Briefing

We are delighted to have you as an Electric Ambassador! Nespelem Valley Electric Cooperative (NVEC) is tracking several issues at the state and national levels. As an Electric Ambassador, we want you to have firsthand knowledge about these important issues facing our non-profit electric cooperative. Please contact Liz Loomis, Director of External Affairs, at (509) 634-4571 or liz@llpa.biz with any questions.

Protecting Preference

As it applies to the electric utility industry, “preference” means consumers, through their non-profit Public Power utilities, have the first right to low-cost power generated from the federal dams on our nation’s rivers. More than 60 years ago, the federal government built a system of hydroelectric dams on the Columbia and Snake Rivers that generate power for Northwest consumers. Congress believed that this electricity belonged to the public – not private companies or individuals.

Congress granted preference status to non-profit utilities, like NVEC, to spread the benefits of the nation’s rivers on to the public in the form of non-profit rates. The power from the federal dams is marketed to customers of the Bonneville Power Administration (BPA) and sold at just what it costs to produce. These “cost-based” rates can be significantly lower than the market price for electricity. NVEC purchases all of its power as a preference customer of BPA through 2006.

Many others want access to our low-cost hydropower. “For-profit”, or investor owned utilities (IOUs), would like to eliminate preference and privatize BPA. Regional aluminum and industrial companies, called Direct Service Industries (DSIs), want our affordable power to improve their bottom line. Politicians from high-cost power regions like California, the Northeast and Midwest want the benefits of our regional hydro system, as well. All these groups claim that non-profit utilities like NVEC have an unfair advantage as preference power customers of BPA.

Over time, BPA has signed contracts for power with the IOUs and DSIs to try and prevent a regional power war. Unfortunately, efforts to keep the peace have driven up rates for most Public Power utility consumers in the process. Our message to members of Congress needs to be clear: Consumers of non-profit utilities, like NVEC, have the first right to low-cost federal hydropower from BPA – not for-profit companies or other states. This grows increasingly important as NVEC and other non-profit utilities in the region negotiate their contracts with BPA for wholesale power supply after 2006.

Transmission service ,–or the ability to get the power from its generation source to a utility’s distribution system for delivery to homes and businesses – makes up a portion of our electric bill as well. Historically, BPA has provided transmission services to the region’s non-profit utilities at postage stamp rates. This means the cost to deliver power – whether to Seattle, Nespelem or Wyoming – has been virtually the same. BPA currently owns 80 percent of the region’s transmission system. NVEC has a contract with BPA for transmission services through 2011.

The Federal Energy Regulatory Commission (FERC) is working to deregulate, or restructure electricity markets across the nation. FERC’s efforts would radically change the way electricity is bought and sold in our region. The vehicle to deliver deregulation to the Northwest would be through a regional transmission organization called Grid West.

NVEC is opposed to deregulation and Grid West because it would raise rates for Northwest electricity consumers. Grid West would take control of the region’s existing federal and private power grid. In addition, it would change how power prices are regulated, and induce utilities to purchase electricity transmission rights on the open market. Practically speaking, it might push energy sales into the short-term, price-volatile market and away from the predictable and low-cost long-term transmission contracts that have been the norm in the Northwest. The changes would also open the Northwest power system to the same type of market abuses that astronomically increased power costs and led to California’s deregulation failure in 2000.

Currently, about 20-25 percent of your electric bill goes toward restoring salmon runs impacted by federal hydroelectric projects. Since passage of the Northwest Power Act in 1980, BPA and its customers have spent more than $6 billion on fish and wildlife.

There continues to be upward pressure on BPA to increase the amount it spends for such programs. As costs have increased, so have electric rates for consumers and a region with a struggling economy.

A good example of wasteful spending is a practice called “summer spill”, where dam operators spill water through the dams in an attempt to help juvenile salmon migrate to the ocean. Summer spill is the most expensive and least effective program available, costing ratepayers $77 million per year and helping less than 100 endangered fish. Reducing summer spill and using a portion of the money for more effective actions – such as capturing predators of juvenile salmon – is a win-win for fish and ratepayers.

Everybody wins when we balance the need for affordable electricity with a sustainable environment. Throwing more money at a problem doesn’t always mean better results. The region needs to come together immediately over the proposed summer spill reductions and stop the expensive cycle of litigation, which continues to drive up costs for electricity and fish restoration efforts. A move away from simply increasing spending for fish and wildlife, and towards a more results-oriented approach is in the best interest of both fish and ratepayers in the region.

NVEC Electric Ambassador Issues Briefing