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Energy: Challenge for the Pacific Northwest

The energy honeymoon the Pacific Northwest has long enjoyed is over. We can no longer take low power prices for granted even as other regions struggle with shortages. Once unthinkable in Oregon, the word “blackout” has entered our vocabulary. This winter, the traditional seasonal power trade between the Northwest and California — the Northwest sends power to California during the summer, when air conditioning drives up demand, and California sends the Northwest power during the winter when heating costs rise — has broken down. California doesn’t have any power to send us, and, as a result of increased generation this winter and low precipitation, the Northwest likely will not have any power to send south this summer. Several weeks ago, as shortfalls continued to loom, the Bonneville Power Administration (BPA) enacted an emergency policy that allows more water to pass down the Columbia River system in order to generate more power, breaking federal water requirements designed to protect salmon. Unfortunately, this increased flow reduces available flow for power generation and fish later in the year. Like money withdrawn from a savings account to cover monthly bills, this water can’t be retrieved in the future. BPA recently announced that it will seek a 60 percent rate increase for its utility and industry customers over the next five years, beginning this fall. This will drive up prices customers pay each month for electricity and hit especially hard energy-hungry industries like aluminum, timber processing and steel. Rate increases of this size will have a lasting impact on our regional economy. Of course, our situation in the Northwest is better than that of our neighbors in California. There has been much talk about the failed electricity deregulation effort in California contributing to the power crunch. This is true, but a poorly formulated deregulation plan has simply laid bare the structural deficiencies in California’s energy market. While California is now putting significant resources toward increasing generation and transmission capacity, a solution is at best years away. In December, outgoing Secretary of Energy Bill Richardson enacted an emergency order requiring electricity suppliers from the Northwest and elsewhere to send power south, when available, to avert blackouts in California. The new Energy Secretary, Spencer Abraham, has renewed the order. The emergency order goes further than existing voluntary energy trades, requiring suppliers to sell excess power to financially unstable California utilities without any assurance that the favor would be returned. Because BPA and most suppliers in the Northwest have had little if any surplus since the order, it has had little effect. If the Northwest is forced to send substantial amounts of power south, however, there will be serious political and market ramifications for our region. With California instituting price caps to protect its consumers and utilities from high prices, the effect of the federal order would be to require Northwest utilities to sell their power to a state where prices are not allowed to fluctuate with changes in the market and utilities may not be able to pay for what they receive. The very shortage of supply that is causing high prices in the Northwest would be exacerbated by attempts to save California from its own failed energy policies. Clearly, this is not fair for people in our region. I am drafting legislation to protect ratepayers in the Northwest from the crisis in California by requiring the state of California or the federal government to act as a financial “backstop” should utilities default on payments owed to Northwest suppliers. If the federal government forces Northwest suppliers to sell energy to financially destitute California utilities it should act to ensure that its policy does not harm consumers in the Pacific Northwest. As we address the current emergency situation in the West, we must also look for steps to take in the long run to ensure an affordable, reliable supply of power in the Pacific Northwest: 4 We must increase our generating capacity. It is a fact that our energy demands have surpassed our energy supplies. We must make sure all of our energy producing assets are being used efficiently to produce as much power as possible. As co-chairman of the House Renewable Energy Caucus, I am also working to make it easier for America to add more clean alternative energy generation to meet our long-term needs. 4 We must continue to act as good neighbors to California and other energy-starved areas while safeguarding Northwest ratepayers and the power generated in our region. Arrangements to send power outside the Northwest must come with the assurance that our utilities are fairly compensated, and that Northwest consumers are not faced with increased rates as a result of financial woes elsewhere. Northwesterners deserve first right to the power generated in the region. 4 We must be more efficient in the use of our energy to stretch each watt as far as it will go. While higher prices force people to conserve, we must increase the awareness of the importance of conservation and provide incentives to spur conservation. These are broad proposals, but the first step in tackling the growing energy concerns of our region is to agree on general courses of action. There is no doubt: the long energy honeymoon for the Pacific Northwest is over and the situation is likely to get worse before it gets better. As a region, we must work to develop a plan of action that ensures the availability of low-cost, reliable sources of energy for the future. The economic health of the Northwest depends upon it.