March 26, 2001

California energy crisis stalls Oregon deregulation plans

SALEM, ORE. (AP) - The energy crisis in California has forced Oregon officials to consider delaying the state's push toward a partial deregulation its own power market.

The idea was to implement the deregulation plan on Oct. 1, but that's the same date the Bonneville Power Administration is scheduled to significantly increase its rates.

Oregon Public Utility Commissioner Ron Eachus and Senate President Gene Derfler had previously quashed any attempts to halt or slow the deregulation effort. But with California utility companies faced with fiscal disaster, the duo appears to be pulling back.

Last week, Eachus sent a Derfler aide an e-mail broaching the idea of delaying deregulation for at least a few months. Eachus said this would at least politically separate the impact of any deregulation the BPA increases.

"If that would satisfy everybody, I think that would be a fair way to do it," Derfler said.

Supporters of Oregon's partial deregulation say it's vastly different from the failed California approach, and they say it's crucial to move ahead with the plan to help the state develop new supplies of energy - both conventional and renewable. Many opponents concede Oregon's plan is different than California's, but they worry that moving ahead with deregulation would only raise consumers' prices in a volatile market.

Oregon's deregulation law is unique. When the Legislature passed Senate Bill 1149 in 1999, deregulation of the power structure already had been approved by 24 states in some capacity. But experts couldn't have imagined that California's system would fail so spectacularly, resulting in controlled, rolling blackouts.

Still, with Northwest power rates among the lowest in the country, there was little voter interest in deregulation.

Instead, the Oregon bill was spawned by an unusual coalition: businesses that thought they could shop for cheaper power; independent power generators who wanted access to a new market; and consumer and environmental groups that wanted to wrest control of such things as energy conservation and low-income energy aid from the utilities.

The result was a compromise: Large commercial users won the right to buy from competing energy suppliers, and consumer and environmental groups gained a 3 percent "public purposes" fee to fund conservation, alternative energy and low-income assistance.

The law protected customers from having to deal with telemarketers selling power, the way phone companies do; and the state's consumer-owned utilities, which account for about 25 percent of the market, would be exempted.

But when California's failed deregulation and the drought hit Northwest energy users about the time the Oregon Legislature began its new session, there were immediate cries to jettison the new law.

Behind Derfler, the coalition behind the bill hung together, and the lobbyists involved in putting the new law together expressed confidence it would go into effect as scheduled. The continued instability in the electricity markets, however, continued to raise doubts about Oregon's deregulation.

The BPA, which markets about half of the Northwest's electricity, warned utilities to expect big rate increases starting Oct. 1, when the old BPA contracts expire. BPA spokesman Ed Mosey said the agency is trying to hold the increases to utilities below 100 percent.

Most of the agency's power goes to public utilities, whose customers could be facing retail rate increases of 50 percent, Mosey said.

At the same time, PGE and PacifiCorp customers also can expect rate increases. PGE expects to ask the utility commission for a "significant rate increase" to take effect Oct. 1 because of high power costs, said spokesman Scott Simms. PacifiCorp on Friday asked for a 24 percent rate increase for May through July while the commission studies what kind of rate increase to grant in August.

Although these increases are not connected to Oregon's deregulation plan, "in the public mind there is a connection," said Senate Majority Leader Dave Nelson, R-Pendleton, "and that has political consequences." (Copyright 2001 by The Associated Press. All Rights Reserved.)

http://www.katu.com/news/news_story.asp?ID=9418

-- Martin Thompson (mthom1927@aol.com), March 27, 2001