SENATE COMMITTEE ON NATURAL RESOURCES, AGRICULTURE, SALMON AND WATER

January 12, 2001 Hearing Room B

8:00 AM Tapes 3 – 4

MEMBERS PRESENT: Sen. Ken Messerle, Chair

Sen. Frank Shields, Vice-Chair

Sen. Bill Fisher

Sen. Ginny Burdick

Sen. Jason Atkinson

Sen. Roger Beyer

Sen. Ryan Deckert

STAFF PRESENT: Judith Callens, Committee Administrator

Patricia Nielsen, Committee Assistant

MEASURE/ISSUES HEARD: Informational Meeting / Regional electric power update, Northwest Power Planning Council

These minutes are in compliance with Senate and House Rules. Only text enclosed in quotation marks reports a speaker’s exact words. For complete contents, please refer to the tapes.

TAPE/#	Speaker	Comments
TAPE 3, A
004	Chair Messerle	Opens meeting at 8:04 a.m. as subcommittee. Opens informational meeting for briefing on regional electric power update.
REGIONAL ELECTRIC POWER UPDATE
010	Eric Bloch	Council Member, Northwest Power Planning Council (NWPPC). Introduces his presentation as a description of the energy situation, and the potential impacts on fish recovery and other river uses. Continues his presentation, with questions from the members.
041	Chair Messerle	Asks for clarification of damage on listed stocks of salmon from river uses, such as hydroelectric generation, irrigation and navigation traffic.
044	Bloch	Responds.
058	Sen. R. Beyer	Asks where the figure came from.
060	Bloch	Responds.
070	Chair Messerle	Asks how any make it to ocean if predation is considered.
073	Bloch	Responds.
078	Sen. R. Beyer	Asks why there are strong runs of some salmon upriver from the dams.
087	Bloch	Explains the process of all cumulative impacts on fish runs.
112	Chair Messerle	A quorum being present, opens full committee meeting at 8:12 a.m.
115	Bloch	Continues presentation, describing benefits from a developed Columbia River.
143	Bloch	Continues presentation, explaining fish-friendly operations.
175	Chair Messerle	Asks whether the National Marine Fisheries Service (NMFS) authority is as consultant, or advisor.
180	Bloch	Summarizes NMFS role and authority.
224	Chair Messerle	Asks who in NMFS makes decisions about biological impacts of actions on listed species, and whether there is any recourse from the decisions.
230	Bloch	Describes the collaboration between the listing agency and action agency.
250	Chair Messerle	Expresses concern that state decision-makers become less effective because of federal decisions.
263	Sen. Shields	Asks for a specific example of listing process.
273	Bloch	Summarizes the operation of the Columbia River hydroelectric system.
363	Sen. Shields	Requests additional clarification about the process of listing of fish species.
380	Bloch	Responds and explains.
407	Chair Messerle	Asks whether the process stops if there is an emergency power situation.
440	Bloch	Responds and continues explanation.
TAPE 4, A
050	Bloch	Continues explanation. Refers to (EXHIBIT A).
075	Sen. Burdick	Asks for examples of list items.
070	Bloch	Responds and refers to submitted written material.
136	Sen. Fisher	Asks for clarification of acronyms used in written material.
140	Bloch	Responds.
145	Chair Messerle	Inquires if dollar value of lost power generation during spills done for benefit of fisheries has been calculated.
150	Bloch	Responds.
200	Chair Messerle	Asks whether the Bonneville Power Administration (BPA) is actually running more because it is required to send power to California.
217	Bloch	Replies.
252	Chair Messerle	Requests clarification whether, when the Federal Energy Regulatory Commission (FERC) required BPA to send power to California, BPA was required to draw down reservoirs in order to generate enough power.
260	Bloch	Responds. We sell them power. NW peak is in winter.
310	Chair Messerle	Asks whether this year is different for power trading with California, because California this year can’t generate enough power for itself, partly due to deregulation.
325	Chair Messerle	Requests the economist’s view on the situation with public utility districts (PUDs), because of the price of electrical power.
335	Bloch	Answers.
420	Sen. Burdick	Inquires whether PUDs, which are now victims of high spot market wholesale prices, can come to BPA and claim preference rates?
Tape 3, B
020	Bloch	Responds that BP is fully subscribed.
026	Sen. Burdick	Asks whether when other contracts expire, utility company customers can then exercise preference rights?
032	Bloch	Confirms.
034	Sen. Burdick	Inquires whether these expirations are staggered, or come all at once.
037	Bloch	Responds.
050	Chair Messerle	Clarifies that the purpose of the Columbia River Governance is to develop a coalition, to achieve more political power, to maintain that preference for the northwest. The fear is that power will be sent elsewhere, such as the midwest, or that we will be required to match rates of other regions, such as California or the eastern U.S.
060	Deckert	Asks whether governors who are meeting in California are talking about rate gaps, and what Council’s plan is.
065	Bloch	Clarifies.
134	Chair Messerle	Elaborates that deregulation works fine if there is surplus supply, which is not the case now. Notes that we are not building up water so we can deal with potential market problems. Asks how we can get out of the situation, and what it will do to our utilities in the short term. Asks whether some customers will not have service, or have such expensive service that they will not operate, and how severe the situation is.
168	Bloch	Acknowledges the question, but has insufficient information to answer.
183	Sen. Fisher	Asks who is making windfall profits, and who is paying for that. Expresses concern that customers will have to pay.
215	Chair Messerle	Acknowledges issues, and urges committee to plan to consider carefully what action it will take. Raises concern that the northwest is growing, but not generating more power to keep pace with that growth.
220	Deckert	Points out that there is information available about what entities are benefiting in the current surplus and non-surplus environment.
234	Tom O’Connor	Executive Director, Oregon Municipal Electric Utilities. Represents small and mid-size municipal utilities in Oregon. Responds by encouraging the committee to continue asking questions.
286	Sen. Burdick	Asks for examples of utilities that are being harmed by the market conditions.
289	O’Connor	Responds.
319	Chair Messerle	Notes that the information doesn’t even consider private companies.
323	Sen. Fisher	Observes that in 1993, Idaho Power said 15 percent of their bill to customers was the fish-related cost of generating the power. Asks what the percentage is now attributable to the fish recovery process.
340	Bloch	Offers to obtain information for the committee.
358	Sen. Fisher	Expresses additional concern about costs of fish recovery.
359	Bloch	Responds.
412	Chair Messerle	Asks about options these small utility companies, and how to resolve some of the situations.
422	O’Connor	Elaborates.
Tape 4, B
050	Sen. Burdick	Asks what conservation efforts municipal utilities are using, and what benefits they have if programs are effective.
060	O’Connor	Illustrates.
070	Chair Messerle	Inquires about capacity for transmission of power, whether a problem is developing, and what is the capacity with natural gas. Asks whether more coal generating plants are needed.
080	Bloch	Clarifies.
090	Sen. Fisher	Comments that gas prices are high.
091	Sen. Shields	Asks whether the electric infrastructure could be used to put peak-hour pricing in place.
118	O’Connor	Describes current pricing structure.
144	Sen. Fisher	Again asks about who is making windfall profits in the energy crisis. Asks for information about hedging buying or stranded costs.
160	O’Connor	Explains.
210	Bloch	Explains further.
247	Chair Messerle	Observes that at this time, BPA has $800 million surplus fund, but if there is a cold dry spring the reserve could be gone. If there is a warm wet spring it could increase. The market is fluctuating. Expresses interest in learning who is gaining and losing in the process.
262	Sen. Fisher	Asks how much it would cost to meter and charge a toll for heavy use time.
269	O’Connor	Offers to bring information to the committee.
278	Deckert	Asserts concern that if FERC abdicates its responsibility, in our dispersed political climate, we lose. Asks how Oregon’s interests will be represented in that process.
190	Bloch	Answers.
339	Chair Messerle	Points out to the committee that it doesn’t have direction to deal with the energy problem at this time. Encourages the committee to also get involved in regulatory issues, such as siting or putting in gas lines.
354	Sen. Burdick	Asks whether anything should be done to prevent some direct-service industries, such as Keyser Aluminum, from shutting down and selling their power instead.
365	Bloch	Describes the re-marketing process.
430	Chair Messerle	Agrees that excess supply should go back into system, and observes that new contracts should tie surplus into requirement to build more generation.

440

Chair Messerle

Adjourns meeting at 9:55 a.m.

Submitted By, Reviewed By,

Patricia Nielsen, Judith Callens,

Committee Assistant Committee Administrator

EXHIBIT SUMMARY

A – List of FCRPS Operations, Eric Bloch, 1 p