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Casey Wants Payments to Have a Purpose by Jordan Kline Daily World, February 27, 2007

Grays Harbor PUD Commissioner Tom Casey believes he has both a political and pragmatic solution to a years-old dispute between the Bonneville Power Administration and public power, one that would unite the groups in the effort to fight global warming.

For nearly seven years, the PUD and other Northwest public utilities have battled with Bonneville and privately-owned utilities over an annual $400 million payment the public utilities are forced to pay directly to private utilities.

Public power views the payments as unjust and unmandated, and balked at Bonneville's settlement offer of a $250 million annual payment during the negotiations for new 20-year power contracts beginning in 2011.

Casey wants to renegotiate the settlement, take the money out of the hands of the private utilities and use the $250 million to fund conservation and renewable energy projects that would fight global warming and reduce the region's dependence on fossil fuels.

The private utilities might support the idea because they are already under pressure to do something to fight global warming, and the money, spread out among all the private utilities in the region, isn't so significant that it will make a major difference in their bottom lines, Casey said.

Currently, the cash payments are funneled to privately owned utilities as part of an agreement under the Northwest Power Act of 1980. Known as the residential exchange program, the payoffs were part of a series of compromises intended to mitigate for the then-growing disparity between residential rates for investor-owned utilities and public utilities.

But in 2000, Bonneville decided to abandon a rate test they were using to calculate the disparity in rates in favor of "settlement agreements" that gave the private utilities the block cash payments negotiated in the face of litigation and a regional power crisis.

The PUD has been vehemently opposed to the settlement.

Casey told PUD officials gathered before Monday's commission meeting that his idea would prevent a "big, bloody fight" and "show that public power is going to take the high ground" in the dispute.

Casey said a recent meeting of the Washington PUD Association in Olympia was the genesis of the idea.

"I was having lunch with the new president of the PUD Association and I just started talking about why there isn't more outrage about this issue among our public power colleagues, and I said it would change everything if this money was spent on something that mattered, and I thought of global warming," he said.

"So, let's redirect this money into something that we all agree needs to be done, and that is to pursue clean energy sources and help lead the nation and perhaps the world to practices that could improve our chances of stopping global warming."
(bluefish notes: $300 million is roughly equivalent to the annualized gross power sales from four Lower Snake River dams and reservoirs.)

Commissioner Jim Eddy agreed with Casey's assessment, saying "We realized that we're probably going to pay the money anyway. ... Why not outline the terms of how we pay the money and what that money is used for?"

Casey wants a third-party organization tasked with collecting and distributing the money in accordance with its purpose. Projects encouraging energy conservation and the development of renewable fuels would be at the top of the list.

An influx of new funding could get projects off the ground that didn't have the capital to get started, according to Casey. "This is huge amount of money every year for 20 years ... money that should be available for a much higher policy purpose than meeting a political settlement with investor owned utilities that meets no social purpose whatsoever," he said.

Casey said the most ambitious projects would be able to get off the ground. "My pet project is to begin the design of facilities that would be necessary to merge the electric system with the transportation system. If we're going to be serious about reducing greenhouse gasses and oil imports to the United States, then I think we need to have an electric transportation system," he said.

Casey said both private utilities and Bonneville would be eager to settle the issue that has blocked progress in the negotiation of the new power contracts and would be unwilling to stand up against more funding to fight global warming.

"I think that Bonneville would be receptive to this because the governor, the Legislature, the Congress and even the president have indicated the urgency in reducing the human contribution to global warming. The role of the electric utilities is front and center in that effort."

Private utilities have also declared their intentions to fight global warming, Casey said, and the payments, which are spread out over all the private utilities in the Northwest, don't impact their bottom lines or their stockholders enough to cause them to oppose his plan.

"I don't know of any enemies to the idea of building renewables and improving our chances of living in a sustainable environment. If somebody wants to stand up and say that, I'd certainly like to debate them," Casey said.

Casey said environmental groups and a few PUD commissioners from around the region have been receptive to his idea, including a commissioner from Snohomish PUD -- the largest in the Northwest.

He also briefed Terry Mundorf, an influential attorney for the Washington Public Power Association, about his idea during Monday's commission meeting.

"There's no apparent legal or technical reason why we can't move forward with this," Casey said. "I'm hoping this idea will change the entire debate."