AFL-CIO panel wants dereg statute delayed

By DON McINTOSH, Staff Reporter

In February as in January, a crisis of electricity continued to afflict organized labor on multiple fronts. In response, labor is working to formulate strategies of defense. The Jobs and the Economy Committee of the Oregon AFL-CIO met Feb. 15 to consider whether Oregon's deregulation bill, scheduled to take effect Oct. 1, will make the situation worse, and whether it should be delayed, reformed, or scrapped altogether.

After a heated hour-long discussion with Public Utility Commission Chairman Ron Eachus, the committee recommended unanimously that the state labor federation call for Oregon's electricity deregulation law to be put on hold.

Leaders of Electrical Workers Local 125, which represents utility workers, believe the law could make the electricity crisis worse if it goes into effect as planned on Oct. 1.

"I don't think the general public is really aware of what's happening," said Marc Anderson, Local 125 legislative aide and a former manager at Pacificorp. "We consider [the law] an unwarranted risk to throw at the public Oct. 1, 2001, so we have asked for a three-year delay in implementation."

The deregulation act, Oregon Revised Statute 757.646.2, was known as Senate Bill 1149 in the 1999 Oregon Legislature. It is a complex 28-page law, with two pages just to define terms.

Under the law, large commercial and industrial customers of Portland General Electric (PGE) and Pacificorp (Pacific Power and Light) will buy power on the wholesale market or accept an unregulated "standard offer" from the utility. Residential and small commercial customers would continue to enjoy regulated rates based on "cost-of-service," or they could opt for "green power" or "market-based rates."

At the committee meeting, Eachus took pains to argue that Oregon's law is nothing like the California deregulation law, which has been blamed for rolling "brown outs" throughout the state. California's law required utilities to sell off their power plants, banned long-term electricity contracts, set up a new short-term spot market where all power had to be sold hour by hour, and phased out regulated rates for residential customers. Oregon's law does none of those things, Eachus said.

Still, California's deregulation has driven up wholesale electricity prices throughout the western United States, leading some people to think delaying the Oregon law would be prudent.

Distaste for "deregulation" is at an all-time high among Oregonians, according to an independent poll conducted in February for PGE. That poll also found that in recent months the energy crisis has eclipsed crime and education as Oregonians' number one concern.

U.S. Representative Peter DeFazio and Portland Mayor Vera Katz have called for delaying the law, and so has the Building Owners and Managers Association (BOMA), a group that represents owners of Portland office buildings.

"Deregulation only works when you have competition," said Robin White, BOMA executive vice president. White said right now there are only a few players in the market, and supplies are short. "We need to wait until we have competitive markets." To test support for a delay, White said, BOMA has been meeting with organizations of hospitals, commercial real estate companies, and the Portland Chamber of Commerce.

The law has numerous defenders, however, including Eachus, PGE and Pacificorp, environmental, consumer and low-income groups, and the unions that make up the Oregon State Building and Construction Trades Council (OSBCTC).

In January, OSBCTC's Executive Board voted to recommend sticking with the law. "Senate Bill 1149 has spurred a lot of generating facility construction projects," said Executive Secretary Bob Shiprack. "That means more work for our members."

Shiprack cited as an example the Coyote Springs natural gas facility in Boardman, Ore., where a project labor agreement was recently signed, making it an all-union construction job.

Eachus and other electricity policy specialists, including attorney Jason Eisdorfer of the Citizens Utility Board, say 1149 is the best way to stimulate construction of new power plants, which would be crucial to correcting the supply shortage and lowering prices.

Northwest utilities have built no new power plants since Congress passed the Energy Policy Act in 1992, which started the movement toward electricity deregulation. That law opened the wholesale electricity market to direct competition. For the first time, utilities were allowed to sell excess power, and "Independent Power Producers" (IPPs) were allowed to build power plants and sell their power at unregulated rates to the utilities. Fearing competition, investor-owned utilities nationwide stopped investing in new power plants. But few new plants were built by IPPs either, because state regulatory conditions were in flux and varied widely. This supply freeze helped provoke the current spike in wholesale electricity prices.

To stimulate construction of new power plants, and to preempt recurring deregulation bills in Congress, numerous states began passing laws setting the terms of their deregulation. That was the climate in Oregon in the 1997 and 1999 Legislatures: deregulation was seen as an inevitability, and environmentalists and advocates for consumers and low-income people were encouraged to get on board if they wanted any say in the details.

Oregon's version, Senate Bill 1149, was the work of the business lobbying group Associated Oregon Industries. Even the bill number the Senate president assigned, 1149, bears AOI's fingerprint - the group's Salem office is 1149 Court Street.

Piece by piece, the bill was crafted to garner support from a broad coalition of interests. Conservationists and advocates for the poor were won over by a 3 percent tax on electric bills that will pay for conservation efforts and low-income housing and a $10 million fund for cash assistance to low-income households in danger of service cutoff.

Advocates of public power were mollified by the exemption of co-ops, municipally-owned utilities and public utility districts from the requirement to restructure. Advocates of wind and solar power like the fact that residential customers will be given the option to buy "green" power, paying a premium to support electricity from renewable resources. Consumer groups like the fact that the law maintains regulated rates for residential customers.

With most potential foes having signed onto it, the bill cleared the 1999 Legislature on an 18-11 vote in the Senate and a 37-22 vote in the House.

"We worked very hard to negotiate Senate Bill 1149," said Jeff Bissonnette, organizing director of the Fair and Clean Energy Coalition. The Fair and Clean Energy Coalition has 122 member organizations, including the Citizens Utility Board and the American Association of Retired Persons. Since the law's passage, the groups have continued to stay involved with the extensive rule-making process by which the Public Utility Commission is working out the details of implementation.

Bissonette and other members of the coalition say delaying the law would create instability for IPPs, prolonging the crisis of supply.

Critics of the law, on the other hand, argue that it will worsen the instability.

"We have talked to a lot of business groups," said IBEW's Anderson. "They've got businesses to run, and they don't want to worry about the energy issues. Particularly in view of what's happened in California, they're very concerned about price spikes."

Dave Hamilton, vice president of commercial property at Norris & Stevens, predicts hardship for the 25,465 businesses that use more than 30 kilowatts a year. That's the threshold above which rates will be unregulated - 30 kilowatts is a deli with two freezers, Hamilton said. "Why should we force Oregonians to go into this wholesale market for power at a time when it's at a record high?"

State Senator Tony Corcoran, D-Cottage Grove, said his constituents are strongly opposed to the law. "If I had $50,000, I could take it to a ballot measure and get the signatures in a month, it's so unpopular."

Corcoran, an organizer with the Oregon Public Employees Union when not in session, has introduced two bills - one that would repeal 1149 altogether, and another that would repeal all but the "public purposes" part that the citizen groups are enthused about.

Roy Hemmingway, energy adviser to Governor John Kitzhaber, says the governor is open to discussion of delay, but not repeal.

Corcoran's two bills were assigned to the Senate Rules Committee, headed by Klamath Falls Republican Steve Harper. Corcoran expects they'll get a hearing, but doubts Harper will allow them to be voted on.

The Jobs and the Economy Committee will report to the Oregon AFL-CIO E-Board March 16, where a decision on what position to take will be made at that time.