H-1350.1  _______________________________________________


                     HOUSE JOINT MEMORIAL 4006



State of Washington      57th Legislature     2001 Regular Session


By Representatives Pennington, Casada, Pearson, Bush, Roach, Buck, Mulliken, Delvin, Boldt, Woods, Talcott, Anderson and Campbell


Read first time 02/05/2001.  Referred to Committee on Technology, Telecommunications & Energy.

Requesting the end of electricity transfers to California.


    We, your Memorialists, the Senate and House of Representatives of the State of Washington, in legislative session assembled, respectfully represent and petition as follows:

    WHEREAS, Reservoirs powering electricity generation dams throughout the Northwest are at historically low levels averaging seventy percent of previous year levels.  Reservoir levels are sufficiently low to generate alarm from industry watchers who warn there may not be sufficient water available to meet the region's future electricity needs; and

    WHEREAS, Reduced output from Northwest generating dams has forced several regional utilities to purchase a greater percentage of their load from the spot market.  This is occurring in tandem with a reduction in power traditionally available from California suppliers, thus adding to spot market price pressures.  The wholesale price of electricity jumped from less than five cents per kilowatt hour in January 2000 to nearly forty cents per kilowatt hour last December; and

    WHEREAS, California has failed to responsibly meet its increasing demand for power with sufficient generation development.  Demand in that state has grown nearly twenty-five percent since 1995, far in excess of small additions to capacity; and

    WHEREAS, California's local and state governments have allowed foes of development to stop any significant capacity growth in that state for reasons as slight as unsightliness in the case of the six hundred MW project at Coyote Valley; and

    WHEREAS, Some forty percent of California's capacity comes from facilities built more than thirty years ago, making them prone to equipment problems; and

    WHEREAS, It has been normal business practice for Northwest utilities to generate hydroelectric power for California consumption during the summer with the expectation that California's utilities would produce sufficient additional power for Northwest consumption during winter months; and

    WHEREAS, California's generating utilities have abandoned their traditional business relationship with Northwest utilities by bringing power plants off line for both maintenance and air emission credit reasons during months when Northwest demand is high; and

    WHEREAS, California has failed to take responsible action to limit the effects of restrictive air emission control standards that encourage plants to remain idle.  In the Los Angeles basin, air emission credit prices increased ten times in the past year to as much as forty-five thousand dollars per ton; and

    WHEREAS, California's Governor and local governments have failed to fully exercise their authority to lift regulations restricting full capacity electricity generation by that state's utilities; and

    WHEREAS, Two of California's largest utilities, Southern California Edison and Pacific Gas and Electric, have accumulated approximately twelve billion dollars in debt and do not possess assets or cash flow sufficient to cover these debts.  State laws obligating the delivery of service and capping retail prices brought about this credit crisis; and

    WHEREAS, California's credit crises has been exacerbated by California's Governor who refuses to allow an increase in retail rates sufficient to provide cash for power purchases; and

    WHEREAS, Industry experts such as Daniel Yergin, chairman of Cambridge Energy Research Associates, have called California's management of its electricity industry virtually a crisis by design; and

    WHEREAS, California participates with Washington on a connected transmission grid that relies on prudent and responsible actions by participants to ensure system reliability.  Blackouts, rolling or otherwise, place a strain on the entire transmission system and system participants have an obligation to avoid such breakdowns.  The California Governor's refusal to allow reasonable retail price increases has created a less reliable transmission grid for all participants; and

    WHEREAS, California utilities, operating through the California ISO, have pressured the Bonneville Power Administration to transfer electricity to the ISO through sales or electricity exchanges.  This latter procedure involves the transfer of electricity generated during peak market periods and returned at a later, lower priced, time.  The Bonneville Power Administration receives more power in return from California utilities than was transferred, but less power than could have been purchased with income received from a market sale of the same power; and

    WHEREAS, California's Governor pressured the Federal Energy Regulatory Commission to force surplus power sales from Northwest utilities when these utilities would not willingly loan power to California's financially insecure utilities; and

    WHEREAS, Though willing to pressure federal agencies to conduct forced or preferential transfers of power from the Bonneville Power Administration and other Northwest utilities, the Governor of California is unwilling to raise retail prices in that state to a fraction of the percentage increase imposed on Northwest utility customers, thereby exposing the present California credit crisis as an event planned and managed by the Governor of California; and

    WHEREAS, The Bonneville Power Administration, which must make debt payments to the United States Treasury on rates charged to Northwest utilities and their customers, is presently owed approximately one hundred thirty-five million dollars by California utilities for power sold on credit.  These same California utilities, operating through the California ISO, have missed repayment schedules on electricity exchange agreements; and

    WHEREAS, The Pacific Northwest Consumer Power Preference Act of 1964, 16 U.S.C.A. 832(c), provides that the Bonneville Power Administration is to be operated for the benefit of public bodies and cooperatives in the Pacific Northwest.  California utilities are not preference customers and are not entitled to any preferential treatment by the Bonneville Power Administration.  Any activity by the Bonneville Power Administration that grants California utilities preferential treatment not afforded Northwest utilities or other Bonneville Power Administration preference customers runs counter to the statutory mission of the Bonneville Power Administration; and

    WHEREAS, Peak market electricity exchanges provide California utilities a preferential benefit not made available to the Bonneville Power Administration's preference customers including Washington utilities and direct service industries; and

    WHEREAS, Any Bonneville Power Administration power exchanged or sold to California utilities without adequate security will place Washington ratepayers at substantial financial risk in the event of default by these entities.  Failure by California utilities to pay obligations owed to the Bonneville Power Administration would result in rate increases for Washington ratepayers; and

    WHEREAS, The Governor of California has acted negligently to permit, plan, and manage an electricity resource, transmission, and credit crises that places Washington utilities, their customers, and the natural resources of Washington at great risk; and

    WHEREAS, Congress and the President have been asked to order the removal of power generating dams located on Pacific Northwest rivers; and

    WHEREAS, Removal of any power generating dam in the Pacific Northwest would jeopardize the economy of the region and the health and safety of Washington's citizens;

    NOW, THEREFORE, Your Memorialists respectfully pray that President Bush and the Congress of the United States direct all federal agencies to cease facilitating the preferential transfer of electricity generated in the Pacific Northwest to California utilities and cease expenditures related to investigating or preparing for the removal of power generating dams located on Pacific Northwest rivers.

    BE IT RESOLVED, That copies of this Memorial be immediately transmitted to the Honorable George W. Bush, President of the United States, the President of the United States Senate, the Speaker of the House of Representatives, each member of Congress from the State of Washington, the Secretary of the United States Department of Energy, the Chairman and Commissioners of the Federal Energy Regulatory Commission, the Administrator of the Bonneville Power Administration, the Chair and Members of the Northwest Power Planning Council, the Honorable Gary Locke, Governor of the State of Washington, the Honorable Christine O. Gregoire, Attorney General for the State of Washington, the Honorable Dirk Kempthorne, Governor of the State of Idaho, the President Pro Tem of the Idaho Senate, the Speaker of the Idaho House of Representatives, the Honorable John Kitzhaber, Governor of the State of Oregon, the President of the Oregon Senate, the Speaker of the Oregon House of Representatives, the Honorable Judy Martz, Governor of the State of Montana, the President of the Montana Senate, the Speaker of the Montana House of Representatives, the Honorable Gray Davis, Governor of the State of California, the President Pro Tem of the California State Senate, and the Speaker of the California Assembly.


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