Academic journal article Forum for Applied Research and Public Policy

Quo Vadis?

Academic journal article Forum for Applied Research and Public Policy

Quo Vadis?

Article excerpt

Public power in the Northwest is changing in the face of restructuring and growing environmental concerns.

Consumer-owned electric utilities, sometimes called public power or publics, come in different shapes and sizes. Take, for example, the Pacific Northwest states of Washington, Oregon, Idaho, and Montana. Municipal electric utilities serve the residents, industries, and businesses of Tacoma and Seattle, Washington. Electric cooperatives serve mainly ranchers in remote, rural areas of the four states, although a cooperative also serves suburban residents and businesses near Salem, Oregon's capital.

Mutual electric utilities, similar in form to cooperatives, may also serve either rural or urban customers. People's utility districts serve rural and urban customers in Oregon. And, finally, public utility districts provide electricity to entire counties in Washington. [1]

Whatever the form, the hallmark of public power is that, unlike investor-owned utilities (IOUs), publics are nonprofit organizations that are owned by the people they serve. An IOU operates not only to provide electricity to its customers, but also to earn dividends for its owners/shareholders, who may live anywhere on the planet. Unlike IOUs, public power also has a statutory priority right to federally generated power at cost.

Territorial Disputes

The Pacific Northwest was a crucible for public power, and most consumer-owned utilities were born into an atmosphere of unrest and tension. [2] Several factors contributed to the establishment of publics in the late 19th and early 20th centuries, including the failure of IOUs to serve remote rural areas; high rates charged by IOUs relative to those charged by existing municipals; a general fear of monopolies that included railroad and river transportation monopolies as well as IOUs; distrust of Eastern financiers; and a backlash against the false information IOUs spread in their attempts to counteract the political lure of public power. But the central issue and ensuing battle was about who would control the Columbia River and its tributaries, whether for irrigation, navigation, flood control, or hydropower. Through the mid-1930s, public and private utility providers in the Northwest engaged in a territorial struggle over who would get to serve where. Then the federal government weighed in.

Franklin Roosevelt's New Deal brought increased federal regulation over IOUs because of their financial misconduct. The federal government initiated low-cost loan programs to extend the benefits of electric power to farmers. Public works projects resulted in the construction of the Bonneville and Grand Coulee dams on the Columbia River. Indeed, the Bonneville Project Act of 1937, creating the Bonneville Power Administration (BPA), settled a three-year battle between public and private power for control over the rights to market hydropower generated by dams owned by the U.S. Army Corps of Engineers and the Bureau of Reclamation. The law was to ensure that federal hydropower generation facilities were operated for the benefit of the public and that BPA gave priority in the wholesaling of federal hydropower to the publics at cost-based rates. [3]

During World War II and the following decade, an uneasy truce developed between publics and IOUs. Both sides agreed to operate Northwest hydro resources as if the region were served by one utility, regardless of ownership. BPA allowed nonfederal power over its transmission lines to accommodate coordinated operations and to reduce the risk of short-term power shortages.

During that time, a large portion of the power generated by BPA was purchased by the aluminum industry, which had grown large meeting the materiel demands of war. Aluminum plants sprouted in the Northwest and, like the IOUs and publics, bought their electricity directly from BPA. Hence their collective name, direct-service industries. [4]

Another era of distrust and bitterness dawned in 1976 when BPA announced that because of predicted load growth and power shortages, it would be unable to provide power to any newly formed publics, and direct-service industry contracts would not be renewed. …

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