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West, Governor John Kitzhaber called on Oregonians last month to conserve power in the name of "community spirit." Turn down the thermostat, take shorter showers, Kitzhaber said. "Even just a simple act like turning off unnecessary lights makes a difference if everyone contributes." But while residents may contribute by shivering in the dark a little more, huge industrial users subsidized and promoted by the state and federal government continue to guzzle enormous amounts of increasingly scarce electricity. One Northwest aluminum smelter can suck about as much juice as half of Portland, for example. Closer to home, Weyerhaeuser's paper mill swallows up as much power as 35,000 homes. Hyundai's new chip plant gobbles the power of 12,000 homes. For Eugene residents to save the power that Hyundai uses, about 70 percent of households would have to stop using a refrigerator. Or, every house in Eugene could go dark by unscrewing 17 light bulbs that they use in the evenings. The huge amounts of power used by industry in Oregon helps jack up rates for residents. To meet rising industrial demand that exceeds the region's generation capacity, the Bonneville Power Administration (BPA) has been forced to buy power on the expensive spot market at rates 50 to 100 times the cost of its cheap hydropower. BPA passes those higher costs on to Northwest residents though their utilities and plans to raise rates 30 percent this year. Locally, industrial demands have meant that EWEB has also not had enough cheap hydropower to serve local needs and has had to buy on the inflated spot market. The utility has proposed a 15 percent rate increase. Combined with the BPA increase, local rates could go up 35 percent this year. While factories' huge power demands drive up rates and create the risk of blackouts, utilities and regulators have given these power hogs little incentive to conserve. EWEB and other utilities give deep discounts on power to big industrial users. Weyerhaeuser pays only about two-thirds of the rate that Eugene homeowners pay for electricity. Hyundai was paying a rate of about 60 percent less than residential users for its power through a special deal with EWEB. But the Hyundai contract allowed for prices to go up some with the cost of market power and the corporation will now pay almost as much as residents through a special deal EWEB found for Hyundai to buy BPA power. Northwest aluminum smelters have used their lobbying muscle to get special deals to cut their power rates to less than half what homeowners pay. "It's a gigantic corporate welfare handout," says Dan Meek, a Portland public interest attorney who's followed the power market for years. Northwest residents are paying hundreds of millions of dollars in inflated utility bills to support the cut-rate power for the profits of aluminum companies, Meek says. When BPA was recently forced to buy high-cost power on the market, it was paying about thirty-five times more for the power than it was charging the big aluminum companies like Kaiser, according to an analysis by Seattle public interest power researcher Kevin Bell. BPA paid about 23 cents for the energy needed to produce the aluminum in a single soda can. It charged the smelter corporations only about two-thirds of a cent for the power. The huge gap between the power cost of aluminum and its actual market value has lead several smelters to shut down their factories to make more money selling the cheap power that BPA gives them on the market. Kaiser has made more than $100 million off selling BPA power from one Washington factory this winter, Meek says. This profiteering off a public resource was made possible by another "horrendous" special deal BPA gave the aluminum corporations, Meek says. Five years ago, the BPA contracts with the smelters traded the same low rates for interruptible power which BPA could shut off in times of short power supply, Meek says. But the contracts were changed, removing the interruption clause. If the clause had remained, BPA would have saved hundreds of millions in costs passed on to ratepayers, says Meek. Another sweet BPA deal keeps EWEB from dumping Weyerhaeuser to save the utility from having to buy expensive market power to meet demand. Weyerhaeuser is in Springfield, outside EWEB's service district and the utility doesn't have to provide the corporation power. If EWEB could dump the paper mill, it would lose about 20 percent of its load and would have to buy almost no expensive power off the market, saving residential ratepayers the 15 percent rate hike. But EWEB Chief Financial Officer Dick Varner says the BPA required in its contract with the utility that EWEB use BPA power to serve Weyerhaeuser. If EWEB dumped Weyerhaeuser, the utility wouldn't be able to use the cheap BPA power the mill used for residential customers, he says. High-tech companies such as Hyundai aren't as big power gluttons as aluminum smelters, but the industry still consumes massive amounts of electricity and helps boost residential rates. Fueled by recruiting from state and local economic development offices and hundreds of millions of dollars in tax cuts and state grants, high tech is booming in Oregon and the Northwest and sucking enough power to light entire cities. A recent joint report by the BPA, Northwest Power Planning Council and Oregon Office of Energy, documents the huge power drain of the "Silicon Forest" and says that most of the new chip plants could cut their power use in half without hurting profits. The report predicts that $20 billion in new microelectronics factories in the Northwest by 2004 will require up to 500 megawatts of additional electricity to run. That's about twice what the entire city of Eugene and all it's industry, stores and residents consumes. It's five million 100 watt light bulbs burning constantly. The government report says chip plants could use half the power by using technology already in use at similar factories in Asia and in Europe, and by taking advantage of new systems now being developed. With the energy savings, plants can boost profitability and become "good neighbors" who are "more readily welcomed by resource-conscious communities." Factory clean rooms are powered by air conditioning systems that could be up to 70 percent more efficient, the report states. The inefficient computerized chip-etching "tools" that the factories use are left to run constantly and consume 50 to 70 percent of a factory's power. Some factories run several hundred furnaces at once to grow silicon wafers for chips. Each furnace consumes the power equivalent of up to 100 homes. Similar furnaces used to make solar power cells use up to 75 percent less power. "Historically, this industry has not emphasized energy efficiency," the report notes. "At the root of most of these [high energy consumption] problems is the intense competition in this industry to move from new concept to full market as quickly as possible. 'Faster, better, cheaper' are the industry's priorities, not 'more efficient.'" Locally, Hyundai's energy demands are likely to grow even more voracious. In 1995, Hyundai told regulators that it would demand 90 more megawatts of electricity for the planned second and third phases of its factory. That would bring the corporation's total electricity consumption up to 110 megawatts, enough power to run about 65,000 homes. Another big high-tech draw on Northwest power is the Internet. An overcapacity of fiber optic lines in the Seattle suburbs has lead to a boom of "server farms" in the region. Warehouses full of computers run constantly to feed web pages into the Internet. More than 30 of the server farms are proposed for the region, potentially consuming almost the same amount of power as the entire city of Seattle and its industries, the South County Journal reported last month. While the industrial waste has spurred power shortages that could leave Northwest citizens shivering and stumbling in the dark while they're mugged by high electric bills, don't expect government regulators and utilities to go after the corporations any time soon. Jeff Bissonnette of the Citizens Utility Board, a tiny public interest nonprofit, says pushing for tough new regulations or utility policies to prevent the big industrial users from driving residential rates up would be very difficult. "That's probably not a realistic expectation," he says. The corporations "have a fair amount of clout." Business interests contributed half of all Oregon state campaign contributions in 1998, according to the National Institute on Money in Politics. Northwest Republicans, industry, many Democrats, and some labor groups have joined together to protect what they call "family wage jobs" and what public interest groups call "corporate welfare." High tech companies like Hyundai, for example, were recruited to Oregon by state officials, including Governor Kitzhaber, who promised huge tax breaks, cheap labor and power. When Hyundai's tax breaks were threatened after the corporation lost a $14 million employment discrimination lawsuit, the governor and Republican Legislature rushed to pass a new law that in effect preserved the hand-out. Don't expect much regulatory help from the federal government either. The Enron Corporation is not only one of the biggest profiteers from the current run-up in energy prices, it's also one of the biggest donors to President-elect George W. Bush. While the big industrial users won't pay the price, it's their greed that caused the Western energy crisis to begin with. A few years ago when market power was cheap due to a temporary oversupply, industry was hoping to jump ship from utilities and the BPA to buy power directly on the commodities market. Corporate lobbyists pushed hard and won legislation to deregulate the power industry in California and, to a lesser degree, in Oregon. But deregulation in California destroyed the incentives for utilities to provide reliable, cheap power and allowed profiteers to run wild. California Gov. Gray Davis has called deregulation a "colossal and dangerous failure" that ``has resulted in skyrocketing prices, price-gouging and an unreliable supply of electricity -- in short, an energy nightmare.'' The San Francisco Examiner reported that deregulation in the state was "one of the most costly public policy mistakes ever made," with a price tag for utility customers of at least $40 billion. The California deregulation "nightmare" has created power shortages and huge increases in power costs throughout the West and threatens to drag the Northwest down with it. Although California is trying to re-regulate its utility industry as fast as it can, Oregon is pushing ahead with deregulation plans set to go into effect in October. Oregon's plan is more modest than California's. EWEB and other public utilities and residential customers aren't required to deregulate. The plan largely effects large industrial customers of private utilities who will be allowed to dump their utility contracts and purchase power directly on the market, if they choose. Industrial users hope to make millions off the plan. They'll get a huge multi-million dollar payout for their "share" of the generating assets of the utilities they leave behind. The factories also hope to take advantage of an eventual drop in market power prices back to the far cheaper levels of a few years ago. Meanwhile, residential users will be stuck with the bill as usual. Residential rates will go up to finance the payout to the big industrial users and residents won't be able to pick between market and utility rates for the cheapest power. The plan also could destabilize the electricity market as happened in California, causing further rate shocks, some consumer advocates fear. "We can't afford to have this potential disaster happen here in Oregon," says State Rep. Robert Ackerman (D-Eugene). Ackerman has called for repealing Oregon's deregulation bill to protect ratepayers. The electric industry, with it's unique characteristics of an unstorable commodity that's a basic necessity full of external societal costs, doesn't lend itself well to being left up to the free market, Meek says. "The entire push to deregulation nationwide has been ill considered." Besides ratepayer's pocketbooks, another big victim of deregulation has been conservation. It's far cheaper, not to mention less polluting, to meet energy demands by promoting energy conservation than to buy more power at today's inflated market rates. With deregulation, BPA felt it had to cut costs to be competitive. The first thing to go was $190 million in yearly spending on conservation. "They slashed their budget by 90 percent," says Steve Weiss of the Northwest Energy Coalition, a group composed of some environmental organizations and utilities. "They had to get their contract [costs] down for the aluminum smelters." Meek says the region should jack up conservation funding drastically and take the conservation money out of the hands of utilities. Utilities, which are in the business of selling power, are more focused on conservation PR than actually saving energy, he says. "It's like putting tobacco companies in charge of anti-smoking ads." One huge potential conservation savings would be to heat more homes directly with natural gas rather than with electricity created by burning natural gas in power plants. The direct method is almost twice as efficient. But, of course, electric power companies don't make as much money off natural gas homes. So instead, Northwest electric utilities are planning 8,000 megawatts of new gas-fired power plants. That's almost enough squandered energy to power four Seattles. It's also enough to make you shiver.
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Chris Helm