When Power Price Is High Enough, the Fish Become a Side Dish

A fishy smell is wafting down from the north, where a federal agency is selling off power from dams recently made famous for the controversy surrounding the salmon runs in the rivers upon which they sit. This December sounds more like high summer in Southern California when you listen to power-utility spokesmen. Consumers are livid and confused--as power providers attempt both to make up the shortfalls hitting California and to soften the blow of high electricity prices exacerbated by one of California’s former allies, the Bonneville Power Administration. Wednesday’s stopgap action by Energy Secretary Bill Richardson doesn’t alleviate the short- and long-term threat to consumers posed by California’s electricity crisis.

Last summer, California’s consumers--particularly those in San Diego--were ravaged by incredible increases in electricity costs. In a deregulated framework where electricity is a commodity like pork bellies, producers can sell their excess to the highest bidder. Power producers including Bonneville--an agency of the U.S. Energy Department that markets electricity from federal dams in the Pacific Northwest--did just that in California, to a shocking extent. While private companies cannot be faulted for pursuing a fair profit, a taxpayer-funded essential-services utility has a different mission.

Now Bonneville has returned to the feast in California in the midst of a growing political storm in which it is pitted against California consumers and some members of Congress. All this is occurring in the shadow of Bonneville’s desperate race to ink huge long-term contracts at rock-bottom prices with its large industrial and business customers, who then resell their excess, an arrangement that some in Congress have talked about investigating.

What has Bonneville done? It has exacerbated--some even allege caused--a power crisis in California and thereby profited handsomely. Bonneville is supposed to supply its excess electricity--power that is not already consumed or obligated by contract to go to the Pacific Northwest--to California at reasonable prices. Indeed, it did so, in cooperation with California’s utilities, for decades. But last summer, Bonneville withheld needed electricity from California. It claimed that it had to hold down production of electricity or risk harm to the salmon population in the Columbia River system. Curiously, when California was on the edge of rolling blackouts, Bonneville miraculously found that it had the excess power to sell. Bonneville waited until just prior to rolling blackouts and then sold electricity at its highest possible price into California. Apparently, salmon are no longer threatened with harm when the price for electricity is high enough.

While private companies have been investigated under allegations of profiteering and price gouging, the Clinton administration moved to shelter Bonneville, relegating audit requests by California Sens. Dianne Feinstein and Barbara Boxer to the back burner. Despite investigation by the Federal Energy Regulatory Commission of the California electricity crisis and the stopgap measures taken by the administration to alleviate the power flow crunch, the administration has made no move to initiate audits of Bonneville.

The primary responsibility for the current power shortfalls lies squarely with power producers and California’s air quality management bureaucracy. Power producers took generators offline for needed repairs, a usual practice during the low-demand cold season, only to find themselves unable to bring those generators back on line until the state’s air quality management bureaucracy was forced by a court to allow them back. But if the cold-weather crisis was not precipitated by Bonneville, the harm caused by the current shortfalls and next summer’s foreseeable crisis no doubt will be exploited and exacerbated by Bonneville.

The requested audit and a congressional inquiry should go forward. The Clinton administration has provided short-term relief that will take on substance only with an audit. Otherwise, Bonneville will continue to hold back needed electricity from California, blaming its alleged concern for the salmon run. Yet somehow, Bonneville will again be able to sell that same power when California becomes desperate enough--and the price becomes high enough.