BUSINESS & AG LIFE
2B — THE OBSERVER & BAKER CITY HERALD
POWER
Continued from Page 1B
The happy result for these
preference customers has
traditionally been some of
the cheapest electricity rates
in the country. But with the
rapid development of Cal-
ifornia’s ambitious renew-
able energy policy, hydro-
power’s long joyride on the
Columbia River appears to
be slowing down.
California solar
changes Pac NW profi ts
The contrast between
California’s energy trans-
formation and the Pacifi c
Northwest’s aging, mid-20th
century dams is startling.
Since the early 2000s, Cali-
fornia has built over 12,000
megawatts of solar power.
In terms of capacity, this’s
nearly equal to what those
31 dams on the Columbia
produce.
California has taken a
giant leap toward modern-
izing its energy system to
refl ect 21st-century realities.
By contrast, the Columbia
River’s fl agship power plant,
Grand Coulee Dam in Wash-
ington, was built in 1937.
The average life expectancy
of a dam is 50 years. (More
than half of the dams in the
United States have exceeded
that time frame.)
But the trouble isn’t lim-
ited to infrastructure that’s
aging out.
The economics of solar
power are providing utili-
ties as well as consumers
with unprecedented oppor-
tunity to make the switch.
The price of a solar panel
has dropped 89% since 2010,
according to the Interna-
tional Renewables Agency.
Last year marked the
beginning of a solar man-
date for residential construc-
tion in the Golden State,
with every new home there
required to feature solar
panels on its roof.
Utility-scale solar proj-
ects have spread across
California. Last year, the
8Minute solar energy com-
pany inked a deal with the
city of Los Angeles to pro-
vide 400 megawatts of solar
power, with 1,200 megawatts
of battery storage to boot,
for less than $25 a megawatt
hour.
For comparison’s sake,
the four lower Snake River
dams average 900 mega-
watts of power production
annually. But that energy
costs signifi cantly more than
what 8Minute will deliver to
Los Angeles. BPA customers
on fi rm power contracts are
paying $37 a megawatt hour.
Since 2009, BPA’s rates
have risen 30%. Aging
dams, deferred maintenance
and upgrades, and funding
federal pensions for the
BPA’s 2,100 employees vir-
tually guarantee the agency’s
rates are going up.
Meanwhile, the price of
solar is predicted to fall fur-
ther, at least through 2030.
Steve Kern, the former
head of Cowlitz PUD in
southwest Washington,
summed up the tenuous
nature of the BPA’s future
in 2018, not long before he
retired.
“A fi nancial cliff is
coming,” said Kern, noting
that BPA’s rates were already
higher than the going market
rate, and its power prices
are forecast to be 55% above
those market rates by 2028.
Who’s going to sign up for
BPA power at those prices?”
highest — thanks in large
part to solar panels’ peak
production that occurs then.
So much electricity is
available now in midday,
in fact, that prices rou-
tinely dip below $10 a mega-
watt hour, and occasionally
head into negative territory
— meaning producers are
paying consumers to take it.
The duck curve helps
explain why the BPA’s debt
problems — $15 billion in
the red — are mounting.
Cash reserves of almost a
billion dollars in 2009 were
reduced to near zero in 2019
on the agency’s power sales
ledger.
A profi table summer of
2020 — good water supply
and a hot Southern Cali-
fornia summer — helped
shore up fi nances in the
short term. But with historic
drought gripping the West
this summer, quick profi ts
are less likely.
The long-term outlook
isn’t so rosy. And it isn’t just
critics of the BPA who are
pointing this out.
The Northwest Power and
Conservation Council is an
interstate compact between
Idaho, Washington, Oregon
and Montana, created with
the passage of a 1980 federal
law that aimed to balance the
needs of salmon recovery
and electricity production in
the Columbia River Basin.
The governors of each state
appoint two representatives
to the eight-person voting
body, which ultimately rat-
ifi es or denies a range of
council policies.
Council staff writes plans
and recommendations for the
Bonneville Power Adminis-
tration, for both its salmon
recovery eff orts as well as
ensuring an adequate and
reliable supply of electricity.
The Northwest Power
Act, the law that created
the NPCC, isn’t perfect: its
critics point out it lacks reg-
ulatory teeth; that is, the rec-
ommendations made by the
council amount to little more
than that.
Ed Chaney, who in the
1980s was Idaho Governor
Cecil Andrus’ right-hand
man on salmon recovery
issues, and who has sued the
Council several times over
its failure to institute eff ec-
tive salmon recovery policy,
is skeptical of NPCC’s con-
tinued existence.
“The council has accom-
plished the incredible feat
of overseeing the expendi-
ture of billions of public dol-
lars and produced the oppo-
site of what the Power Act
required,” says Chaney.
“Snake River salmon and
Bonneville are now both
threatened with extinction.”
Chaney has tracked how
the council’s work on salmon
recovery was ceded back to
the BPA and NOAA over
the years as litigation over
endangered salmon stocks
began to dominate recovery
plans.
Despite abdicating the
salmon recovery portion of
its mission, every fi ve years
the council still produces
a report on the energy pic-
ture in the region, and makes
forecasts based on a survey
of factors that aff ect power
supply and demand.
As work began on the
current draft plan, Ben
Kujala, the NPCC’s power
division director, was ini-
tially taken aback by the
results of the model they
deploy to help craft the coun-
cil’s energy report. It was
forecasting the need for a
massive build-out of gas-
fi red power plants, a move
at odds with what was hap-
pening on the ground.
“The forecast still had ele-
ments of how we’d forecast
prices in our previous power
plans,” says Kujala. “But we
had hit a place where stan-
dard industry planning prac-
tices had diverged sharply
from the policy landscape in
the West.”
The model’s inputs were
updated to refl ect that cur-
rent reality. A fi nal draft of
the ninth power plan will
be ready sometime this
summer, but initial fi ndings
of the plan have been pre-
viewed on several occasions
in council proceedings.
The draft report confi rms
the tumultuous market con-
ditions of the last decade
aren’t an anomaly — the
way we produce and dis-
tribute electricity is under-
going a profound change.
Hydro’s reliable appeal
Kujala, who moved over
to the NPCC from a job
with the Bonneville Power
Administration as an energy
analyst, cautions that the
decision for utility managers
isn’t as simple as signing
an energy contract with a
solar provider. He points out
that utility managers and
their commissioners might
be inclined to stick with the
BPA, paying more for power
that comes with perks.
“Convenience has value,”
says Kujala. “You sign up
with a [BPA preference cus-
tomer contract] and you get
reliable power that is shaped
to meet your customers’
demand. It’s a nice tidy
package delivered to your
doorstep.”
On the fl ip side, the vul-
nerability of that same con-
tract is the vagaries of its
price: BPA doesn’t set a fi xed
rate for its preference cus-
tomers’ power purchases.
When rates soar, as they
have over the past decade,
those same customers at
least cast a furtive glance at
what might be a better deal
elsewhere.
So is solar a better deal?
It’s a decision, says
Kujala, that utility managers
face with some trepidation—
but not, if he can help it,
without good information to
aid in deliberations. Where
the future lies will very
much depend on the size,
location and specifi c needs
of individual utilities.
“A solar project has a
fi xed price,” he says. “You
know what you’re getting.
Sure, you might have a few
cloudy days, but if you do
a $25-a-megawatt solar
project, you’re pretty sure
you know what’s coming
out.”
By contrast, a draw-
back of a long-term contract
with the BPA, says Kujala,
is price uncertainty, par-
ticularly in an era of pro-
found change in the energy
business. A 20-year term
is standard for preference
customers.
Tony Jones is an Idaho
energy economist. He’s
studied the federal hydro-
power system on the
Columbia for three decades,
and has a piece of advice for
utility managers.
“You don’t want to be
the fi rst to sign one of those
20-year contracts,” he says.
“There’s a scenario here
where a few key customers
head for the exits. That
leaves the remaining cus-
tomers with rate increases
to make up the cost of those
departing customers.
“In any business, a
shrinking customer base is a
death spiral. And you don’t
want to be the PUD in the
region stuck with the pros-
pect of trying to prop up the
BPA.”
The best way for Bonne-
ville to survive, says Jones,
is to get rid of its vulnerable
assets. The worst of the lot,
he fi gures, are the four lower
Snake River dams.
THURSDAY, JUNE 24, 2021
SHOPPING
Continued from Page 1B
County better, one
moment at a time. Try
it. I’m not asking you to
never leave the valley or
forgo a thing you may
pine for. All I’m encour-
aging you to do is prac-
tice a little extra mind-
fulness when you’re
shopping. If you can’t get
something here, that’s
OK — I get it. If you just
want to go for a drive and
check out new places,
I’m right there with you.
But next time, before you
click, see what you can
fi nd right now, rather than
two days from now.
Consider this random
fact I learned since
researching the bene-
fi ts of supporting local
— if everyone shifted
and spent just $10 per
month locally (that nor-
mally would have been
spent online), $9.3 bil-
lion would be returned
back into local econo-
mies. Wherever you are,
isn’t $10 worth where
you live?
———
Suzannah Moore-
Hemann is the execu-
tive director of the Union
County Chamber of Com-
merce & Visitors Informa-
tion Center.
Reassessing Snake
River dams
Kujala has been asked
often since Idaho Rep. Mike
Simpson proposed a concept
for removing the four lower
Snake River dams about
whether the NPCC’s draft
power plan will provide any
insight into the feasibility of
that prospect.
He says the updated
model they’re using is
capable of providing a
picture of what the fed-
eral hydropower system
would look like without the
Snake River dams. But in
part because of the hotly
contested politics of dam
removal, he’d want the input
of council representatives.
“What the council does
well is we pull everyone into
a room, we make them all
sit there and we go through
everything in exhaustive
detail,” he says. “We say
‘these are the inputs you
wanted, these are the conclu-
sions that came out,’ and we
go through those slowly and
methodically. We absolutely
have the capability of doing
it, and I think we could do
it in maybe a more nuanced
way than what’s been done
so far. But it would be a big
process.”
The public will have a
chance to weigh in on the
draft plan at an as-yet unde-
termined time this summer,
an opportunity Kujala
encourages citizens to take.
“Part of what we’re here
for is to be helping people
understand what’s going on
in the power system,” he
says. “We want to be one
of the places people can
turn to.”
U.S. Army Corps of Engineers/Contributed Photo
Washington’s Lower Monumental Dam is one of four dams
along the Snake River that environmentalists call “salmon-kill-
ing machines.”
DAMS
Continued from Page 1B
The dams are critical
for the West Coast’s export
and import markets, said
Jeff Van Pevenage, presi-
dent and CEO of Columbia
Grain International in
Portland.
Some 60-65% of the
wheat exported using the
Columbia-Snake River
system originates in the
Lower Snake River region,
consisting of 13 barge facil-
ities with more than 10
owners, Van Pevenage said.
“Without the current
volume, you will endanger
the economic viability of
at least two of the export
facilities that exist in Port-
land,” Van Pevenage said.
Those facilities rely heavily
on barges and don’t have
the ability to expand rail
capacity, he said.
Barging provides trans-
portation competition and
alternatives to keep freight
rates in check, Van Peve-
nage said. Without it, rail
costs for grain shipments to
Portland could potentially
more than double, particu-
larly during the fall, when
corn and soybean ship-
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FAMILY
OWNED
ments from the Midwest are
also heavy.
Without barging, many
regional farmers could fi nd
themselves in a “captive
shipping” scenario, similar
to one experienced today by
Montana farmers, Van Pev-
enage said.
“As an example, at
times today, you can ship
wheat from eastern North
Dakota through Mon-
tana to the West Coast for
cheaper rates than you can
ship from Montana to the
PNW,” he said. “It’s very
possible those types of
scenarios will exist here
without the competition.”
If the dams are breached,
“what will happen in the
end is farmers will be
paying more and making
less at the end of the day,”
Van Pevenage said.
Van Pevenage recom-
mended the industry orga-
nize similar tours for other
members of the House
Appropriations Committee.
“...(T)hey could come
out for themselves and see
that we don’t need to spend
$34 billion that we don’t
have to eradicate these
dams, we need to continue
the work that’s happening,”
he said.
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BRINGING QUALITY PRODUCTS AT
AFFORDABLE PRICING TO
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New world confi rmed
Gone, too, is the ready
availability of profi table
midday electricity sales.
Energy wonk blogs buzz
with allusions to “the duck
curve” — a glib turn of
phrase that describes how
electricity prices are now
lowest in the middle of the
day when they used to be
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