August 23, 2006

Transmission 101

August is not only the season of beach trips and watermelon festivals -- it's also the time of year when electricity use peaks in many parts of the country, including California and much of the South and Southwest. Three years ago, Oregon saw a power blackout in August due in part to this high usage. But according to one source, the blackout also "highlights the problem of relying on transmission operators that lack visibility of the entire system." So today, we're here to talk transmission. Welcome to Transmission 101.

Transmission in the Larger System

Transmission is the second of three major components of electricity production: First comes Generation (1), when power plants using wind, solar, hydro, gas, or coal produce electricity; we then rely on Transmission (2) to carry the power at high voltages using giant poles and wires (like those you may have seen along I-5 between Portland and Salem) to a utility substation, where the voltage of the electricity is reduced in preparation for Distribution (3), when the electricity is sent via smaller poles and wires to our homes and businesses. The electrons produced at the generating facility don't exactly flow in a straight line; instead, they act more like water (it's called a current, right?) and move through transmission lines in ebbs and flows. The overall web of transmission lines make up the grid, which travels over state and even national borders.

The region which shares electrical power lines with Oregon is broader than just the Northwest. Oregon sends and receives energy from as close as Washington and Idaho and as far away as Arizona and British Columbia. This system occasionally runs into congestion, lines that appear filled to capacity when more power is needed. One answer to the dilemma, often the first to occur to people viewing the problem, is to echo the following sentiment: "California will continue to be plagued by blackouts -- more hot weather is forecast this week -- until electrical transmission bottlenecks are ended by building more power lines to generators outside the state." (Why the Lights Go Out in California, Los Angeles Times 08/20/06). Build more lines. It's an obvious answer to a very complicated question, but not the only answer. We'd like to look at the issues involved more closely.

History & Oversight

Utilities generally have been building the steel transmission lines since the 1950s to serve their power generation plants. Those companies, therefore, own and control their own lines. The transmission lines in this part of the country are mostly owned and managed by the major investor-owned utilities (PGE and PacifiCorp) and the Bonneville Power Administration. The many transmission lines of any one entity form an invisible network of traveling electricity, a small chunk of the grid, and these networks are primarily regulated not by the individual states through which the lines may pass, but by the Federal Energy Regulatory Commission (FERC). States oversee generation and distribution, which are the issues CUB mostly discusses in cases before the Oregon Public Utility Commission. We also participate, however, in discussions about regional transmission.

According to FERC, and the 1992 law that deregulated electricity transmission, owners of transmission lines are supposed to share the transmission space on their lines. They charge fees for transmitting other companies' power, and theoretically anyone is supposed to have access to the lines, after the company has used the capacity they themselves need to serve their own customers. This can create problems when the company owning the transmission lines is expected to open its lines to competitors in the power generation market. An analogy might be a trucking company that also owns some toll roads. The law says it is supposed to open its toll freeway system to competing trucking companies (each trying to move an essential product that cannot be stored) and not give preferential treatment to its own trucks. Theoretical assumptions of equal access aside, sometimes access to the tollway will be limited or delayed by the competitive company in control of the tollway.

Problems also arise when line operators can see their own lines, but not the power moving in other lines, connected through the grid. Add to this the issue that each line is built to carry different capacities. Large trunk lines may be built to carry 500-5000 MWs, but a smaller branch line may have a much smaller capacity. For example, it is possible that sending 500 megawatts of electricity from Seattle to Portland could knock out a smaller line in Montana. Electrons don't travel in just a straight line, and they don't wait in line patiently -- they're moving at the speed of light.

In addition, there are ongoing electricity transmission issues waiting to be resolved. The basic question remains: Do we have enough transmission lines? Additional questions might be: How do we know how much power capacity we have in existing lines at any one time? How do we know whether we even need more? How big should new lines be, where should the lines be placed, and who should control and pay for new lines? They can cost a lot of money: over $1 million per mile! Finally, what are the other options for maintaining adequate transmission that don't involve building new lines?

RTOs & Non-Wire Solutions

One solution proposed for some of these transmission issues is the creation of a Regional Transmission Organization, or RTO. Several RTOs exist around the country, and groups working to create one for the Pacific Northwest have been meeting for years. One of these, which recently fell apart, was a group that would have created an RTO called Grid West. A planning document for Grid West defined its purpose as "creating a new, independent, non-profit corporation that plans and manages certain operational and commercial functions of the regional transmission grid." That's a pretty good definition of what an RTO does, ideally. RTOs might be able to find and make use of natural efficiencies in the transmission system; however, they must be established for the benefit of the customer to minimize costs. There is a danger inherent in the prospect of building a new organization with the power to raise transmission rates and build infrastructure: decreased accountability as decisions are removed one more step from the final consumer and regulated by a federal agency (FERC) back in Washington, DC.

With the Grid West effort dead, one RTO option in the Northwest continues to be debated: the Columbia Grid. Less robust and proactive than the Grid West proposal, Columbia Grid could still remain a viable option for centralizing information regarding the flow of electricity on our region's portion of the grid, and allow for more careful management and planning. Debates over who will have the most control and carry the most accountability for the RTO, and therefore over the transmission lines themselves, remain as major hurdles to finally putting such an organization in charge of the Northwest grid.

Why is creation of an integrated transmission organization seen by some as an important goal? Well, part of making sure we have enough electricity is making sure we can transmit that electricity from point A to point B, that we have adequate transmission capacity. In order to ensure capacity, it would help if points A and B could see what capacity is left open on the line between them (and on other connected transmission lines).

There's the reality of contracts (the planned flow of electricity on paper) and then there's the reality of physics (the actual electrons moving at any one time). Up until recently, line operators looked at contracts and guessed at actual line capacity. Operators now have the computer capability to watch the electrons move, and schedule the transmission capacity more efficiently and more fully, if only they aren't limited to seeing the one tiny section of the grid at a time that is owned by that operator's company. As Steve Weiss of the Northwest Energy Coalition said, "We need planning, and it needs to be integrated. When we have integrated planning we can look at wire solutions to congestion, and we can also look at non-wire solutions." A wire solution would be building more transmission line. So, what would a non-wire solution look like?

Three non-wire solutions, according to Weiss, should be pursued: conservation is always the first and best way to use energy most efficiently. If you can reduce your electricity demand, you have effectively reduced the amount of power flowing on the transmission lines. A second option would be using distributed generation, that is to say, generation facilities located more closely to the load, the place where electricity is needed, so that power doesn't need to travel as far to reach its final destination. A final possibility would be plugging power holes, those times when supply cannot meet demand, by contracting with customers to cut back their usage during peak periods, or running an otherwise inefficient generating plant for just the few hours it's needed. For instance, is it better to pay a pulp mill to shut down for an afternoon or run an old diesel generator 100 hours per year at a cost of $500,000, or to build a new transmission line (that isn't necessary all the time) at a cost of $500 million?

It is possible that a well-run RTO could alleviate transmission issues in the Northwest, potentially without building new lines. On the other hand, some have argued that natural efficiencies can be found in the system even without the additional bureaucracy of an RTO. The main goal remains sharing knowledge and making the most efficient use of the system. After all, you can use a system more intelligently when you don't have to guess at what capacity is available, but can actually see and use open capacity to the fullest.

New Technologies & the Future

New generating technologies such as wind power, quickly becoming a substantial part of the energy market, require a different way of thinking about transmission. Wind farms have to follow the wind, and only rarely produce the very large amounts of power at one location that a traditional coal plant would. You end up with a greater number of smaller megawatt generating facilities scattered over a larger area. They are also often located out in rural areas far from existing power lines. This could require different companies using different technologies to share existing transmission lines, or agreeing to build new ones, sharing the cost based upon expected usage. In addition, wind turbines only turn when the wind is blowing, and produce on average about 35% of their total capability. This affects the transmission system, of course, which must be built for a power capacity that may not be in use (from the wind farm, anyway) much of the time.

New tracking technologies that allow computers to show actual flow of electrons have created a different system of contracting transmission of electricity. Instead of the traditional promise of delivery of, for instance, our theoretical 500 megawatts from Seattle to Portland, you instead have a new system called injection/withdrawal rights. So a company with a generating plant might pay a transmission line owner for the right to "inject" 500 megawatts into the line at Seattle and "withdraw" 500 from the line at Portland, understanding as we do now that electrons go wherever there is open line for the current. The distinction may seem small but it is a significant shift in the way contracts are written and the movement of electricity is conceptualized.

We've all heard about the manipulations that Enron used that helped create the Energy Crisis of 2000, one example of which was the strategy whereby the company supposedly "created phony [transmission] congestion and then relieved it." (Trading Activities ... During the Western Electricity Crisis of 2000-01, Oregon Public Utility Commission Staff, 06/12/03). However, genuine congestion does exist and can cause serious problems if left unaddressed. Regardless of what specific tools we use to address transmission's particular issues, the topic of electricity transmission is a crucial one in making sure that we get the electricity we need to power our homes and businesses, and whether it's August or February we need to get that power without overspending, overbuilding, and certainly without wasting the electricity we have used valuable resources to produce.

Posted by Oregon CUB at 12:12 PM | Comments (0)

July 27, 2006

How Clean Is Nuclear Energy?

A CUB member recently called and left us a phone message with this question: Why wasn't nuclear power included in the recent CUB report (Bear Facts Summer 2006) on the Clean Energy Agenda we are working to put together for the 2007 Legislative Session? This member said he understood that environmentalists had safety concerns about nuclear waste storage, but he cited the following as reason to open the debate again: "The Bush administration will open negotiations with Russia on a long-discussed civilian nuclear agreement that is to pave the way for Russia to become one of the world's largest repositories of spent nuclear fuel." (New York Times, 7/09/06.)

With global warming threatening the future health of the entire planet (seen Inconvenient Truth yet?), a significant group of people believe that nuclear power -- which contributes fewer greenhouse gas emissions -- needs to be part of the energy discussion. According to Environmentalists for Nuclear Energy, "If well managed, nuclear energy is a very clean energy, does not reject polluting gases in the atmosphere, uses very few construction materials (per kWh) compared to solar & wind energy, produces very little waste (almost totally confined), and does not contribute to the greenhouse effect (no carbon dioxide)."

However, concerns about a nuclear waste repository in Russia remain: "The United States has traditionally opposed any such arrangement, in part because of concerns about the safety of Russian nuclear facilities, and because the country has helped Iran build its first major nuclear reactor." (New York Times, 7/09/06.) Columnist Jim Hoagland further discusses the fact that: "[T]he planned Russian nuclear expansion has not been widely publicized by the Kremlin in this 20th-anniversary year of the Chernobyl meltdown. That disaster immediately caused more than 30 deaths, the evacuation of 135,000 people from the region and a global panic about the safety of nuclear reactors. Bush noted May 24 that no new atomic energy plants ... have been approved in the United States since the 1970s." (Washington Post, 07/14/06.)

To a great extent the de facto ban on new nuclear power generation in the U.S. has been fallout (forgive the pun) from the Three Mile Island meltdown in 1979. With that incident, America got a taste of the possibility of nuclear meltdown, but the American experience of meltdown was minor compared to the 1986 catastrophe which occurred at Chernobyl. In addition to the immediate and longer-term deaths due to exposure to radiation from Chernobyl (in parts of Belarus the cancer morbidity rate increased by more than 50%), vast swathes of land became uninhabitable, and people as far away as Scandinavia were told not to drink milk, since the cows who produced it were breathing in contaminated air that had traveled from the scene of the nuclear disaster. Here in Oregon, lawyer Greg Kafoury worked as an activist against PGE's Trojan nuclear power plant for many years, and had this to say about the Oregon nuke's many safety issues: "We were one broken pipe away from Chernobyl." (Willamette Week, 3/09/05.)

Nuclear catastrophe aside, concerns about nuclear power and its accompanying radioactive waste products are more generally articulated in a 2003 report produced by MIT on "The Future of Nuclear Energy." The report states: "[T]he prospects for nuclear energy as an option are limited, the report finds, by four unresolved problems: high relative costs; perceived adverse safety, environmental, and health effects; potential security risks stemming from proliferation; and unresolved challenges in long-term management of nuclear wastes." [Italics in original.]

To call nuclear power "clean" may seem like a stretch when you take into account that it produces a waste product that remains toxic for a very long time. "One of the major problems associated with radioactive waste is the fact that much of it will be radioactive -- and thus will require isolation from the human environment -- for hundreds of thousands, if not millions, of years. Since this is a time period far longer than all of recorded history, the problem of waste disposal presents an enormous challenge." IEER On-Line Classroom. You may recall that Oregon voters passed a law in 1980 prohibiting the construction of more nuclear power plants, until the problem of safe nuclear waste storage had been solved, and even then citizens reserved the right to vote on it. Yucca Mountain in Nevada has become a battleground in the debate, wherein locals and Nevada Congresspeople have fought against a proposed nuclear waste siting, while others in Washington D.C. have promoted it as a fine solution to the problem. Suggesting that Russia play the role of nuclear waste repository does effectively solve the "not in my backyard" problem seemingly inherent in the use of radioactive material, but raises a whole host of other questions about international transport, foreign military usage of nuclear weapons, and the basic issue of whether -- in a global economy and global ecology -- any place on Earth should become a nuclear by-product dumping ground.

Proponents argue that the "new generation" of nuclear power will be safer and cleaner than ever before. But who wants their community to be the test subjects? Oregon has already had a spotty history with nuclear energy. At the time voters passed the "no new nukes" law, Oregon's only nuclear plant, Trojan, was undergoing safety and maintenance problems, and the law stopped construction of Pebble Springs, the next nuclear plant on PGE's agenda. Trojan has since been closed down (and was recently demolished) after serving only half of its expected power-generating life. After the failure of Trojan and Pebble Springs nuclear facilities, and after the Washington Public Power Supply System (WPPSS) went into default on their nuclear program, utilities in the region are not proposing new nuclear plants and might not be able to get financing approved to cover the costs of building them.

We at CUB are advocates of clean, affordable energy, and as such we are willing to look closely at any and all functioning power options. With the Northwest's existing base of hydroelectric plants, and its potential for economic wind power, and with an abundance of solar and geothermal resources, it is doubtful that nuclear power will revive itself in this region. We are skeptical about the so-called "new generation" of nukes, since the fact remains that any nuclear power production will still burden many generations of humans to come with deadly radioactive waste. This is not an energy source with which we feel it is wise (or in Public Utility Commission lingo, "prudent") to be cutting edge. As CUB Executive Director Bob Jenks puts it, "We like sleepy little utilities that make efficient use of proven technologies."

Most importantly, we still have thousands of Average Megawatt Hours (aMWh) of energy efficiency to be achieved, by far the cheapest and cleanest energy gain of all. Where energy efficiency falls short, we believe that wind and other renewable resources can produce additional thousands of aMWh to power our homes and businesses. Many options lie before us, but nuclear is way down at the bottom of our list. We maintain that nuclear energy does not belong in Oregon's Clean Energy Agenda. Free of carbon emissions it may be, but trouble-free it is not. CUB believes that the safety risks, cost risks, and legal obstacles for nuclear power in Oregon outweigh the benefits.

Posted by Oregon CUB at 02:44 PM | Comments (6)

April 28, 2006

CUB's Brainstorm Blog on Gasoline

"Exxon Mobil Corp... posted its biggest first-quarter profit ever on Thursday... The Texas behemoth reported a profit of $8.4 billion, on the heels of record earnings of $10.7 billion in the previous quarter. The news is expected to fuel growing consumer resentment in the United States over Big Oil's long-running profit bonanza." Reuters on Yahoo 04/27/06

It sure hurts to fill up the car these days, and with summer coming and travel increasing, gasoline prices are expected to stay high. Gasoline (made from crude oil) is a totally different product than the natural gas which is sold by NW Natural, Cascade and Avista here in Oregon, and which is regulated by the Oregon Public Utility Commission. There is no such state or federal price regulation of the gasoline market, and it shows. As Public Citizen testified before Congress, "So it would seem there is a direct correlation between record prices paid by consumers and record profits enjoyed by oil companies. As Americans shell out more dollars at the pump, the profit margin by U.S. oil refiners has shot up 79% from 1999 (the year Exxon and Mobil merged) to 2004."

CUB has no direct stake in the trajectory of the gasoline market, and, since our board has not discussed it, no official position. However, we are consumer advocates dealing with energy issues across a broad spectrum of the social, economic, and environmental background of Oregon. We are people with opinions (no surprise to those who know us!) and with concerns regarding the overall energy stability of the society we live in. Also, one gubernatorial candidate recently suggested that perhaps gasoline should be regulated by the PUC. And, most importantly, CUB members have asked us about what, if anything, can be done about the rising prices at the pump. For all these reasons, we offer this brainstorm blog on gas, a collection of voices about an issue looming larger and larger on the horizon.

We feel that the conversation about gasoline prices has reached an interesting point, and that the proposed windfall profit tax, or some other mechanism for limiting customer vulnerability in the market, deserves more exploration. (Note below under Royalties, Senator Wyden's attempt to shift some of the cost back to oil companies when prices skyrocket.)

Another suggestion, some form of regulation of the gasoline market, also deserves discussion. We have definitely seen a difference between those states which retain a regulated natural gas market and those whose market is deregulated; while customers in regulated states such as Oregon are subject to the same volatile prices of the wholesale market as deregulated states, the regulated states have not seen huge jumps in profit margins, CEOs' salaries, etc, which can and do drastically affect the bottom line on customers' bills. (See CUB article on Rates in Deregulated States.)

A great failing of the American energy portfolio to date has been its shortsightedness. We have dwindling oil production capability -- dwindling massively at home and dwindling gradually abroad (click here for a primer on estimated remaining oil reserves). And yet America has yet to open a serious discussion on turning this Titanic economy away from near-total dependence on oil. Some serious foresight with regard to the future of gasoline (not just stock futures of gasoline) seems to be in order, and regulation could help put a structure for such foresight in place.

Another perspective suggests that it would be foolish to try to manage oil costs without at the same time addressing natural gas, since their production and usage are linked. This perspective would suggest the formation of a group that directs the purchase and sale of both oil and gas, to stabilize changes in price, just as the Federal Reserve Board does for U.S. currency. This would help with the current speculation bubble in the price of oil, which is estimated to be anywhere from $10-$25 out of a barrel cost of $75.

Supply and demand remains a primary problem. For many years the U.S. was the main buyer for worldwide oil production, but now China and India are becoming major competitors for the worldwide supply. A short-term solution would be better gas mileage standards for all new vehicles, and a long-term solution means shifting usage to other energy sources altogether. This is the same message CUB offers for managing electricity and natural gas usage: conserve what you can, and start shifting the energy you must use to renewable sources.

Finally, security issues, questions of cost and ethics surrounding American military intervention in places where oil is produced, have come to the forefront. As stated by James Howard Kunstler in an article on Alternet, "The problem is that the oil supply will soon steadily diminish at a rate of at least 3 percent a year, and that necking down of supply is likely to be expressed in greater geopolitical friction and turmoil between the great nations who crave oil." These issues are beyond the scope of this brainstorm, but no discussion of energy stability would be complete without mentioning them.

Again, CUB does not deal in regulation of gasoline. Energy in all its forms, however, is not only interrelated, but of great importance in the ongoing discussion of how we protect consumers, cultivate a healthy economy, and maintain a livable planet. We appreciate your willingness to engage in this discussion with us.

Fall 2005 Record Profits

"By most familiar comparisons, the $9.92 billion profit earned by Exxon Mobil Corp. in just three months is almost unimaginable. It would cover all Social Security benefit payments for three months... It would fund the military operations in Iraq and Afghanistan for more than two months. Yet oil industry representatives and Exxon Mobil yesterday made a game effort to cast the record profit, earned during a quarter in which the Gulf Coast was shattered by hurricanes and gas prices rose well above $3 a gallon, as middling at best." The Washington Post 10/27/05:

Congress Reacts

"Sen. Byron Dorgan has introduced a three-year tax of 50 percent for any profit oil companies make for oil sold above $40 a barrel. But even the North Dakota Democrat admits it's an uphill battle for the bill. "This is not a very hospitable political environment to challenge the oil industry," Dorgan told CNN/Money. "We have a president and vice president who come from the oil industry and they're not interested in doing anything that runs counter to the interests of major integrated oil companies." But Dorgan said he's sensing some growing support for a tax across the aisle." CNN Money 10/28/05:

Where We Are Now - $3.00 and Rising

"Bolstered by high oil prices, Exxon Mobil said profits rose 7 percent in the first quarter, even as Congress threatens to punish oil companies for excessive profits at a time of soaring gasoline prices. The surge in energy costs has jumped to the top of the political agenda as the average price of gasoline recently reached $3 a gallon in many parts of the country. Last week, crude oil prices jumped above $75 a barrel, the highest in over a quarter century. Facing growing political pressure ahead of this year's mid-term elections, Congress is considering ways to trim $2 billion in tax breaks it awarded oil companies as part of last year's energy bill. Some would also like to see a windfall profit tax imposed on oil companies. Net income at Exxon, the world's largest publicly traded oil company, rose to $8.4 billion in the first quarter, compared with $7.86 billion in the year-earlier period. Sales climbed 9 percent to $89 billion." New York Times 04/27/06

Red Herrings

"No doubt it makes everyone feel better when the president states his concern for Americans, who are now paying more than $3 a gallon for gasoline. Unfortunately, the measures President Bush chose to announce this week to combat high prices are either meaningless or possibly dangerous in the long run, even if they do offer a bit of temporary relief. For example, just talking publicly about "price gouging" can spook gasoline providers into slightly lowering prices. And maybe it's useful to inspire state officials to start looking harder for crooks, given that price gouging is defined at the state level, not by the federal government. But in the long term, such talk encourages the public to believe that evil price gougers are responsible for higher pump prices, when the real culprits are global economic growth, increased demand and Americans' own large cars." Washington Post Editorial 04/27/06

Genuine Issues:

Executive Pay

"Last year, Exxon made the biggest profit of any company ever, $36 billion, and its retiring chairman appears to be reaping the benefits. Exxon is giving Lee Raymond one of the most generous retirement packages in history, nearly $400 million, including pension, stock options and other perks... Last November, when he was still chairman of Exxon, Raymond told Congress that gas prices were high because of global supply and demand... Raymond, however, was confronted with caustic complaints about his compensation... That was before new corporate documents filed with the Securities and Exchange Commission that revealed Raymond's retirement deal and his $51.1 million paycheck in 2005. That's equivalent to $141,000 a day, nearly $6,000 an hour... "I think it will spark a lot of outrage," said Sarah Anderson, a fellow in the global economy program at the Institute for Policy Studies, an independent think tank. "Clearly much of his high-level pay is due to the high price of gas."" ABC News 04/14/06

Royalties

"At a time when energy prices and industry profits are soaring, the federal government collected little more money last year than it did five years ago from the companies that extracted more than $60 billion in oil and gas from publicly owned lands and coastal waters. If royalty payments in fiscal 2005 for natural gas had risen in step with market prices, the government would have received about $700 million more than it actually did..." New York Times 01/23/06.

P.S. Kudos to Oregon Senator Ron Wyden who filibustered yesterday (04/27/06) in an attempt to force a vote on his amendment which would curtail royalty waivers for oil companies when oil is selling at above $55/barrel.

Finite Resource

"Are Americans willing to live with $100-a-barrel oil prices, which could translate into $6-a-gallon gasoline and heating oil? They may have no choice. It could happen as soon as five years from now, according to some energy experts. The price for a barrel of crude has nearly tripled in three years, from $25 in April 2003, to over $72 today. But the more crucial question is this: Are Americans and their political representatives willing to make the individual and collective sacrifices needed to come up with viable mass-market energy alternatives to heat our homes, drive our cars and run our industries? They would have to accept the unpalatable prospect that a concerted national push for alternatives to oil will be neither cheap nor easy, and it won't generate significant results for quite some time, even when such alternatives are made to work." Newsday Editorial 04/23/06

Conflict

"No one who is honestly assessing the decline of American leverage around the world due to our energy dependence can fail to see that energy is the albatross of US national security," Sen. Richard Lugar (R) of Indiana said last month... Now, with an election looming and higher gas prices, the US is in a perfect storm of playing politics with energy. It's time to end blame games and decide whether oil is a social good needing evermore protection." Christian Science Monitor Commentary 04/26/05

Posted by Oregon CUB at 02:50 PM | Comments (1)

March 07, 2006

Governor's Address Hits the Right Energy Solutions

Governor Kulongoski talked big and he talked tough on energy during his State of the State address 10 days ago. And we here at CUB think the governor is on the right track. As Bush said in his State of the Union address, and Kulongoski quoted in his State of the State speech, we are "addicted to oil." The question is, what to do about it?

Two issues emerged from the Governor's discussion: 1) global warming must be addressed; and 2) the economy must be kept on track. The Governor's twofold response is appropriate to the challenge: 1) conservation must continue to be a priority; and 2) renewable energy offers much room for expansion.

You have heard us talk about global warming before, and you will again. The dangers are becoming more and more apparent. The solutions are also becoming more apparent. First let's talk conservation. When the Governor says that conservation is not a personal virtue, he is attempting to broaden the discussion to include both our daily behaviors around energy usage, and the investment in our infrastructure that reduces our need for energy.

Conservation is often invoked when its equally important cousin, energy efficiency, is meant. Conservation is turning off the light when you leave the room. Energy efficiency is burning a compact fluorescent lightbulb. Conservation is turning down your furnace; energy efficiency is installing double-paned windows and a high-efficiency furnace. Conservation is cutting the hours of your manufacturing plant to use less fuel; energy efficiency is retrofitting the plant with a technology that uses less fuel even while it keeps working. You get the idea.

Both sides of energy savings are important, but one is, as the Governor says, a matter of "personal virtue" - that would be conservation. The other is pragmatic and structural - that part is the energy efficiency. If you invest in a cost-effective system for saving energy, you don't have to deprive yourself of heat, light, or power. You save energy and go about your business, at the same time.

CUB helped develop the infrastructure of the Energy Trust of Oregon, one of whose purposes is instituting energy efficiency changes. Funded by the 3% public purpose fund set up by the Oregon Energy Restructuring Act of 1999, the ETO works every day to help businesses and individuals set up the systems that will allow them to use less energy, without denying themselves or abstaining from power usage. ETO programs are in huge demand, and have been wildly successful, saving 36 Average Megawatts in 2005, the amount of electricity required to power 26,000 homes.

Those projects will save energy this year, and every year the structure or technology is operational. The snowball effect over time of implementing energy efficient technologies could be considerable and greatly benefit the economy (which sees less demand and lower energy costs), the environment (which absorbs less pollutants), and the customer (who sees lower prices for energy when less energy is demanded from the system).

ETO also helps pay the extra costs involved in developing renewable energies. The Bush Administration Budget has set aside huge subsidies for the fossil fuel industries. We believe that our public money is better off spent here, developing wind, solar, geothermal and other renewable, non-polluting energy. Because renewables do not contribute to greenhouse gas emissions, they address the global warming problem; because they can be developed right in Oregon (unlike most fossil fuel production), they contribute to the development of Oregon's economy. And because renewables make the electricity system less reliant on fossil fuel and electricity markets, our rates become less volatile. Now, that is an elegant solution.

The Governor's plan to use 25% renewable power by 2025 is ambitious but achievable. We will support the effort and continue to educate the public about options for producing clean energy and turning the tide for Oregon's environment and economy.

"Conservation is the most cost-effective way to cut greenhouse gases, cut our dependence on foreign oil, and cut the cost of doing business. It is not a personal virtue. It is a national necessity...

In Oregon, we're going to move ahead with reducing our reliance on fossil fuels, increasing energy efficiency and cutting greenhouse gasses. Global warming is not junk science. Junk science is the denial of global warming. We have already taken major steps to combat global warming and develop renewable energy sources. I call this - intelligent redesign...

The Legislature must join me in making Oregon a world leader in alternative fuels. That includes passage of a renewable portfolio standard that will result in 25-percent of our energy coming from renewable sources by 2025...

If we cannot convince the federal administration of the value of an alternative and renewable energy portfolio standard as part of a national policy of energy independence for America, Oregonians will do what we always have done: Roll up our sleeves, do it ourselves, and be a beacon for the rest of the country."

-- Governor Ted Kulongoski, Feb. 24, 2006, full speech here

Posted by Oregon CUB at 10:07 AM | Comments (0)

February 08, 2006

Bush Budget Harms Northwest Ratepayers

President Bush recently unveiled a budget plan that, among other things, siphons money from the federal hydropower system and raises electric rates throughout the Pacific Northwest. Customers of the Bonneville Power Administration (BPA), which sells the power from the federal hydropower system, pay the full costs of operating the system. Taking revenues from the hydro system is a special tax on Northwest electricity customers and would harm the region's economy; all residential customers of PGE, Pacific Power, and the public utility districts of Oregon would be negatively impacted.

BPA, along with every utility in the country, sells surplus power into the open market. The revenues from these surplus power sales help offset customer rates, keeping them from spiking in those years when demand is high or hydropower is low, and power must instead be bought from the open market. This system has worked for decades in maintaining a financial equilibrium for Northwest ratepayers. The price of electric power neither skyrockets nor plummets, so long as the years of surplus and drought in the federal hydropower system are allowed to balance each other out. The Bush Administration's current budget would cancel this system and gather surplus revenues back to Washington instead, causing rates to increase in the Northwest.

Once Northwest electric customers become a source of revenue for federal budget-makers, you can bet they will come back for more. Rather than electric rates that are based on the costs of producing electricity, we will end up with electric rates that are largely set by the President and based on the needs of the federal budget.

This tax on Northwest electric customers is designed to make the federal deficit look smaller than it is, and thereby justify the Administration's tax cuts. The difference in rates could be sizeable, amounting to $900 million over 10 years, according to the Salem Statesman Journal. In addition, as public utilities complain about the high rates, it is possible that BPA could respond by eliminating important energy programs that support cost-effective investments in energy efficiency and renewable energy. Fish programs would undoubtedly suffer.

It is possible that the revenue expected by the U.S. Treasury from BPA -- or more specifically, from BPA customers -- will never materialize. The Congressional Delegations of Oregon, Washington, Idaho, and Montana have united before to fight such proposals and been successful. Should this budget line be more than a political gimmick designed to facilitate tax cuts, the Delegations would undoubtedly unite to fight for Northwest customers, and the Northwest Region's economy, once again.

In addition to higher electricity rates, the Bush budget would cut $91 million from the Weatherization Assistance Program, which helps poor folks weatherize their homes when cold weather hits. The combined effect of higher electric rates and loss of weatherization assistance would hit low-income ratepayers of the Northwest especially hard. Weatherization programs also provide much-needed conservation of energy for the system overall, keeping usage down. This energy savings would be lost.

Even when the Bush budget is good on an energy issue, it comes at the cost of another. The Administration did earmark an additional $66 million for solar energy projects, and $39 million for biomass energy. However, this comes at a cost of $23 million from geothermal projects and the $91 million cut in weatherization. The overall cut to renewable energy and conservation programs in this budget is significant.

The budget contains an additional $115 million in subsidies for nuclear energy projects. However, nuclear has not proven itself to be economically feasible (even leaving safety concerns out of the discussion); the Northwest Region's ratepayers lost hundreds of millions of dollars in the Trojan and WPPSS nuclear projects. In fact, Oregon voters decided not to allow any nuclear projects until a permanent waste site is established, which would make a change in the law necessary before nuclear could join our energy portfolio. Nuclear power doesn't make a lot of sense when compared to wind and other renewable sources of energy.

The Bush budget should be taken seriously, since it is the suggestion of the Executive Branch of our nation to its Legislative Branch about meeting energy needs and managing fiscal responsibilities. The budget line items we have mentioned today, however, look more like political tinkering and less like clean energy leadership. We hope it doesn't become a real fight over the benefits of the Bonneville hydropower system, which customers should reap, just as they pay the costs. But if it does come to a real fight, we will be counting on our Congressional Delegation to do the right thing and fight for retaining the integrity of the system that our rates have helped to build.

Posted by Oregon CUB at 12:05 PM | Comments (0)

November 02, 2005

Dividing Up the BPA Pie

A series of meetings is underway to decide how the biggest source of low-cost energy in the Pacific Northwest Region will be divided and distributed among consumers. The source of energy is the federal hydropower system, which is administered by the Bonneville Power Administration (BPA), and the ongoing discussion is called the Regional Dialogue. BPA's energy is produced primarily as hydropower generated by dams on the Columbia River System (including those on the Snake River) and also by one still-operational nuclear plant in Washington State. Since Woody Guthrie sang of the Columbia River, "your power is turning our darkness to dawn, so roll on Columbia, roll on," many groups have been jockeying to obtain a share of the Columbia's massive power for themselves.

BPA's current customers, or constituents, include public utilities of the Northwest, large industrial customers, and residential and small farm customers of investor-owned utilities (IOUs) such as Pacific Power and Portland General Electric. Because the federal hydropower system is limited, it is important that this cheap hydropower be allocated fairly among all these constituents. CUB's staff attorney, Jason Eisdorfer, sits on the Principals Management Group and is one of the only consumer group representatives advocating for residential customers at the Regional Dialogue table, where everybody wants to maximize their piece of the pie. Other stakeholders include the Northwest's Indian Tribes, fishermen's associations, and environmental groups. The Regional Dialogue involves a complex set of issues, but one we thought was worth talking about.

Although customers of IOUs receive a fraction of the value of low-cost power that public power customers receive, they have still tended to be perceived as a cost to the federal system by BPA. This is because IOUs receive low-cost power through a program called the Residential Exchange, which was set up in 1980, and involves a shifting of numbers rather than an actual flow of energy. When BPA sells power through the Exchange, it actually writes the utility a check for the difference between the utility's cost of power (purchased or generated from elsewhere by the utility) and the cost of BPA's lower-cost (mostly) hydropower. The amount of this check gets passed through to residential customers as a reduction in rates. The Exchange is important in that it is the mechanism that provides residential customers with their portion of the value of the federal power system.

The public utilities, on the other hand, simply purchase the power they need from BPA, for the inexpensive price of about $.03 per kilowatt hour, a rate called the Priority Firm or PF rate, and very highly valued by those who have it. People in other parts of the country would love to have this rate. And, in fact, CUB and others in the Northwest regularly have to fight back efforts from other parts of the country to try to force BPA into selling its power at market rates, sending the increase in revenue back to Washington, D.C. to pay off the expanding federal deficit. Another concern is the uncertainty in BPA's revenue stream that is created when some of its customers come and go, following the short-term energy market. This has become an increasingly popular and yet dangerous choice in the last decade, as the market has become more volatile.

The proposed solution to these concerns is locking in long-term, 20-year contracts for BPA power. In this way, BPA is freed from the uncertainty of wavering revenues, and the federal government receives a steady stream of income from the BPA system, while at the same time being prevented from tying its customers to the vast fluctuations of market costs. The downside of 20-year contracts is that you lock in agreements based on a set of conditions that are like a snapshot in time, conditions which are bound to change in unexpected ways over the course of two decades. So, for example, some of the issues of long-term contracts that CUB has emphasized -- and stakeholders are discussing -- include:

1) What percentage of the system do residential customers get? (This, of course, is a priority issue for CUB.)

2) How much does BPA commit to spending on renewable energy resources and energy efficiency programs?

3) Does BPA invest in more generating facilities or do individual utilities make those investments? And how do we ensure adequate investments are made, not knowing what energy demands will be in future years?

4) What happens if a new public utility is formed during the 20-year contract (for example, what if PGE were to go public)? Is a new public utility shut out of PF rates?

The decisions made in this Dialogue will affect rates for customers in Oregon for years to come. We are working hard to try to ensure that everybody gets a fair slice of this federal power pie, in particular keeping an eye out for residential customers' access to BPA lower-cost power, since we are one of the only advocates for residential Exchange customers at the table. At the same time we feel it is important to give a fair hearing to other stakeholders who are working to protect our environment, our Native Tribes, or our larger regional economy.

BPA is hoping to bring groups together in consensus and reach a Regional agreement within the next several months.

Posted by Oregon CUB at 09:53 AM | Comments (0)