will get a structured way to participate, he said. Clearly, a number of groups were left out, and they have interests here, he said.
Let's get the product of the three subcommittees clear as a way of directing the work groups, Golden said. Collins queried whether Saven wanted to go beyond that point. I meant, let's identify a series of topics that comprehensively deal with what we're up to -- things that are appropriate to deal with, Saven replied. I want to give people a piece of paper with a task on it, he added.
My suspicion is the lists will not be that different, Drummond stated. We should be able to combine the lists into one, he said, adding, we're not prejudging the outcome of the work groups -- we're asking them to clarify these issues. Rick Applegate agreed with bringing the subgroup work together. "Our templates say a lot about what we are thinking," he said. Shimshak said she would be interested in hearing about the "lively discussions" that took place in other subgroups.
That's probably good counsel, Collins said. You've settled a lot with the precision with which you approached the goals and givens, he added. There's a consensus that we need to process the subgroup outcomes before we start work groups, Collins concluded.
Tom O'Connor, Oregon Municipal Electric Utilities, suggested the templates did not cover the public purposes broadly enough. The template lists conservation, renewables, and low-income assistance, he commented. BPA was born as a public purpose, O'Connor said, and he urged the committee to broaden the concept to such things as postage stamp rates and other purposes the federal system was created to serve.
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.
Last modified: March 5, 1996
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