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Special Report

Fortnightly Magazine - February 1 1997

Mahar sees the critical period as the next five years, figuring in the impact of deregulation, new market entrants, and natural gas prices.

How will the agency get subscribers to think "long term" when the market cries "short term?"

"I anticipate we're going to be negotiating and working with our customers," says Mahar. "It's going to be like a rate-setting process. ... Everybody's united in this vision of preserving these federal assets in the Northwest. Then, if they don't coalesce and pull off something, something's going to be done to us from Washington, DC ... I don't know if you want to call it the carrot or the stick, but that's going to be hanging out there and motivating people to work together.

"Clearly, clearly, it's fasten your seatbelts time."

Sharon L. Nelson, chairman of the Washington Utilities and Transportation Commission, and a steering committee member, notes that the only reason Bonneville isn't competitive now is because the region, with the 1980 Act, decided to take on "all the debt that many, many other actors in this marketplace incurred for the region in the nuclear thermal program started in the 70s." If it weren't for that debt, Bonneville would be competitive with combustion turbines. Once the debt is gone, it will be competitive, she says. The region wants to keep the BPA as a resource and to forestall the bureaucrats and Congress who want "to sell the thing off to the highest bidder."

Still, Nelson says she's concerned with the subscription process because the emphasis on long-term contracts relieves the stranded cost concern but conflicts with "a more fast paced competitive market."

"It's difficult for many people to understand you can take a 50-year-old hydro system and make it more expensive than a new combustion turbine," Drummond says. "But that's exactly what we've got. Eventually this system is going to be a gold mine, but you've got to withstand 10 or 15 years of high-cost power in order to get there."

"You've got to become an owner, take on the obligations of that system," says Alvin L. Alexanderson, senior v.p. of Portland General Corp. and a steering committee member. "And then you'll be in a justifiable position later on to say, 'We paid for it when it was worth more than market, and the payback is when it's cheaper than market.'"

He says whether the subscription process takes off and runs is an open question and is in the hands of the governors' panel.

"It could fail," Alexanderson says. "That's sort of an OK outcome (em to find out the whole system's under water and no one wants it. But if we get to that outcome, we ought to take it to Congress and say, 'Let's deal with it that way.' On the other hand if other people do want it ... then come to the subscription meeting and sign the card."

Besides a regional stamp of approval, the Comprehensive Review will need federal legislation and support to be carried out. The DOE has carefully followed the review process, particularly acting secretary