Albion Monitor /Commentary
[Editor's note: For background on Enron, see "A Bigger Scam Than the S&L Bailout" by Alexander Cockburn in a previous edition of the Monitor.]

Utility Deregulation Will Send Oregon's Water South -- By Wire

by Russell Sadler

The Northwest was watching for pipelines. It should have been watching for powerlines
(AR) ASHLAND, Ore. -- Utility "deregulation" is the darling of the Beltway's think tank crowd of economic determinists. It has no appeal in the Pacific Northwest where "deregulation" just looks like another plain, old-fashioned raid on Columbia Basin water.

Northwesterners kept a worried eye turned south for decades fearing thirsty Californians would raid Columbia River water to sustain their unsustainable build-and-damn-the-consequences economy. Former Sen. Mark Hatfield, R-Oregon, regularly attached riders to appropriations bills prohibiting federal agencies from studying transfers of Columbia River water.

The Northwest was watching for pipelines. It should have been watching for powerlines. Congress is considering legislation that sends Columbia River water south -- by wire. Houston-based Enron Corporation, the first of the raiders, is already banging on the barricades, waving money and throwing its ample political weight around. Only the Oregon Public Utility Commission can stop the raid. It may do just that.

It's all part of the magic of free market economics -- and Enron's 22 lobbyists
The frustrated Houston energy hustlers are petulantly packing their bags, threatening to take their money and go home if the Oregon Public Utility Commission will not deal over their proposed $3.2 billion buyout of Portland General Electric. It is a revealing threat.

Enron is successful today because it does political deals rather than build utilities. Facing the Oregon PUC has been a frustrating experience for Enron because the commissioners and their staff do not deal like the pliable politicians Enron is accustomed to bullying or buying with campaign contributions. Enron is a major contributor of "soft" money to both parties.

The Oregon PUC will not deal because they know the Pacific Northwest already has the lowest electric rates in the country. The commissioners knows Enron cannot sell Northwest power south and still keep low rates in the Northwest.

"Utility deregulation" legislation is simply re-regulation. It rewrites nearly 100 years of utility law specifically creating unnecessary middlemen like Enron who contract for the power output of newly independent generating companies then resell the power to large business and industrial energy users at discount prices. "Everyone will do business differently," says Neal Scott, an Enron Vice President. Nearly no one bothers to ask why.

"Deregulation" legislation requires transmission and distribution companies to wheel and distribute Enron's contract power to Enron's distant customers over private transmission lines at regulated rates. It's all part of the magic of free market economics -- and Enron's 22 lobbyists.

Buying out Portland General Electric is the keystone of Enron's plan to create a market for unnecessary middlemen and make money at the expense of Northwest ratepayers. Controlling PGE gives Enron access to a transmission system that can ship cheap Northwest hydroelectric power to large business and industrial users as far away as Southern California, Arizona and possibly Texas underselling the local utilities.

Southwest utilities will have to raise residential rates or cut maintenance and service to make up lost revenue from the business and industrial customers Enron lures away. Northwest residential utility customers will pay higher rates or reduce maintenance to keep their power in the region or face building new generating capacity.

PGE is a good buy for Enron because it is heavily reliant on contract electricity since it shut down its ill-fated Trojan nuclear plant. PGE buys much of its power from Bonneville Power Administration or BC Hydro in Canada. If Enron owns PGE's transmission and distribution facilities it can dump whatever contracted power it cannot sell to large business industrial customers on PGE's residential customers.

The price is certain to be higher than PGE customers now pay for the region's hydroelectric power. The entire "deregulation" scheme sacrifices adequate, reliable power for a form of pseudo-competition that lowers rates for large-scale electricity users.

Enron and similar middlemen who hustled this deceitfully misnamed "deregulation" legislation through congress are simply trying to create a speculative market in electric power
This scheme robbing Petra to pay Paula in the name of "competition" was dreamed up by economic ideologues in Potomac-based think tanks without bothering to talk with the engineers who built the western electrical transmission system. It was built to send Northwest surplus hydroelectric power to the Southwest in the summer for the air conditioning season.

The Southwest pays for this electricity by sending their seasonally-idle thermal power to the Northwest for the home heating season. This symbiotic power sharing reduces the need for expensive new generating capacity in both regions.

"Deregulated" utilities will use the western transmission grid in an entirely different way. Power from independent generating companies located anywhere in the region will be shipped to large business and industrial users anywhere, any season. The engineers who designed and built the transmission grid for seasonal exchanges of surplus power are not sure it will work reliably shipping small amounts of power point to point anytime, anywhere in the West.

Two regional grid failures in one record hot month last summer was the engineers' first clue the grid might not be as reliable as they thought when it gets near capacity. A tree shorting a transmission line triggered a cascading failure that was not contained by existing safety devices. The most candid engineers say privately they still do not know why that happened.

The engineers speculate the grid behaves differently than they theorized when it is close to capacity as it was last summer. They warn electrical transmission technology is as much art as engineering. Yet congress is systematically dismantling the established utility industry without knowing whether their new scheme its technologically reliable.

Enron and similar middlemen who hustled this deceitfully misnamed "deregulation" legislation through congress are simply trying to create a speculative market in electric power. Their model is the money markets not the utility business. Enron plans to export Northwest hydropower south to places where it can undersell local thermal generated power.

When rates go up to keep some of that power in the Northwest, Enron will wring its well-manicured hands and say "that is the way the market works." It will be a market designed and manipulated by Enron and its pliant politicians. So far, the Oregon Legislature hasn't got a clue. Like so many state legislatures, its institutional memory has been sapped by term limits.

Only the Oregon Public Utility Commission can prevent shipping Columbia River water to the Southwest -- by wire.

Russell Sadler is a syndicated columnist who teaches journalism and environmental studies at Southern Oregon University in Ashland

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Albion Monitor April 20, 1997 (

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