The electricity industry in the United States is in the midst of significant restructuring. This transformation will move the industry from the regulated monopoly structure of the past 50 years to a more competitive model.

There is much to be gained in this transition. Electricity consumers are already benefiting from competition in a number of significant ways. Competition in the natural gas industry has helped lower the cost of electricity from gas-fired generating plants. Competition among manufacturers and developers of combustion turbines has contributed to less expensive, more efficient, shorter lead time power plants. Broad competition in the electricity industry could result in lower prices for consumers and more choices about the sources, variety and quality of their electrical service. This is good news. The opportunities are great.

But, there are also risks inherent in the transition to more competitive electricity services. Merely declaring that a market is competitive will not necessarily achieve the full benefits of competition or ensure that they will be broadly shared. It is entirely possible to have deregulation without true competition. How competition is structured is important.

It is also important to recognize the limitations of competition. Competitive markets are about efficiency, not fairness or other social goals. To the extent that the citizens of the Northwest want their electricity system to deliver certain social benefits, such as low-cost electricity to rural areas or fish and wildlife recovery, special attention will be required to accomplish those goals during and after the industry's transition.

Similarly, markets are never perfect. For example, prices rarely reflect the environmental consequences of resource development and operation. Inadequate information and related market barriers also inhibit the market for energy efficiency. Again, if the citizens of the Northwest value environmental quality and energy efficiency, special care will be required to ensure that these values are upheld while the region captures the benefits of a more competitive electricity industry.

To seize the opportunities and moderate the risks inherent in the transition to competitive electricity markets, the governors of the four Northwest states convened a "Comprehensive Review of the Northwest Energy System." The governors appointed a broadly representative steering committee to study that system and make recommendations about its transformation. Each governor has also appointed a representative to make certain the public is educated about and involved in the Comprehensive Review.

In establishing the review, the governors stated:

"The goal of this review is to develop, through a public process, recommendations for changes in the institutional structure of the region's electric utility industry. These changes should be designed to protect the region's natural resources and distribute equitably the costs and benefits of a more competitive marketplace, while at the same time assuring the region of an adequate, efficient, economical and reliable power system."

This is not the first time the Northwest states and stakeholders within the region have come together to address the future of the region's power system and related issues critical to the economy and environment of the Northwest. For more than 15 years, Idaho, Montana, Oregon and Washington have worked cooperatively to protect the resources of the Columbia River Basin, which is the source of the region's vast hydroelectric system and its largest and most complex ecosystem.

Through the Northwest Power Act of 1980, these states formed a compact and established the Northwest Power Planning Council to help plan for the future of the power system, and inform and involve citizens of the region in the planning process. Congress and the four Northwest states identified and embraced a set of long-term goals in the Power Act:

  • To achieve cost-effective conservation;
  • To encourage the development of renewable energy resources;
  • To establish a representative regional power planning process; and
  • To assure the region of an adequate, efficient, economical and reliable power supply.

Since the creation of the Council, utilities, businesses, local governments and others in the region have saved more than 1,200 average megawatts of electricity, enough to power a city the size of Seattle. These savings cost utilities an average of 2 cents to 2.5 cents per kilowatt-hour. that's about half the cost of power from the lowest-cost new generating resources available at the time. The environmental benefits of foregoing new generating resources in favor of conservation have not been calculated, but it is likely that they are substantial.

The four states, utilities, local governments, businesses and citizens have also worked together to promote wind and geothermal demonstration power plants, which are now in various stages of development. These are accomplishments of which the Northwest can be proud. No other region in the nation has worked so successfully as a team to manage so vast and complex a resource as the Northwest power system.

The goals of the Northwest Power Act were the product of a different era, an era of regulated monopoly utilities and large, capital-intensive resources. Nonetheless, many of these goals are still relevant in the increasingly competitive utility world. The industry transformation could challenge or help further those goals, depending on how the transformation is structured and how successful the region is in fashioning mechanisms to achieve those goals.

The Fourth Northwest Power Plan

This Draft Fourth Northwest Conservation and Electric Power Plan was begun as fulfillment of the Power Act mandate to prepare and adopt "a regional conservation and electric power plan" and review that plan at least every five years. The Council's last plan was adopted in 1991.

The timing of this draft plan, in light of the governor's review, requires a different approach than that taken in previous Council power plans. Consequently, this draft contains few recommended actions or policy decisions. It is instead a reference tool, containing background on the industry and its current restructuring, as well as analysis of some of the major issues that must be addressed as the Northwest advances toward its new energy future. Because the Bonneville Power Administration, which markets about half the electricity generated in the Northwest, and the Council itself will be profoundly affected by the transformation of the industry, issues related to their futures are also explored.

The goal of this draft plan mirrors and supports the governors? goal in setting in motion the Comprehensive Review. The key issues and findings are summarized in the following pages.

The Evolving Northwest Electricity Industry

The electricity industry in the Northwest is evolving rapidly in the direction of increased competition. This trend is the product of the interaction of a number of developments. Prices for natural gas have fallen dramatically. And the technology of gas-fired electricity generation has been advanced to the degree that new combined-cycle gas power plants are relatively low-cost, flexible resources. These changes have broken down the financial barriers that once blocked entry into the electricity generation business.

These forces have been amplified by important policy changes at federal and state levels. Federal policies encouraging competition in generation began with the Public Utilities Regulatory Policy Act of 1978 (PURPA) and have been advanced by the National Energy Policy Act of 1992. The Federal Energy Regulatory Commission is in the process of adopting new rules to ensure competitive wholesale power markets. Progress toward competition at the retail level has been left to the states to determine and shape. In many states, the prospect of lower-cost power is driving consumers of large amounts of electricity to seek access to the competitive market or at least to market prices.

While rates in the Northwest are generally lower than elsewhere in the country, the pressure for retail competition is evident here as well. The Bonneville Power Administration, which markets electricity from the federal power system, is a power wholesaler and, as such, is already fully exposed to competition. Bonneville's size and importance in the regional power system mean that wholesale competition will have dramatic effects in the Pacific Northwest regardless of actions at the retail level. This plan reviews the evolution toward increased competition and the forces driving it in Chapter 2.

Capturing the Benefits of Competition

Competition in the electricity industry has been promoted because it is considered to be more effective than regulation in fostering improved productivity, greater innovation, increased choice and lower costs to consumers. However, while the Pacific Northwest could benefit greatly from more open competition in the utility industry, the region shouldn't assume that deregulation alone will ensure these benefits. Without a market structure that fosters effective competition, the industry could simply replace regulated monopolies with deregulated oligopolies -- where a few large companies have near-monopoly power.

There are generally recognized conditions that need to be met to foster effective competition. For example, an effective market requires an adequate number of sellers, and market access by buyers and sellers to ensure that no individual has the power to influence prices in the market. The Federal Energy Regulatory Commission (FERC) is pursuing policies intended to satisfy these conditions at least partially, by expanding access to electricity markets through transmission systems.

An effective market also requires that sellers cannot subsidize their competitive position by shifting costs to customers in a monopoly part of their business. This condition could be met by separating companies into their competitive and monopoly components.

Even if effective competition is achieved in the utility industry, market imperfections and other barriers could keep the industry from functioning efficiently. For example, if environmental costs and benefits are not taken into account, the utility industry will fall short of environmental goals. Other market barriers can limit the amount of energy conservation that is secured. Consequently, continued attention to market imperfections may still be required even in competitive markets.

There are also some things that competitive markets simply can't do. In the Northwest, for example the utility system supports social goals, such as economic development in remote rural areas or promotion of irrigated agriculture, generally by offering lower rates for these purposes. In a competitive electricity market, it may be difficult to include the costs of providing low rates to some in the prices charged to others. If supporting such social goals is to continue, new avenues and sources for the support may need to be identified.

Finally, how the transition from the regulated utility industry to a more competitive market is structured is critical. The transition requires reconciling decisions and actions made in the regulated environment with the new realities of competition.

Stranded investment -- the inability to recover the full costs of past utility decisions at current market prices -- is the most contentious issue in this area. While stranded investment in this region is small compared to other regions, it may still be an issue. Where legitimate stranded costs exist, the allocation of those costs between utility stockholders and utility customers will need to be negotiated.

For some Northwest utilities with existing low-cost resources, the ability to charge market prices could lead to windfall profits. These gains also need to be divided between investors and consumers. The Council offers some guiding principles and cautions for a competitive electricity industry in Chapter 3.

The Existing Northwest Power System

The foundation for the transition to more competitive electricity markets is the existing regional power system. This system is still dominated by hydroelectric power. Today, hydropower accounts for about 66 percent of the region's annual electricity supply. Since the Council's 1991 Power Plan, the region added 2,470 average megawatts of generating resources and conservation. Natural gas accounted for 57 percent of these additions, while conservation made up 21 percent of the new resources. Renewable resources, largely small hydropower and some biomass, accounted for about 17 percent of the additions. The preponderance of natural gas-fired resources in the recent additions to the system has raised concerns, but overall, the power system today embodies more resource diversity than did the system of 1991.

During the same period, the region also lost some electricity resources. The closure of the Trojan nuclear plant decreased energy supplies by about 725 average megawatts.

In addition, changes in how the hydropower system is operated, designed to protect endangered salmon and other fish and wildlife, have reduced the annual firm energy capability and limited the flexibility of the system to meet seasonal and hourly variations in electricity loads. The fish and wildlife protections reduced the firm energy capability of the region's hydroelectric system by about 850 average megawatts. The availability of low-cost electricity from the Southwest has helped the region offset the loss of energy from the increased flows for fish. This draft plan devotes Chapter 4 to a description of existing regional energy resources.

Forecasts and Resource Trends

The opportunities and risks inherent in the transition to a more competitive Northwest electricity industry must be analyzed in the context of certain key factors. These include: future electricity use, the price and availability of natural gas, the amount of and cost of electricity in the West Coast power market, the availability and cost of new resources, and uncertainties regarding the Northwest hydroelectric system.

In the midst of the changes in the electricity industry, growth of the region's economy and the reliance of that economy on affordable and reliable electricity continue. Because future economic growth and electricity requirements are inherently uncertain, the Council prepares a range of economic and demand forecasts rather than a single point prediction. The mid-range of that forecast anticipates electricity use will grow by 1.3 percent per year, or approximately 280 average megawatts annually. This figure reflects an expectation that the region will experience relatively stable and even slightly declining electricity prices in real dollar terms as a result of lower gas prices and transactions on the West Coast power market.

Future gas prices are a major factor in the demand for electricity and the cost of the options to supply that demand. The emergence of a competitive natural gas market has resulted in declining prices and the expectation of ample supplies at comparatively low prices for the future. Again, because future gas prices are uncertain, the Council prepares a range of forecasts intended to encompass that uncertainty. The mid-range forecast suggests a real growth rate of 0.4 percent per year for residential and commercial gas prices, 1.1 percent for industrial use and 1.6 percent for electric generation. The lower end of the forecast range reflects expectations that future gas prices may be constant in real terms or even decline slightly.

Falling natural gas prices, the opening of transmission access and the availability of substantial excess generating capacity in California and the Southwest have combined to create a vigorous West Coast market for electricity. The availability of relatively low-cost power in this market makes it an attractive alternative to the Northwest's meeting demand growth entirely with the construction of new resources.

The Council's analysis finds that the West Coast market is likely to have substantial supplies of electricity costing around 2 cents per kilowatt-hour well into the next decade. Taking into account transmission constraints, if the Northwest were to rely on that market for as much as 3,000 annual average megawatts, the future cost of electricity to the region could be reduced by an average of $3 billion, compared to a strategy of building new resources to meet Northwest load. [These present value savings include estimates of costs and benefits that accrue beyond the 20-year planning horizon because many of these resources have lifetimes that extend beyond 2015. See Appendix H for more detail.] The level of reliance on the West Coast market would be considerably greater than 3,000 average megawatts in some months and much less in others.

When new generating resources are required, the Northwest has numerous options. Natural gas-fired combined-cycle combustion turbines are the most likely choice. The Council estimates there are sites available that are capable of supporting an additional 7,400 megawatts of gas-fired capacity. These sites could supply 6,800 average megawatts of energy at costs of 2.7 to 3.3 cents per kilowatt-hour under the medium gas-price forecast.

The other generating alternatives analyzed in this draft plan include industrial cogeneration, coal-fired generation, forest thinning residue-fired generation, geothermal, wind, hydropower, land-fill gas recovery, mixed wood residue burning, nuclear and solar. Currently, there are few generating alternatives that are cost-competitive with combined-cycle combustion turbines -- only some industrial cogeneration, small amounts of new hydropower and a few biomass applications. However, there is a significant amount of cost-competitive conservation available. In the long run, coal-fired generation, some additional hydropower and biomass, wind generation at good sites and fuel cells are expected to become competitive. Gas-fired combined-cycle plants maintain their cost advantage even if a small carbon tax is assessed. If a large carbon tax is implemented, non-fossil fuel burning resources become cost-effective.

The region continues to face uncertainty with respect to the degree to which the operation of the hydropower system might be further constrained to protect fish or wildlife. The Council analyzed three alternative hydropower operations in comparison to the current system operation. Depending on the alternative, the capability of the hydropower system could be increased somewhat or it could experience substantial further losses in energy and capacity.

These changes are uncertain. There is no way to be certain if, when and to what extent new fishery recovery measures might be implemented. The important question is whether the region would make different resource choices in the near term in the face of this uncertainty. The Council believes the answer is no. The flexibility of the resource choices available to the region are such that, given sufficient lead time, the power system could adapt. However, some hydropower system changes could come at a significant cost. These issues are analyzed in Chapter 5.

Resource Issues in Competitive Markets

The advent of competitive electricity markets raises new issues with respect to the development of conservation, renewable resources and the consideration of environmental costs and benefits. These issues are explored in detail in Chapter 6 and described in the following paragraphs.

Cost-Effective Conservation

An objective of the Northwest Power Act is "to achieve cost-effective energy conservation." Despite the region's success in conservation development, significant cost-effective energy savings remain. This plan identifies 1,535 average megawatts of electricity savings that could be obtained over the next 20 years at an average levelized cost of 1.7 cents per kilowatt-hour. These savings are equivalent to the electricity generated by seven typical combustion-turbine power plants, and on average, they cost about two-thirds as much.

If this conservation is developed, the region's consumers would save $2.3 billion on their future electricity bills. [ These present value savings are estimated as explained earlier and in Appendix H.] Consumers on their own will make some of the efficiency improvements identified in this plan. The region's utilities have indicated they will secure more. Together, consumers and utilities in the region will probably capture about a third of the available and cost-effective savings over the next 20 years. But, unless the remaining two-thirds of the savings are secured, the region will pay $1.7 billion more in power system costs and natural resource impacts than it needs to.

There are significant uncertainties inherent in any long-term look at the benefits of conservation. In addition to evaluating the conservation over a wide range of demand and fuel price forecasts, the Council looked at a wide range of alternative scenarios to determine how robust conservation's value was to the region. These scenarios included a reduction in the estimate of the available conservation, a dramatic improvement in the cost of generating technologies, and the sudden loss of 3,000 average megawatts of load. In the worst case, the value of conservation dropped as low as $830 million.

On the other hand, there is the risk that growing scientific evidence that global climate change is occurring could result in the imposition of measures to reduce emissions of carbon dioxide and other greenhouse gases thought to contribute to this climate change. If a carbon tax between $10 and $40 per ton of carbon dioxide were implemented in 2005, the value of the conservation would grow to between $3.2 and $6.1 billion.

In even extreme scenarios, the development of further cost-effective conservation is a positive long-term investment for the region. In the shorter term, however, conservation requires that the region incur somewhat higher costs today compared to buying electricity off the West Coast market. For conservation to be successfully developed in the future, the near-term costs must be weighed against its longer-term benefits.

Bonneville and the region's utilities have been the dominant forces behind the success of conservation efforts in the past. However, their role is changing because competitive pressures are making some utilities reluctant to spend money on conservation programs when some of their competitors do not make such investments. As a result, utilities will be unable to secure all the remaining conservation that is cost-effective.

Consumers are expected to save some electricity on their own, but there are significant market barriers that will likely limit this activity. Most Northwest utility resource plans include significant amounts of conservation acquisitions over at least the next four years. As a result, the region has some time to think through potential actions that might be appropriate for the long run.

In light of the potential benefits that may be at risk, the Council suggests that the Comprehensive Review and the states evaluate the costs and benefits of potential mechanisms to acquire conservation beyond what will naturally be developed in the market. The goal should be a competitive market that preserves as much of the conservation benefit as possible.

Some options include: waiting during this transition period to see what happens in the market; instituting a system benefits charge similar to the charge on phone bills that pays for the 911 emergency line; granting utilities distribution monopolies only if they offer conservation opportunities to their customers; or requiring that a certain amount of load growth be met by conservation. The last suggestion would result in efficiency trading, similar to emissions trading, which is already in practice in the electricity industry. Important qualifications for any mechanism are:

  • That it be competitively neutral and not interfere with the market pricing of electricity;
  • That it complement the emergence of competitive markets for energy-efficiency services;
  • That it provide some symmetry between who pays and who benefits;
  • That it be administratively efficient;
  • That it use competitive mechanisms to the greatest extent possible; and
  • That it incorporate mechanisms to ensure performance.

Renewable Resources

Renewable energy projects -- those powered by the sun, wind, biomass, water and geothermal energy sources -- are valued because they have generally favorable environmental characteristics, they offer diversity and flexibility, and they help ensure the long-term sustainability of the power system. An objective of the Northwest Power Act is "to encourage the development of renewable energy resources within the Pacific Northwest."

Renewable projects producing more than 420 average megawatts of energy have been developed since the 1991 Power Plan. These were primarily hydropower and biomass resources. This represents about 17 percent of all resources developed during this period.

Encouraging progress has also been made on the renewable resource confirmation agenda of the 1991 Power Plan. The confirmation agenda incorporates research, demonstration and development activities necessary to test renewable resources under Northwest climate conditions. However, declining wholesale electricity prices have resulted in near-cessation of the development of additional generating resources. This is consistent with the surplus of generating capacity on the Western electrical system, but it raises the question as to what type and level of renewables activity, if any, is desirable in this environment.

Analysis presented in Chapter 6 shows that, for the reasons noted above, few renewable resources are cost-effective in the near term. Even over the long-term, the large inventory of undeveloped renewable resources available to the Northwest has little expected economic value. However, the potential value of these resources would increase substantially if mitigation of carbon dioxide production were required to control global climate change. Such controls could raise the cost of competing resources.

But, even if carbon dioxide controls were needed in the future, there appears to be little economic value in developing renewables in advance of need and cost-effectiveness. Such projects would require a substantial cost premium, they preclude the benefits of later technological development and are unlikely to produce significant economic benefit. This finding holds even with consideration of uncertain fuel prices, water conditions, demand growth and with adoption of relatively high carbon taxes.

Renewable resources are unlikely to be selected by utilities in a competitive market in the near term because they are not cost-competitive. However, key development and demonstration activities conducted now will help the region integrate such resources into the power system in the future.

Based on this analysis, a renewable resource strategy for the Northwest should focus on:

  • Ensuring that the restructured electric power industry provides equitable opportunities for the development of cost-effective renewable resource projects;
  • Ensuring that the renewable resource potential of the Northwest is adequately defined and that prime undeveloped renewable resources remain available for future development. This will require completion of key demonstration projects and additional resource assessment activities that are already under way;
  • Supporting research and development efforts to improve renewable technology;
  • Offering green power purchase opportunities; and
  • Monitoring fuel prices, the global climate change issue and other factors that might influence the value of renewable resources. More aggressive preparation for the development of renewables could be initiated if changes in these factors indicate that accelerated development of renewables is desirable.

Environmental Considerations

The Northwest Power Act requires quantifiable environmental costs and benefits of the power system be taken into account. While there are a number of these costs, for this draft plan, the Council has focused on the implications of possible global climate change.

There is increasing scientific concern that global climate change may be caused by emissions of greenhouse gases, most notably carbon dioxide. Carbon dioxide is produced in large quantities by power plants (and other energy equipment) that burn fossil fuels. Global climate change is a particularly difficult issue to address in power planning for several reasons. First, while the uncertainty regarding global climate change is narrowing, there remain questions regarding the existence, causes and magnitude of that climate change. The consequences of global climate change are also not well understood.

Second, global climate change is largely "external" to the Northwest. While the Northwest would experience the effects of any climate change that occurs, actions taken unilaterally by the region could not, in and of themselves, significantly affect the degree of climate change experienced by the region. Third, because of the large hydroelectric resources of the Northwest, the electric utility industry is not the most significant producer of greenhouse gases in the Northwest. Reductions in greenhouse gases might be accomplished at less expense in other sectors of the economy or in other parts of the world.

Still, the possibility that emissions of greenhouse gases might someday need to be controlled poses a financial risk. For example, a carbon tax could significantly increase the cost of electricity from fossil fuel power plants. If the type, magnitude and timing of possible carbon dioxide regulations were better known, certain near-term resource choices or, alternatively, investing in carbon offsets (e.g., tree planting) might be good hedges against carbon regulation. However, because of the lack of sufficient information, the Council cannot evaluate strategic responses to global climate change with the level of sophistication that it can bring to, for example, gas price uncertainties or future electricity requirements of the region.

Instead, however, the Council estimated the potential impacts of carbon dioxide control measures on the overall cost of providing electricity to the region, as well as on the relative costs of alternative resources. A range of possible carbon tax rates was used to represent the cost of carbon dioxide control measures. A carbon tax would raise the Northwest's total electricity bill and increase the value of energy-efficiency improvements, renewable resources and nuclear power plants. The value of efficient natural gas-fired resources would also increase relative to other fossil-fuel resources.

Until the uncertainty regarding climate change is resolved by scientific consensus, and national and international policies respond to that consensus, the region can reduce its exposure to risk by:

  • Avoiding investments in generating resources that are heavy emitters of greenhouse gases;
  • Securing cost-effective conservation;
  • Gaining experience with measures to offset greenhouse gas emissions, such as reforestation; and
  • Considering the carbon dioxide offset value of the region's only operating nuclear plant.

The Role of the Bonneville Power Administration

The transition to a competitive electricity industry raises many issues for the Bonneville Power Administration. The reasons for this are several. First, as a wholesale utility, competition is already here for Bonneville and will probably become more intense. Second, Bonneville markets the output of a public resource, the Federal Columbia River Power System. Third, Bonneville plays an extremely large role in both generation and transmission in the region. And fourth, Bonneville is responsible for a number of public purposes besides power production, including discounts for rural customers, energy-efficiency programs, fish and wildlife recovery, and research and development.

As the region thinks about the role of Bonneville in a more competitive power industry, the questions raised by the principles for effective competition (in Chapter 3) must be asked and answered for Bonneville, just as for any other actor in the market. Does Bonneville have undue market power in transmission or generation? If so, how is that market power most effectively mitigated? More fundamentally, what is the appropriate role for a federal agency in a competitive market? Can it be a full competitor or must its role be somehow limited? Are there alternatives for ownership of Bonneville's assets or marketing rights that might be preferable, and, if so, what are some of the key issues that must be resolved? How should the benefits and risks of the system be allocated? How should the products of the system be marketed and priced? And how should the public purposes currently carried out by Bonneville be fulfilled? None of these questions has easy or clear answers.

Many argue that the Bonneville Power Administration, as currently configured, violates several of the principles for a competitive electricity market. It combines generation and transmission in one entity. It has substantial market power. It is not in a good position to deal with market risk. And it carries out several public purposes that may be difficult to support in a competitive wholesale power market, at least in the ways they have been supported in the past. At the same time, Bonneville is at the heart of the regional power system and embodies many of the values of the region.

Deciding the future role of Bonneville is a key task of the Comprehensive Review. A successful resolution of Bonneville's role is necessary to set the stage for an efficient and competitive regional power system that maintains the benefits of the Federal Columbia River Power System for the Northwest. Some of these considerations are explored in more detail in Chapter 7.

The Role of the Northwest Power Planning Council

Just as the role of the Bonneville Power Administration may be different in the future, the role of the Council in power planning is also in question. The Council's role of establishing a power plan to guide the resource acquisitions of the Bonneville Power Administration is moot if Bonneville is no longer acquiring resources. More generally, the role of a long-term regional power plan in an open market environment is questionable.

The Council's planning responsibilities were not intended as an end in themselves. These were intended to serve the overall purposes of the Northwest Power Act:

  • To encourage conservation and efficiency in the use of electric power;
  • To encourage the development of renewable resources;
  • To assure the Pacific Northwest an adequate, efficient, economical, and reliable power supply;
  • To provide for the participation and consultation of the states; local governments, consumers, customers, users of the Columbia River system and the public at large in:
  • the development of regional plans and programs related to energy conservation, renewable resources, other resources, and protecting, mitigating and enhancing fish and wildlife resources;
  • facilitating the orderly planning of the region's power system;
  • providing environmental quality; and
  • to protect, mitigate and enhance the fish and wildlife, and their habitat, of the Columbia River Basin. [ 16 USC ?839 (1)-(6).]

Through the Comprehensive Review, the region will be re-evaluating many of these goals and identifying mechanisms that can accomplish many of the key goals in a new utility context. A number of activities that the Council currently carries out in the course of developing and encouraging the implementation of its plans could be useful to the region, both during the transition to a more competitive utility industry and beyond. These activities include:

  • Providing up-to-date information on future electricity demands, new generating and efficiency technologies, system operations and market forecasts;
  • Serving as a broker for information exchange among utilities and others;
  • Working at federal and state levels to resolve legal and institutional barriers to accomplishing regional goals;
  • Providing impartial analysis of issues with a long-term regional perspective;
  • Serving as a focus for analysis of the interactions between power and fish;
  • Representing the interests of states and the public in power issues; and
  • Being a regional convener of forums to resolve issues.

The restructuring of the Northwest's electricity industry may result in new roles that are appropriate for the Council. On the other hand, some of the existing and potential new roles might also be performed by others. There may still be a need for strategic thinking about the directions the electricity industry might take and the implications for the region. The Comprehensive Review will need to explore these and other possible Council roles. This draft plan elaborates on this question inChapter 8.

Structuring the Competitive Marketplace

This draft power plan is long on analysis and short on conclusions. That is deliberate. It is designed to provide supporting information and analysis for the Comprehensive Review of the Northwest Energy System that was inaugurated in January 1996 by the governors of Idaho, Montana, Oregon and Washington. If this draft plan offers any advice, it is this: a deregulated electricity industry will not automatically deliver benefits to all consumers. Deregulation without attention to how competition is structured will not secure the low-cost and reliable electricity that has long been a mainstay of the Northwest's economy. Nor will competition necessarily secure the societal and environmental values this region has come to expect from its power system.

To achieve the full benefits of a competitive electricity market -- lower power costs, innovation in both services and technologies, more choices for consumers, and attention to societal and environmental values -- the Northwest will need to design its own structure for that market. No region in this country is more capable of doing that than the Pacific Northwest.

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