PUD 1 receives its power from Bonneville Power Administration (BPA) which runs the hydroelectric system in the Northwest. Back in the mid-1990’s the federal government passed a new energy bill which gave some of the benefits of the hydro system back to investor-owned utilities (IOUs) like Puget Sound Energy. The IOUs complained that preference customers, like Mason PUD 1, that received their power from the federal hydro system have more benefits of the system than IOUs did. Their argument was that federal money was used to build the system so all tax payers should benefit from it. As a result, $50 million a year was given to IOUs to level the playing field. Today, that number is about $250 million per year.
We (public power) protested this and we went to court over it.
Around 2011, the administrator of BPA informed us that if we did not drop the lawsuit our energy costs would go through the roof. I personally felt like we had a gun held to our heads but we did what the BPA administrator asked us to do to mitigate the risk to our rates. BPA and the public power providers signed a settlement called the Residential Exchange Program (REP). This program terms are set until 2028. Now, BPA is stating that they believe by 2028 the subsidy will be more like $400 million per year.
The problem really is that BPA spends about 26 cents per dollar of our power rates on fish and wildlife habitat mitigation programs. If you add another 10% for the Residential Exchange Program, that means 36 cents of every dollar is spent for programs that BPA has been mandated to fund. BPA now states that they don’t have enough money to do maintenance on their system because of all of their other obligations. The IOUs don’t pay into the fish mitigation but they benefit from the federal system.
What I am proposing is that by 2028, the administration of BPA should sit down with the IOUs and preference customers and ask if we can work together using the REP to help benefit all customers using the federal system, whether IOUs or preference. We can work together to keep reliability up and costs down. Using this money to help build transmission for IOUs that have other energy resources that need access to the power grid, is one example. Using the money to help maintain the federal power system in the Northwest is a working strategy that benefits everyone.
At the present rate, BPA will not be able to be competitive if we don’t start thinking outside the box. I am not saying we should do away with the REP, but instead, we should use it to benefit everyone and keep BPA competitive.
Ron Gold, Commissioner