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ORECA
Position on Electric Industry Restructuring
Sandy Flicker, Executive Director, ORECA
Overview: The Oregon Rural Electric Cooperative
Association (ORECA) supports postponing the implementation of laws
providing for the restructuring of the electric power industry
because of the potential to further destabilize Northwest
wholesale energy markets, negatively affecting co-op customers.
ORECA Advises Legislators to Delay
Electricity Deregulation
In 1999, the Oregon
Legislature passed Senate Bill 1149 that deregulated the electric
utility industry. The new law said that investor- owned utilities
(IOUs) must allow their large customers access to the open market
by October 1, 2001. Under deregulation, Oregon's IOUs must remove
their excess electrical power generation facilities from
regulation either by auction or transferring them to an
unregulated affiliate. They may retain only enough generation
capacity to serve residential and small commercial customers on a
cost-of-service basis.
ORECA participated in the deregulation
debates to make sure its members and customers were represented.
As a result of this participation, ORECA was able to get language
in the bill protecting local control. This allowed local utility
boards to decide whether or not to participate in a deregulated
environment. Regardless of its participation, ORECA's official
position was one of neutrality as the bill made its way to final
passage. That was then!
Today, California continues to make
headlines with its failed deregulation bill, including rolling
blackouts; utilities facing bankruptcy; and, some consumers facing
electric bills that have tripled in cost. The effects of
California's flawed legislation have disrupted the wholesale
energy markets. This impacts co-ops because their primary
electricity supplier - the Bonneville Power Administration (BPA) -
over-committed their resources to Direct Service Industries and
IOUs and is forced to augment their power supply by buying on the
market. When BPA buys market power, they meld that cost with their
hydropower and now electric co-ops are facing rate increases to
cover the rising cost of BPA power that is in scarce supply.
Taking these issues into account, ORECA
is asking the Oregon Legislature to delay implementing SB 1149.
Anything that affects the wholesale energy market directly affects
electric cooperative customers either through wholesale market
contracts or through the market exposure of BPA. When SB 1149 was
passed with an intended implementation date of October 1, 2001,
the Legislature could not foresee the wholesale market problems we
are now encountering. This situation will remedy itself over time
as new generating resources are built in response to the current
price signals in wholesale markets. ORECA, therefore, advises the
Oregon Legislature to postpone restructuring and supports efforts
to streamline the siting of new generating resources. Any benefits
of direct retail access should be reassessed when it becomes clear
that the region's resources are adequate to meet the demand for
electricity.
The Legislature is now embarking on the
discussion of delaying deregulation. Both Representative Bob
Jenson (R) - Pendleton and Senator Ted Ferrioli (R) - John Day,
have introduced legislation to delay deregulation for two years.
They have the support of many other co-op Legislators for this
legislation. According to Ferrioli, "We must act decisively
to create new electricity supply, stabilize the electricity market
and sort out the California energy meltdown before moving toward
deregulation in Oregon. Our ratepayers need answers and we need
certainty far more than we need deregulation."
It is important, as co-op consumer
owners, that we contact our Oregon Legislators and ask them to
support delaying deregulation until new resources are on-line in
the Northwest and we have a more stable market than exists today.
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Spring Ahead or
Spring Back
This spring not only includes adjusting our clocks, but
hopefully our electric usage habits. During peak hours of electrical use
(6:30 a.m. to 10:00 a.m. and 4:30 p.m. to 10:00 p.m.) generation and
transmission systems can be stretched to the limit to provide the power
necessary to meet high usage needs. This is especially true considering
the power supply situation we're facing over the next several months.
Please try to adjust some of your electrical usage, like washing dishes
and washing and drying clothes, to off-peak hours. The entire region
could benefit if we all make some adjustments.
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