SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1509 words

COMMITTEE: SENATE ENERGY AND NATURAL RESOURCES

HEADLINE: BONNEVILLE POWER ADMINISTRATION

TESTIMONY-BY: MS. J. RACHEL SHIMSHAK,, DIRECTOR,

AFFILIATION: RENEWABLE NORTHWEST PROJECT, PORTLAND, OREGON

BODY:
August 13, 2001

Subcommittee on Water and Power Hearing Testimony:

Ms. J. Rachel Shimshak, Director, Renewable Northwest Project, Portland, Oregon

Good morning Mr. Chairman and Senator Cantwell. My name is Rachel Shimshak, and I am the director of the Renewable Northwest Project (RNP). RNP is a regional advocacy organization promoting the implementation of solar, wind and geothermal resources in Washington, Oregon, Idaho, and Montana. Our members include environmental and consumer groups as well as energy companies. We work together with policymakers, elected officials and customer groups to ensure a clean energy future for the region.

I am delighted to be here today among my distinguished colleagues to address the electricity challenges facing the Northwest, and the special role of the Bonneville Power Administration in promoting energy conservation and renewable energy to help address those challenges. By now you have heard a lot about the ugly prices many utilities and their customers experienced over the last year, our low water situation, and about the uncertainty that has plagued the market over the past five years resulting in a lack of demand and supply-side investments. We have a chance to move forward and solve these problems if the region works together to address the situation. I want to talk to you this morning about solutions to the problem. If the goal of our energy system is to provide adequate, reliable, environmentally responsible, and affordable energy, I believe there are at least four important strategies we ought to pursue:

- Create a diverse portfolio of demand and supply-side resources;

- Implement transmission and shaping policies that acknowledge the benefits of clean energy technologies;

- Support the Bonneville Power Administration in its clean energy leadership; and

- Enact federal initiatives that will provide stable funding for conservation and renewable technologies.

These four strategies will help us maintain a strong system to serve our needs, and help us maintain a high quality of life.

I believe that the way we manage our way out of this energy crisis matters. A wise governor once said that, "The most important step in developing energy policy is to understand that energy is a problem that we must manage over the long haul, not a crisis to be solved and forgotten." Although many people accept this concept intellectually, the truth is that, given the recent drop in energy prices, many managers already have amnesia about the prices and the problems we have all faced over the past year. Many are reverting back to their old, bad habits of looking only at short-term low prices, and not long-term least costs.

The key to addressing our crisis is to move forward with a diversity of demand and supply side resources. Let me begin by describing the current portfolio of resources we consume in the Northwest. Over half comes from hydro, but a full forty- percent of the electric energy we consume comes from fossil fuels. To keep the system stable in the future, we need to add a diversity of resources, beginning with conservation.

Conservation is the quickest, cheapest, cleanest resource we have available, and we should accelerate its implementation immediately. Many of the region's utilities and Bonneville have joined together in a rush to offer energy efficiency programs and products to their customers, and many have pursued load curtailments with their customers. The impact of their actions, coupled with the calls for conservation from the Western Governors have had a very positive impact on our situation.

Rather than the boom and bust nature of these efforts, we should have broad public policies at the state and federal level that will provide consistent investment in energy efficiency. Federal incentives for efficient buildings and equipment, and reserving a portion of utility revenues for conservation investment are just two of the many initiatives that will help maintain the energy efficiency infrastructure and make sure that the resource is available when we need it.

The next step is to move forward aggressively with new renewable resources. Bonneville's role in the region with respect to renewables is pivotal. As you know, BPA serves over 40% of the load in the region and controls over 70% of the high voltage transmission. They also have a statutory responsibility to encourage the development of renewable resources.

Bonneville responded rationally to their need for additional power with a 1000-megawatt wind Request for Proposals (RFP). Happily, the Northwest is blessed with a tremendous potential for wind, solar, and geothermal power. Wind is the most cost competitive of the resources, and once it is permitted, it can be built within six months. That RFP has drawn a huge diversity of developers to the region. The greater competition created with the RFP will help deliver high quality projects that are competitively priced. In other words, Bonneville is playing a key role in developing a market for wind in the Northwest.

We now have 110 MW of operating wind projects in the Northwest with over 360 MW of wind and geothermal projects under construction. The 261 MW Stateline wind project will be on line by the end of this year. Another 1200 MW of wind is undergoing siting reviews and could be operating by 2003. This is all good news, but it is happening amidst a backdrop of 16,000 MW of proposed gas plants.

Wind power is clean energy, with no air or water pollution, and no fuel price volatility. In fact, wind has no fuel! Wind development also brings with it some important economic development benefits for our region. Some of the best wind resources are found on rural wheat farms and cattle ranches. For every turbine installed on a farmer's property, the landowner receives a royalty payment from the wind developer. This helps create a "second crop" for these farmers which helps them stay in the farming business. In addition, wind turbines sit atop tall towers made of steel. Many in the regional metals industry have been called upon to produce these towers, and one turbine company is currently contemplating locating its manufacturing facility in the Northwest.

Bonneville is providing other green power opportunities for its customers as well. Their recent rate case includes a conservation and renewable incentive program that will reduce the rates for customers who invest in clean resources. And all wholesale customers can purchase Bonneville's Environmentally Preferred Product, or a straight chunk of new renewable power.

Bonneville has two other critical roles in relation to wind resources. One is to provide reasonably priced shaping services for wind. Because wind is an intermittent resource, and doesn't operate 100% of the time, you need to blend it with other resources to create a firm power product. The hydro system is the perfect battery for this purpose.

The final element for making wind a reality in the Northwest is to establish fair transmission policies for renewable resources. The current system was designed for large projects with control of their generating resources. Those existing policies disadvantage intermittent resources such as wind. A wind resource often has to sign up for transmission services to cover the entire output of the plant even though it may only produce energy 40% of the time. Stiff penalties are assessed for projects that don't use their transmission rights.

The establishment of a new Regional Transmission Organization (RTO) can address these problems if the transmission owners move forward with the recommendations of the regional representatives group. Having a deep and liquid market for transmission rights across constrained paths is critical for intermittent renewables. FERC and the region need to insure that the rules of the new RTO incent the development of renewable resources.

Bonneville has done a great job stimulating and building the market for wind in the region. But they could chill that market in an instant if they lose their resolve. I urge you to support Bonneville as they move forward on this very important initiative and urge them to find timely and fair solutions to the shaping and transmission issues. They definitely have the ruby slippers on. They just have to click their heals together.

Congress can play a further role in helping the development of renewable resources by extending the wind energy production tax credit and providing the credit to all renewable resources. To ensure that we have a diverse energy portfolio, Congress should also enact the federal renewable portfolio standard contained in Senator Jeffords' bill.

We can have a secure, clean energy future if we prioritize conservation and renewable resources, and move forward with their implementation. Bonneville is critical to achieving a clean energy future in the Northwest and to preserving our quality of life. They deserve your support in their clean energy endeavors.

Thank you.



LOAD-DATE: August 20, 2001