Kyle Roadman, EPUD General Manager
Hello Emerald Customer-Owners,
The weather is warming up and we’re heading into prime construction season here at EPUD. I hope you soon have the chance to see our staff out in your community, working to make our electric system even more reliable. Meanwhile, I’m back with a final post about our Northwest power supply system.
To recap, my previous posts on this topic have argued:
- The Northwest power supply system is a “crown jewel” that has long driven our regional economy
- Historically, this system has successfully balanced three key pillars: reliability, affordability, and environmental responsibility
- In recent times, however, policymakers have shown a near singular focus on the last of these pillars
- The result has been a less reliable and affordable system, a situation that is beginning to impact people and families
- We can look to California for a preview of just how bad an unbalanced power supply system can get
To finish off this series, I’d like to highlight three current policy issues that will help determine whether the Northwest system can maintain balance.
Issue 1: Future of the Federal Hydro System
Despite an 80-year track record of delivering affordable and reliable energy for our region, the Federal hydroelectric system is under increasing attack from interests seeking to remove dams. Most recently, the focus has been on those located along the lower Snake River, including Ice Harbor Dam, Lower Monumental Dam, Little Goose Dam, and Lower Granite Dam. This dam removal effort culminated in December 2023, when the federal government facilitated an agreement between the states of Oregon and Washington and four tribal nations. Known as the Columbia Basin Restoration Initiative, this agreement lays out a series of steps leading to the removal (breaching) of the four lower Snake River dams.
The agreement pays lip service to “replacing” the energy and other services lost from the four dams. However, should this agreement play out to its logical conclusion, the reality would be an unmitigated disaster for our region. Credible studies on replacing the 3,000 megawatts (3 gigawatts) of power production from these four dams show that it would require an additional 15,000 megawatts of renewable and storage capacity at a cost of at least $15 billion. Other studies have shown that electricity rates could rise nearly 20%.
Source: Lower Snake River Dams Power Supply Replacement Analysis (Northwest RiverPartners).
Despite this nonsensical outcome, special interests have cheered this march toward energy scarcity, with press releases that do nothing to hide their intentions.
Source: Earthjustice Press Release: U.S. Government Sets a Path to Breach the Four Lower Snake River Dams
Although the 2023 agreement appears paralyzed for the time being, this debate is unlikely to go away any time soon. Dam opponents will go back to court if they don’t achieve the outcome they’re looking for via negotiation. And based on recent comments, the Snake River dams are likely just a precursor to an attack on the far larger hydroelectric projects along the Columbia River. Whether we can maintain these clean, affordable, and reliable power sources in the face of relentless opposition will go a long way in determining if our regional system can stay in balance.
Issue 2: Organized Energy Markets
A second, lesser known, issue has to do with how energy is produced, bought and sold across the country. Traditionally, electric utilities like EPUD have relied on power plants located relatively close by. We use our own transmission and distribution lines to deliver the energy from these plants directly to our customers. In many parts of the country, however, this model has been replaced by organized markets, in which utilities share generating resources and transmission lines across a much wider footprint. The idea is to find a “least cost” outcome for everyone involved. Existing organized markets in the U.S. are shown below.
Existing organized markets across the country
After decades of fighting against the concept of organized markets, the Northwest now looks poised to move down this road as well. The promise is to leverage resource diversity, particularly when dealing with renewable resources. Imagine a wind plant in Wyoming and a solar plant in Arizona. If working in isolation, each would have periods of no- or low-generation due to the nature of the resource. However, if they were operated by the same entity in a single market, one could offset the other and ensure there is always some level of generation. At least that’s the theory.
In reality, organized markets have a mixed track record in other areas of the country. Costs often don’t come down and utilities are replaced by bureaucratic “market operators” when it comes to resource decisions. Unsurprisingly, California was an early adopter of this concept (and we’ve already seen the results down there). Nonetheless, the promise of wider geographic cooperation is too attractive for most in the Northwest.
Which brings us to the market options for Northwest utilities . The infrastructure required to stand up such a market is extensive and there’s currently no support for a homegrown solution. That’s led to a big recruitment effort from California, which is always looking to expand it into new areas. Already, this California market has been singled out by the investor owned utilities in Oregon, who can’t move fast enough to join forces with the state that has the second highest electric rates in the nation. .
That leaves consumer owned utilities like EPUD looking for a path forward. For most of us, we’ll access any organized market through the Bonneville Power Administration (BPA), so the choice of which market it joins is hugely consequential.
The California market is governed by the California legislature by and for the people of California. The folks down there would, quite frankly, love to get their hands on our low cost hydroelectric power. Without proper regulation and fair governance, this would mean cost shifts (or, stated differently, a wealth transfer) from California ratepayers to Northwest consumers. We need only look back at Part 4 of this series to see how bad California has done keeping its own system in balance. The prospect of joining forces with them, in a market that the California legislature controls, is about as appealing as a stick in the eye.
Luckily, a second market option has developed in recent years. This comes from an organization known as the Southwest Power Pool (SPP), which has member utilities from 14 different states, including Montana and Wyoming. SPP is developing a competitive offering to the California market, with the same resource diversity benefits but one crucial advantage: SPP’s market will be independently governed by all those who choose to join. This means any Northwest utility participating in the market will have a seat at the table to influence its design.
The Southwest Power Pool’s proposed “Markets+” Footprint
Given that BPA represents so many consumer owned utilities and owns 75% of the transmission in the Northwest, its decision on which market to join has been closely scrutinized. This includes intense political pressure from Senators, Governors, and Oregon/Washington state agencies, pushing BPA to join the California market. But to its credit, BPA held strong and announced its intention to instead join the SPP market, with the independent governance model being the primary reason.
Despite this current direction, the pressure will remain on BPA to follow California off the ledge. Whether it can hold out and follow through on joining a truly independent market will play a major role in determining whether our Northwest power supply system can stay in balance.
Issue 3: New Infrastructure Development
The final issue is one that plagues so many of our domestic industries: an inability to design, permit, and build infrastructure at the scale we need. At the same time the electricity sector is facing record demand, an outdated regulatory regime has made it extremely difficult to respond with new supply. Even renewable energy, supposedly in favor among regulators, is often held hostage using existing land use and environmental laws.
It’s become cliché at this point, but the NIMBY (Not In My Back Yard) tendency is the chief offender here. Nobody wants development to happen near them, and we’ve given both individuals and special interest groups extraordinary veto power over projects that could benefit society overall. I previously highlighted the example of an off-shore wind project along the Oregon coast, which fell apart once a local group came out in opposition.
Perhaps even more problematic is how this relates to transmission system expansion. All the generation projects in the world won’t mean anything if we can’t get the power to end users via appropriately sized transmission lines. And given all the miles over which transmission lines run, this is ground zero in the war against progress. A recent example in Portland highlights just how absurd the opposition can be.
Portland General Electric (home of the double digit rate increase) has had an existing right-of-way through a portion of Forrest Park near downtown Portland. In an effort to meet growing energy demand, it requested approval to expand its system within this existing right-of-way on an additional five acres of land. The area in question is shown below.
The dotted orange line is the proposed new infrastructure. The other lines are existing infrastructure.
After unending analysis and approval steps, Portland City staff came out against the project due to the removal of 370 trees. Nonetheless, it was approved by a hearing’s officer in March on the basis that the utility had followed all the necessary steps and the ends justify the means:
But in a late breaking twist, last month the project was somehow rejected again by the Portland City Council after a group of environmental interests protested.
It’s important to take a step back to understand what the City is rejecting here. This upgrade to PGE’s system in a tiny portion of the park (5 of 5,200 total acres!), around which they already have transmission lines, is intended to meet growing demand with new, renewable energy resources. Say what you want about renewables (and I’ve said a lot), the fact that the City is opposing what it purports to want (clean energy) tells you everything you need to know about our ability to get anything built around here. Multiply this project by hundreds of others across the Northwest and you can see the challenge.
Whether we, as a Northwest society, are able to change the trajectory of future infrastructure build out will be key in determining whether our power supply system stays balanced. There are plenty of ideas being floated, from permitting reform to land use changes. Ultimately, however, there will need to be wholesale re-evaluation of our approach to building both power supply and transmission if we’re going to keep up with rising demand.
That concludes the mighty five-part power supply series. If anyone actually read this far, thank you and I hope you’re still in one piece. I’ve enjoyed sharing my perspective and look forward to doing more of this in the future.
Please reach out with any questions or comments and thank you all for being EPUD customers!
Please stay safe,
