PNUCC PACIFIC NORTHWEST UTILITIES CONFERENCE COMMITTEE SUMMARY OF PNUCC TESTIMONY BEFORE THE WEAVER SUBCOMMITTEE On July 11, the Pacific Northwest Utilities Conference Committee (PNUCC) testified before Congressman Weaver's subcommittee on marketing of the Northwest's present firm energy surplus to California. Principal points of PNUCC's testimony can be summarized as follows: Mutual Benefits Sale of the Northwest's firm surplus could potentially benefit both regions. Such an arrangement could permit Northwest utilities to proceed with cost-effective conservation programs, to utilize their electric systems more efficiently and thereby to produce rate benefits to this region's consumers of electricity. On the other hand, a surplus sale would allow Southwest utilities to displace existing oil and gas-fired generation, to reduce operating costs, and to defer construction of new generating facilities, thus yielding economic and environmental benefits to their consumers. It also appears that a long-term sale of the Northwest's firm surplus is possible without changes in existing law. Conservation and the Net-Billed Plants It appears that both an aggressive conservation effort and the WPPSS net-billed plants (i.e. Projects Nos. 1, 2, and 3) are needed to support any long-term sale. To be attractive to Southwest utilities, a long-term sale needs to provide roughly 1500 megawatts of energy over a 15 year period. Even with the Regional Council's mediumlow load forecast and its ambitious conservation effort, all three net-billed plants must be completed to support a commitment of this magnitude. Whether additional resources need to be developed, such as cogeneration and small hydro, depends largely on future load growth and how much energy will actually be saved in a full scale conservation effort. Broad-based Support For a long-term surplus sale to be successful, it will require the full support of all groups active in regional energy planning. BPA and Northwest utilities must be able to share risks with their Southwest counterparts and realize tangible benefits for Northwest ratepayers. The Regional Council must ensure that any sale is consistent with the Regional Energy Plan and generally is in the Northwest's best interest. The states, public interest groups and the general public must also understand and support the need for such an arrangement. Finally, any surplus sale must preserve the economic benefits of Northwest resources for this region's ratepayers; the Northwest cannot risk either the appearance or the reality of becoming an "energy farm" for California. PNUCC 520 SW SIXTH AVENUE, SUITE 505 PORTLAND, OR 97204 (503) 223-9343 TESTIMONY OF THE PACIFIC NORTHWEST UTILITIES CONFERENCE COMMITTEE (PNUCC) BEFORE U.S. HOUSE OF REPRESENTATIVES SUBCOMMITTEE ON MINING, FOREST MANAGEMENT AND BONNEVILLE POWER ADMINISTRATION OF THE COMMITTEE OF INTERIOR AND INSULAR AFFAIRS Randall W. Hardy, Executive Director, PNUCC Eugene, Oregon July 11, 1983 Good morning Congressman Weaver and subcommittee members. My name is Randall W. Hardy, and I currently serve as Executive Director of the Pacific Northwest Utilities Conference Committee (PNUCC). PNUCC is a voluntary association representing public and investor-owned utilities in the Northwest, as well as the 15 direct service industries (DSIs) which purchase wholesale electrical energy directly from the Bonneville Power Administration (BPA). PNUCC's major responsibilities include electric load forecasting, long range resource planning and representation of member interests before the Northwest Power Planning Council. I am appearing today at Chairman Weaver's invitation to offer PNUCC's perspective on selected issues associated with marketing the Northwest's firm energy surplus to California. I have organized my presentation to speak to those subcommittee questions where PNUCC has some knowledge or expertise. The identification of issues in my testimony corresponds to the question number in the subcommittee's invitation letter. GENERAL QUESTIONS 1. What are the economic and environmental benefits and costs of expanded transmission capacity between the Northwest and California? Forecasts of the demand for electricity in the Pacific Northwest project a surplus of electric energy for the next several years. Forecasts of demand for electricity in the Pacific Southwest indicate a continued reliance on substantial amounts of oil and gas, a long-term deficit of firm power supply and, therefore, a need either to construct new generating facilities or to contract for firm supplies of electric energy from outside sources. The situation suggests that it might be to the economic and environmental benefit of both regions to enlarge the capacity of the transmission system that interconnects them, and to enter into long-term contracts for the sale of firm power over that system. For the Northwest, such contracts could make it possible to proceed with cost-effective conservation programs, to plan and to utilize its electric system more efficiently, and thereby to produce an economic benefit to all consumers of electricity. For the Southwest, such contracts could make it possible for utilities to displace existing oil and gas-fired generation, reduce operating costs, and defer construction of new generating facilities, thereby benefiting consumers both as to the cost of electricity and the quality of their environment. In addition, the depletion of oil and gas reserves would be reduced substantially by the assured availability of Pacific Northwest surplus firm power. The costs associated with such an arrangement would result primarily from the capital investment and environmental mitigation required for expansion of the existing transmission system. An additional cost would likely come from the displacement of non-firm energy by surplus firm sales, during an interim period while new transmission capacity was being added. 2. Please compare the feasibility, possible schedule for completion, benefits, and costs of these transmission expansion proposals: (various specific proposals identified). Since PNUCC does not perform transmission planning studies, it would not be appropriate for us to comment in this area. We believe that BPA and individual utilities can provide the subcommittee with detailed information on many of the identified transmission alternatives. In addition, the Northwest-Southwest Work Group on surplus marketing has recently formed a subgroup to inventory existing transmission studies and to evaluate their cost and benefits on a common basis. While that subgroup has just begun its task, the results of its preliminary analysis should probably be available in the next few months. 3. If any of these proposals are desirable, which organizations should finance and carry out the line upgrades, conversions or new line construction? This subject will probably be part of the Northwest-Southwest Work Group analysis of transmission alternatives. At this time it is premature to conjecture what entities might be involved in financing or constructing particular transmission facilities. 4. What are the economic, financial and legal obstacles to expanding transmission capacity, and selling surplus firm and non-firm energy between the Northwest and California? Although asked as three separate questions, all potential obstacles are SO interwoven that a single listing is appropriate. From our discussions to date, the most significant obstacles appear to be: Size of the surplus - There is considerable question as to the exact size and duration of the surplus. The Northwest Power Planning Council's range of forecasts itself illustrates the point. If the Regional Council's high forecast occurs, the present surplus disappears in 1988. If Council's medium-low forecast proves more accurate, then the surplus lasts until 1994. In either case additional conservation measures, which the Council predicts are available in substantial quantities, could further lengthen the surplus period, yet these measures are subject to their own unique performance uncertainties. The size of any Northwest firm surplus, and how it varies with |