Power can keep building us up
Tuesday, December 22, 2009
If the only consideration was the instantaneous purity of the market for electric power, no one would make aluminum in the Northwest. If we all lived in the moment, if thinking ahead was forbidden, the Bonneville Power Administration would coldly adhere to its statutes and sell most of its often plentiful and cheap federal hydroelectric power to the region’s public utilities at a cut rate. It would sell some to private utilities and farmers and tell industry to fend for itself. Jobs, the economy, the region’s future, none of that would matter. We might get slightly lower power rates, but we might not. Jobs and the people who need them wouldn’t be considered.
The Bonneville Power Administration, the federal government’s New Deal-created marketer of power, is not now in its cold-shoulder mode. It is both selling power and considering how the industrious human beings of the region might use it to produce wealth, and produce valued commodities, and provide a dose of stability and long-term economic security. On Monday, BPA Administrator Steve Wright and Gov. Chris Gregoire traveled to Ferndale to sign a power sales agreement with Alcoa’s Intalco smelter, which employs 528 people making middle-class wages, who spread their wealth to support thousands more. The crowd of workers heartily cheered as the pact was formalized. BPA will provide up to 320 megawatts to Alcoa for the next 17 months at its standard industrial rate. It agreed to provide power for five years beyond that, depending how the courts resolve the inevitable legal challenge from the people who would like that power for themselves.
In recent decisions (the Northwest’s power policies are always in court, somewhere) the court seemed to say that BPA cannot sell to industries like Alcoa unless there is no measurable impact on other BPA customers, and that BPA cannot consider social and economic benefits of its power sales. It shouldn’t ponder how many jobs might be created, for instance.
BPA says this shouldn’t be the standard. Jobs can’t be ignored. People can’t be ignored. “It comes down to, are we a community or not,” Wright said at Intalco. He said he believes the court “should change direction upon further consideration.”
Significantly, Gregoire said the state is ready to go to the mat for aluminum jobs. “We will be in the Ninth Circuit, we will be in the U.S. Supreme Court,” she told the Intalco workers, the event covered by The Bellingham Herald. Losing hundreds of manufacturing jobs, especially now, would be a major blow to the state. “Devastating,” said Gregoire.
This is a substantial change in attitude from the power crisis of eight years ago, when the region was willing, even anxious, to see the aluminum industry disappear and call it “conservation.” Making aluminum inhales huge amounts of power — the energy consumed at Intalco could light up a quarter of Seattle. When Chelan County PUD’s new agreement with Alcoa goes into effect in 2011, the Wenatchee Works will take a quarter of the power from two Columbia River dams. Measured in jobs per kilowatt, this does not shine. There will be times when that power might be sold for a higher rate to somebody else, and they’ll call the difference a “subsidy.” But, there will be times — the dead of night for instance — when aluminum will be infusing the system with cash when few others will. And there is much more to the big picture than giving some people low power bills some of the time. There is stability, there is continuity, there is the economic future of thousands of families, there is the region’s productivity and the nation’s need for valuable materials like metal. For lack of a more precise term, call it the greater good. We can use our power to build our community.
Tracy Warner’s column appears Tuesday through Friday. He can be reached at warner@wenworld.com or 665-1163.

















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Norm (Norm Messer) says...
Regarding this:
"...the Bonneville Power Administration would coldly adhere to its statutes"
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What specific statutes are you referring to? Federal agencies do not have discretion (authority) to disregard statutes passed by Congress. They do have discretion to write regulations interpreting and applying Congressional statutes. If you are advocating not "adhering" to congressional statutes, the proper place to address your advocacy is congress, not BPA, to change the statutes in question. If you are advocating a different interpretation or application of statutes, then BPA is your target.
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Regarding this:
"In recent decisions (the Northwest’s power policies are always in court, somewhere) the court seemed to say that BPA cannot sell to industries like Alcoa unless there is no measurable impact on other BPA customers, and that BPA cannot consider social and economic benefits of its power sales. It shouldn’t ponder how many jobs might be created, for instance. "
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What specific court cases are you referring to?
December 22, 2009 at 3:47 p.m. ( permalink | suggest removal )
Norm (Norm Messer) says...
Ok. The statute you appear to be referring to is 16 USCA § 838g(1), which states "Such rate schedules ... shall be fixed and established (1) with a view to encouraging the widest possible diversified use of electric power at the lowest possible rates to consumers consistent with sound business principles"
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The 9th Circuit, in Pacific Northwest Generating Co-op v. BPA (2008) held that contracts between BPA and ALCOA violated the statutory requirement of setting rates "consistent with sound business principles." It did not hold (as your article states) that "that BPA cannot sell to industries like Alcoa unless there is no measurable impact on other BPA customers". Rather, it held that specific contract provisions were invalid "... The provision at issue did not, however, require BPA to sell physical power to Alcoa. Rather, BPA had agreed to “monetize” the power sale *831 by making cash “benefit” payments to Alcoa in an amount approximately equal to the difference between the higher wholesale market rate for power and the lower contract rate multiplied by the amount of power consumed by Alcoa each month.FN1 See id. at 854-55. The idea was that Alcoa could use the monetary benefit payments to subsidize its purchase of power on the wholesale market, such that the aluminum company's net power costs would be approximately equal to the agreed-upon contract rate (assuming that various caps on the monetary benefit were not triggered)."
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Following the 2008 case, BPA entered into an amended contract with ALCOA that was also found invalid on basically the same grounds. The court stated: "The amended contract requires BPA to pay Alcoa up to almost $32 million over a nine month period. BPA is to receive nothing in return. In essence, then, BPA has agreed to provide a non-obligatory gift of up to $32 million. The agency concedes, as it did in PNGC, that its decision to provide this voluntary gift will lead to higher rates for its other customers. See id. Given that BPA was under no obligation to contract with Alcoa, let alone to pay it over $30 million in cash, and that the amended contract will inevitably lead to higher prices for all other customers, BPA's decision raises serious questions concerning compliance with its statutory obligation to maintain “the lowest possible rates to consumers consistent with sound business principles."
December 22, 2009 at 4:31 p.m. ( permalink | suggest removal )
Norm (Norm Messer) says...
"There is stability, there is continuity, there is the economic future of thousands of families, there is the region’s productivity and the nation’s need for valuable materials like metal. For lack of a more precise term, call it the greater good. We can use our power to build our community."
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That's all well and good, but it can't be done through the courts: the proper place to take these concerns is to Congress. Courts do not have discretion to entirely disregard statutes, and the statute in question here is quite clear.
Instead of writing that "the court seemed to say that...BPA cannot consider social and economic benefits of its power sales. It shouldn’t ponder how many jobs might be created, for instance", it would be more correct to say that the statute governing sale of federal power clearly does not allow for consideration of these other concerns. Your argument is with the statute, not the court; asking the court(s) to disregard the statute is a waste of time and money. Anybody concerned with this issue, included the governor, this newspaper, affected employees, and other interested parties should address their advocacy to our congressional delegation to amend the statute to allow for consideration of these other valid concerns.
December 22, 2009 at 4:43 p.m. ( permalink | suggest removal )