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2018 Annual Report

PUBLICPOWER COUNCIL

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BRINGING PUBLIC POWER TOGETHER TO SHAPE THE FUTUREThe Public Power Council (PPC) assists consumer-owned utilities with their current and future power supply needs by providing policy expertise, influence, and consensus building. From some of the smallest to the largest not-for-profit electric utilities in the region, PPC’s members gather each month to address critical federal power and transmission challenges. These municipal utilities, public or people’s utility districts, electric cooperatives, and tribal-owned utilities come from parts of seven western states to share information as well as technical, legal, and political expertise in order to have a real impact to shape their futures. Owned and governed by their consumers, they all share the right of “preference” to purchase power from the Federal Columbia River Power System. In times of rapid change, it is more important than ever to come together with one voice to tackle the challenges of a dynamic energy industry.

Touring Grand Coulee Dam

FROM THE CHAIRMAN AND EXECUTIVE DIRECTORThe Public Power Council and its members are working hard to build the foundation of a new energy future. The power of PPC is that we can chart a course through these challenges together. The information, networking, and engagement at PPC allows members to access top energy expertise and gives members a say in the policies shaping their industry in the Northwest.

In the following pages, we summarize the past year, but with a forward-looking perspective. At PPC, we continued to push in 2018 for real steps toward a competitive Federal Columbia River Power System. This demands competitive products and rates both in the near term and in future years when decisions will be made on new power supply options. PPC worked collaboratively with the Bonneville Power Administration and many of PPC’s suggestions were adopted in a final budget that proposed expense reductions of $66 million from today’s levels.

PPC also worked on the update of the terms and conditions of BPA transmission service and helped develop unified positions on public power’s interests in future market design and participation. In our nation’s capital, PPC again helped fend off proposals to privatize BPA’s transmission system, and we finally saw the formal start of talks with Canada for a more equitable power agreement under the Columbia River Treaty.

These few pages only scratch the surface of the work this year by PPC members and staff who are dedicated to ensuring a reliable, affordable power supply for consumers. We express our sincere appreciation to all who make the work of PPC possible.

Dan Peterson Chairman, Public Power Council; Commissioner, Pend Oreille County PUD

Scott Corwin Executive Director/Secretary-Treasurer, Public Power Council

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BPA COMPETITIVENESS AND STRATEGIC DIRECTIONThe year kicked off with BPA publishing its fiscal year (FY) 2018-2023 Strategic Plan. PPC had worked closely with members and BPA to help shape the focus of the plan’s strategic goals. For the BPA power business line, this included a push for competitive products and rates both in the near term and for longer term when the current contracts sunset. On the transmission side, PPC made the case for more efficiency, responsiveness, and focus on customer needs. Some tools to achieve these outcomes include increased financial discipline, better prioritization, and modernization of BPA’s assets and system operations. PPC worked hard this year with BPA to increase accountability to these goals. There is more to be done, but this focus on value to customers is starting to pay dividends as seen in BPA’s most recent budget process.

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COST CONTROL AND BPA BUDGETSPPC devoted significant effort this year to the biannual Integrated Program Review that sets budgets and program spending levels for the upcoming rate period. These spending levels account for about half of BPA’s revenue requirements. PPC’s work started long before the first proposal. We consistently advocated for improvements such as setting top-down budget constraints early in the process, capturing historical underspending in programs, and seeking efficiencies in personnel.

Many of the suggestions PPC made in this and past budget cycles were adopted by BPA. This resulted in an initial budget proposal that would keep total expense levels flat for the next rate period for both business lines. But, PPC continued to work with the agency for further progress. Consistent with PPC recommendations, the final BPA proposal included $66 million in reductions below today’s spending levels. While there are other concerning factors impacting rates heading into the BP-20 rate case, these significant expense reductions provide direct value to the consumers served by public power.

On access to capital and the overall financial strategy, PPC worked with Energy Northwest, BPA, and other organizations on the proposal for $3.5 billion of Energy Northwest Regional Cooperation Debt financing from 2021 to 2030. PPC developed a “term sheet” designed to ensure that the financing is used appropriately, including annual reviews by the Energy Northwest board and a mid-point check in to provide a comprehensive review of BPA’s access to capital situation and strategy.

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Mobile oil purification – Chief Joseph Dam

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CooperativesBenton Rural Electric Assoc., WA Big Bend Electric, WABlachly-Lane Electric, ORCentral Electric, ORClearwater Power Company, IDColumbia Basin Electric, ORColumbia Rural Electric Assoc., WAConsumers Power, Inc., ORCoos-Curry Electric, ORDouglas Electric, ORFall River Rural Electric, IDFlathead Electric, MTHarney Electric, ORHood River Electric, ORIdaho County Light & Power, IDInland Power & Light, WAKootenai Electric, IDLane Electric, ORLincoln Electric, MTLost River Electric, IDMidstate Electric, ORMissoula Electric, MTModern Electric Water Company, WANorthern Lights, Inc., IDOkanogan County Electric, WAOrcas Power and Light, WA Oregon Trail Electric, ORPeninsula Light Company, WAPNGC Power, ORRaft River Rural Electric, IDRavalli County Electric, MT

Salem Electric, ORUmatilla Electric, ORUnited Electric, IDVigilante Electric, MTWasco Electric, ORWells Rural Electric, NVWest Oregon Electric, OR

MunicipalsCity of Ashland, ORCity of Bandon, ORCity of Bonners Ferry, IDCanby Utility, ORCity of Cascade Locks, ORCentralia City Light, WACity of Cheney, WAEugene Water & Electric Board, ORCity of Forest Grove, ORHermiston Energy Services, ORIdaho Falls Power, IDMcMinnville Water & Light, ORMilton-Freewater

City Light & Power, ORMonmouth Power & Light, ORRichland Energy Services, WAPort of Seattle, WARupert Electric Dept., IDSeattle City Light, WASpringfield Utility Board, ORCity of Sumas, WATacoma Power, WAVera Water & Power, WA

PUDsAsotin County PUD, WABenton PUD, WACentral Lincoln PUD, ORChelan County PUD, WAClallam County PUD, WAClark Public Utilities, WAClatskanie PUD, ORColumbia River PUD, OREmerald PUD, ORFerry County PUD, WAFranklin PUD, WAGrant County PUD, WAGrays Harbor PUD, WAJefferson PUD, WAKittitas PUD, WAKlickitat PUD, WALewis County PUD, WAMason County PUD #1, WAMason County PUD #3, WANorthern Wasco County PUD, OROkanogan County PUD, WAPacific County PUD #2, WAPend Oreille County PUD, WASkamania County PUD, WASnohomish County PUD, WATillamook PUD, ORWahkiakum PUD, WAWhatcom County PUD #1, WA Tribal-OwnedYakama Power, WA

(left to right)Scott Corwin, Executive DirectorAaron Bush, Energy AnalystKevin O’Meara, Deputy DirectorKaren Heim, Administrative Specialist

Lauren Tenney Denison, Senior Policy AnalystMichael Deen, Policy DirectorBo Downen, Director, Environmental and Regional AffairsIrene Scruggs, General Counsel(Not pictured: Sharryn McCann, Bookkeeper)

2018 PUBLIC POWER COUNCIL MEMBERS

PPC EXECUTIVE COMMITTEE 2017-2018OfficersDaniel Peterson, Pend Oreille PUD ChairmanMatt Michel, Lane Electric Coop/PNGC Power Vice Chair, Administration and BudgetTravis “Bear” Prairie, Idaho Falls Power Vice Chair, Long Range PlanningChris Robinson, Tacoma Power Vice Chair, Allocation / Rates / ContractsDebra Smith, Central Lincoln PUD Vice Chair, Fish and Wildlife

PPC Executive Committee AlternatesJim Baggs, Seattle City Light Robert Cromwell, Seattle City LightDan Bedbury, Clark Public Utilities Wayne Nelson, Clark Public UtilitiesStephen Boorman, City of Cheney Clint Whitney, Richland Energy ServicesScott Coe, Emerald PUD Roger Kline, Northern Wasco PUDAnnette Creekpaum, Mason PUD #3 Dave Ward, Grays Harbor PUDHolly Dohrman, Franklin PUD Chad Bartram, Benton PUDJo Elg, United Electric Co-op Max Beach, Idaho County Light and Power John Gerstenberger, Hood River Electric Coop Dave Schneider, Midstate Electric Coop Chad Jensen, Inland Power and Light Yvette Armstrong, Big Bend Electric CoopMark Johnson, Flathead Electric Coop Doug Grob, Flathead Electric CoopFrank Lawson, Eugene Water & Electric Board Susan Ackerman, Eugene Water & Electric BoardMatt Michel, Lane Electric/PNGC Power Roman Gillen, Consumers Power, Inc.Kevin Nordt, Grant County PUD Andrew Munro, Grant PUD Dan Peterson, Pend Oreille PUD Colin Willenbrock, Pend Oreille PUDBear Prairie, Idaho Falls Power Mike Klaus, City of Bonners FerryWill Purser, Clallam PUD Doug Nass, Clallam PUDChris Robinson, Tacoma Power Clay Norris, Tacoma PowerDebra Smith, Central Lincoln PUD Brandon Hignite, Central Lincoln PUDJim Smith, Klickitat PUD Mike DeMott, Klickitat PUDAnne Spangler, Snohomish County PUD Tom DeBoer, Snohomish County PUDChuck Thurman, Monmouth Power & Light Nate Rivera, Hermiston Energy Services

PPC STAFF

THE FISH AND WILDLIFE CHALLENGEIn a challenging year regarding fish and wildlife mitigation costs in the federal power system, PPC worked for policies to better offset the upward rate pressures with other costs reductions. Issues included a court order for increased spill of spring water and renewal of long-term mitigation project agreements.  The cost impacts of the court-ordered operations were approximately $40 million in 2018, but other moves by BPA reduced the amount recovered in rates to about $10 million. In addition, PPC and its members proposed a rate mechanism to more accurately recover these costs. BPA now forecasts flat budgets for the fish and wildlife direct program for some time, and public power will work to control these costs and to support a direction at BPA that counters future operational cost increases with decreased program expenses. 

RESOURCE PROGRAMAs a result of PPC efforts to ensure BPA is acquiring resources in the most cost-effective manner, BPA recently completed a revamp of its Resource Program, the mechanism it uses to determine options for meeting its energy obligations. This work included improved inputs such as the load forecast, conservation potential, and demand response potential. The result was a more accurate needs assessment. This should provide greater value to customers and potentially lower rates through better budgeting, program design, and resource acquisition decisions. Additionally, better resource planning may highlight opportunities for BPA to maximize its marketing of surplus power.

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2018 PPC FEDERAL LEGISLATIVE ACCOMPLISHMENTS This was a busy and successful year in Washington, D.C. for PPC and Northwest public power interests. The U.S. State Department responded to continued Northwest delegation pressure and formally initiated discussions with Canada on renegotiating the Columbia River Treaty. This has increased expectations that progress will made toward rebalancing this outdated Treaty that has the U.S. sending much more federal power to Canada than justified under an equitable sharing of benefits.

The Northwest congressional delegation advanced PPC interests on a number of other fronts. Once again, Congress rejected Administration proposals to privatize BPA’s transmission system. At the urging of PPC, in coordination with many Northwest interests, the delegation also moved forward with bipartisan legislation to reduce predation of salmon by marine mammals. And, the Administration took executive action to accelerate the development of a new Biological Opinion for operations of the Federal Columbia River Power System. The continued engagement and education of federal officials by PPC and its members, including a timely visit to the capital by members this fall, is producing tangible benefits for Northwest consumers.

PPC Budget PPC is a not-for-profit association that efficiently delivers high value to its members. The total approved budget for PPC for 2018 was $2,359,511. This was a reduction of two percent from the prior year. PPC does not charge any additional fees beyond the annual member assessment.

PPC leaders at the U.S. Senate (above) and the U.S. Department of Interior (below)

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Mission StatementPPC’s mission is to preserve and enhance the benefits

of the Federal Columbia River Power System for consumer-owned utilities.

Public Power Council650 NE Holladay Street, Suite 810, Portland, OR 97232

(503) 595-9770www.ppcpdx.org