Energy Secretary Chu Threatens Low Cost Power
Washington PUDs, including Clallam County PUD, represent nearly one-million customers across the state. We take great pride in our long history of providing our communities with safe, reliable electrical service at the lowest reasonable cost. On March 16, 2012, Energy Secretary Steven Chu issued a memo that calls for actions that threaten to raise the cost of power in the region, increase rates for many PUD customers with no reciprocal benefit, and undermine a foundational principle of public utility districts – local control.
The memo issued by Secretary Chu strikes at the heart of public utilities’ rights to cost-based power produced by the federal hydro system. Not-for-profit, public utilities including PUDs, have “preference rights” which means we have first right to purchase federal power at cost, passing on the benefits of the federal system to the citizens we serve.
This hydropower is a critical resource to our PUD and the region. It is clean, reliable, relatively low cost power that energizes our communities and drives economic development. We purchase the power from the Bonneville Power Administration. BPA, a federal agency under the umbrella of the Department of Energy, markets the power and is one of four power marketing administrations (PMAs) in the nation. The costs – including interest on the initial capital investment — of the federal power are paid by ratepayers, not taxpayers, and are reflected in the rates BPA charges. When BPA’s costs go up, it impacts the cost of power on a local level, often driving our rates up. That is why the memo has made waves — and not just in Washington State.
Secretary Chu’s memo, issued to BPA and the three other power marketing administrations, alludes to several ominous directives that could add additional costs and seeks to impose a “one size fits all” policy direction with little regard for what is truly in the best interest of our communities and our customer-owners.
The memo is vague, but suggests new programs promoting new renewable power resources, energy efficiency, and new technologies. These may sound like good ideas on the surface, but it is questionable at best whether it is appropriate or even necessary for BPA and the other PMAs to execute these programs with the ratepayers bearing the costs.
It is important to point out that in many cases the goals of the memo are already being addressed. For example, we and other utilities across the state have promoted and successfully achieved energy efficiency for years. Our PUD saved customers in our community more than4,722,019 kWh last year (2011) alone and we continue to work with BPA to generate additional savings. We already made great strides in development and integration of new renewable resources. To date, over 4,500 megawatts of wind capacity has been integrated into the BPA system. In fact we have integrated so much wind energy; we have more than the region needs. This begs the question: if we’re already doing what the memo states we should be doing, what is DOE’s underlying purpose? Our concern is that the agency wants to go beyond what we have already done, planned for, and paid for (or will pay for) in Washington state unnecessarily and with no benefit to our electric customers.
The other concern with the memo is that it shifts energy policy decisions from local control to a federal agency in the other Washington. PUDs are founded on the principle that local communities are best positioned to decide how to manage one of their most critical resources, energy. We value the expertise, experience and input from various stakeholders to arrive at sound decisions that are in the best interest of the people we serve. This model works well at both the local and regional levels as our PUD participates in an open dialogue with BPA on how best to manage our valued resource.
While we appreciate the Department of Energy’s interest in the PMA’s contribution to meeting the challenges of operating the electric system in a rapidly changing world, directives from DC are not the answer. It is time for the Secretary of Energy to put the brakes on his proposals and listen to the voices of ratepayers, the local public utilities across the nation that serve them, and the 166 members of Congress (bipartisan and bicameral) who signed a letter to the Secretary expressing concern about the initiatives being contemplated. It is only through a collaborative process focusing on the unique characteristics of the region that we can make wise energy decisions that will support our local economy and preserve our natural resources while continuing to keep the lights on.
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