PUD fights to stop another potential fleecing of public power customers

Take time today to thank the folks at the Snohomish County PUD for mounting a lonely crusade to keep your power bills as low as possible.

And I’m not talking about the Enron mess.

Rather, the PUD appears to be alone in publicly questioning the Bonneville Power Administration about a scheme to manipulate debt from a failed nuclear plant program. You may remember the program’s centerpiece, best known as the Washington Public Power Supply System, or WPPSS (whoops!) for short. The PUD believes BPA may be taking money earmarked to repay the nuke debt and using it to help investor-owned utilities (IOUs), like Puget Sound Energy, transmit their power. The PUD would rather that BPA money be used to lower rates of public power agencies, like the PUD itself or Seattle City Light.

At least that’s the gist of questions brought forward by the PUD’s Steve Marshall in a December utility meeting in Portland. PUD Commissioner Kathy Vaughn and General Manager Ed Hansen had his back.

Don’t get me wrong. Today’s courage on the part of the PUD doesn’t excuse the comatose bumbling of the utility’s former leaders as the switches were being lined up for what would become the West Coast energy train wreck. Pollyanna herself was running the PUD in 1998, when Bonneville predicted energy shortages in the coming years. Back then, even a high school economics student could tell you what happens when demand goes up and supply doesn’t.

Instead, utility managers across the Northwest, including the PUD’s and Bonneville’s, opted for the Jiminy Cricket approach: Wish upon a star and, by golly, everything will be OK. Trouble was, Jiminy turned out to be Pinocchio, and his nose got longer every day as the energy crisis grew longer.

After the PUD woke up from its binge – and saw the credit card bill – it showed the guts that few other utilities had: It went after the thieves of Enron and, more importantly, continues to shame the Federal Energy Regulatory Commission into not swooning for every Texan with a fat swagger and an even fatter checkbook.

That’s the campaign that’s getting all the press. But the PUD has another bone to pick, and this one also has ramifications for every public power utility in the Northwest. The PUD – in the form of Steve Marshall – took its case to Bonneville’s hometown in December.

Here’s the deal: Because Bonneville ordered the three nuclear plants, only one of which was finished, it is obligated to pay off the old WPPSS bonds. In recent years, Bonneville and Energy Northwest, the successor agency to WPPSS, have agreed to what’s known as a debt optimization program. Because of federal and state law, Energy Northwest has access to cheaper borrowing than does Bonneville. So, under the debt program, Energy Northwest refinances its old bonds, essentially pushing ultimate nuke payoff farther into our children’s future. Lower bond payments today allow Bonneville to use extra cash. But to what purpose?

If Bonneville is using the money to improve its transmission system, which benefits private companies, isn’t the ongoing debt actually a subsidy to privately owned utilities? If it is, the debt plan probably violates federal law – as well as meaning higher rates in your bill next month. You’ll see higher rates next decade, as well, because we’ll be paying on the nuclear bonds far beyond their original payoff date.

To be fair, not everyone at Energy Northwest – including its CEO – was enthusiastic about the debt plan. And Energy Northwest’s Executive Board requires that Bonneville certify it uses refinancing benefits to only pay down higher priced debt. But you can’t separate one dollar bill from another 3 billion churned together in the cement mixer of BPA’s budgeting process.

Bonneville maintains the debt plan saves ratepayers $100 million a year. But at the Portland meeting, BPA didn’t lay out any figures to indicate what would happen if the entire debt plan savings was applied to immediate rate relief.

Then there’s the problem of using borrowed dollars to finance current living expenses – not a good option whether it’s employed by someone with a swollen credit card account or by a federal power marketing agency.

Yet, if the debt plan is such a boon to the region, why did Bonneville hatch it outside of its regular public disclosure channels? And why is BPA Administrator Steve Wright badmouthing the PUD for bringing up the matter at all?

Good questions, and I’m glad the PUD is asking them. For someone who’s watched energy sleight of hand for many years, to see the Snohomish County PUD stand up and ask questions that are equally tough and pertinent makes the air a bit fresher, the sun a little brighter – and, I hope, rates a little lower for every ratepayer in the Pacific Northwest.

Former newspaper reporter Don McManman is a public affairs consultant who has worked with Energy Northwest and BPA in the past. He lives in Shoreline. Reach him at mcmanma@attglobal.net.