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Show UP&L tells its story about obtaining hydro-power to reduce customer rates By JOHN WARD Utah Power & Light Utah Power & Light Co.'s effort to obtain a share of low-cost federal power for its customers custom-ers has generated volumes of rhetoric. But the reason for UP&L's action remains simple. All taxpayers contributed to the construction of federal dams along the Colorado River system. sys-tem. It's not fair that the federal government will sell low-cost power from the dam projects only to about 25 percent of the people in Utah. Because of this obvious inequity, UP&L has worked for years to obtain a share of federal power for its customers. That effort is now ' continuing in the form of a lawsuit against the Western Area Power Administration, the federal fed-eral agency that has refused to allocate low-cost low-cost power to communities UP&L serves. About 150 cities, towns and counties in Utah and Wyoming have joined UP&L in the lawsuit. law-suit. If they are successful in obtaining a share of the low-cost power, rates for residential and irrigation customers could be decreased by more than 20 percent. Municipal power systems that currently receive re-ceive large blocks of Colorado River power frequently mark up the price before selling it to local citizens. They use the profits to support other city budgets not related to the power system. UP&L, on the other hand, would pass all of the benefits of low-cost federal power directly to the company's customers. UP&L would not earn a dime in profit from the public resource. The idea of spreading the benefits of federal power projects across all citizens is not a new one. In 1981, Congress accomplished in the Pacific Northwest the same thing that UP&L now seeks for its customers in Utah and Wyoming. Congress decreed that the benefits of low-cost hydroelectric power should be shared by everyone regardless of what kind of utility serves them. Overnight, UP&L customers cus-tomers in Idaho saw their rates go down by a . - third. "r As the debate continues in Utah, a number of inaccurate statements about the issue keep , cropping up. Those statements include: Statement: UP&L had a chance to obtain federal power when the dams were built, but didn't want to participate. Fact: UP&L did seek to participate when the dams were built. UP&L and other western power companies even asked the federal government gov-ernment to allow investor-owned utilities to build the generating facilities on the dams. The utilities then would have paid the government a fee for using the water. This was the arrangement used when the Hoover Dam was constructed, but the federal government refused to allow the participation of investor-owned utilities when the Flaming Gorge and Glen Canyon dams were built. Statement: UP&L didn't participate when the dams were built because hydro power was more expensive than UP&L's coal-fired power. Fact: For the same amount of power delivered deli-vered at the same voltage, UP&L's selling price was 1 .06 cents per kilowatt-hour, compared com-pared to the government's selling price of 0.6 cents per kilowatt-hour. Even then, government govern-ment power was 43 percent lower. UP&L didn't participate because UP&L was not allowed to participate. Statement: Municipal power systems that receive re-ceive federal power aren't really subsidized. Fact: Subsidies do exist. The Colorado Rivet Storage Project received its loans from the U.S. Treasury at bargain rates. Although CRSP repays its loans to the Treasury at 2.875 percent interest, the Treasurery borrowing costs were higher than that. Taxpayers subsidize subsi-dize the difference. John J. Gish, a director of special projects for the Grace Commission, has confirmed "that the power rates charged by the Federal Power Marketing Administrators are, in part, based on subsidized borrowings from the government." govern-ment." Statement: But municipal power systems are repaying the U.S. Treasury for the power systems sys-tems that serve them. Fact: A portion of the cost of CRSP electric power-related facilities will never be repaid it's "non-reimburseable." Of the portion that will be repaid, municipal electric systems are paying extremely low rates over 50 years. At the end of 1983, only $163 million had been repaid out of the total $1.1 billion that is owed. After 20 years, only 14 percent had been repaid. re-paid. Statement: Municipal power systems provide pro-vide competition that keeps UP&L's rates down. Fact: In the words of former Energy Secretary Secret-ary James Schlesinger, "It is national policy to provide privileges to municipals. Municipals want to preserve their sheltered positions. Consequently, talk of competition is illusory if not downright misleading." Exclusive access to large blocks of inexpensive inexpen-sive power from federal dams is the main reason a few long-established municipal utilities utili-ties can offer lower rates than UP&L. Municipal Municip-al power buzzwords like "non-profit" and "local control" really have very little to do with the cost of power. If communities served by UP&L had access to low-cost power, it would improve competition competi-tion by forcing both UP&L and long-established long-established municipal utilities onto a more level playing field. Statement: If UP&L wins this lawsuit, it will be "all pain, no gain." Rates for existing municipal muni-cipal electric systems would skyrocket and UP&L customers would receive only token rate decreases.' " - Fact: A report recently completed by the United States General Accounting Office has concluded that UP&L would be able to substantially sub-stantially reduce rates if it were to obtain a share of power from federal dams. Predictions of massive rate increaess for the existing municipal electric systems are overestimated. over-estimated. They could soften the impact of rate increases by passing all of the benefits of their remaining low-cost federal power allocation directly to consumers through rates, as UP&L proposes to do. If rates of municipal power systems are forced to rise at all, it is simply an indication of the size of the great subsidy they are currently receiving. Statement: UP&L's lawsuit is a waste of time. The law is on the side of municipal electric elec-tric systems. Fact: Company officials believe the merits of the lawsuit are solidly in UP&L's favor. Contrary Con-trary to assertions by government-owned power pow-er advocates, the company does not have to totally invalidate the "preference" principle to win benefits for UP&L's customers. The company com-pany simply must prove that the "preference" principle has been applied unfairly and unlawfully unlaw-fully by the Western Area Power Administration. Administra-tion. The debate over the allocation of low-cost federal power likely will continue in this area for some time to come. But don't be misled by the myriad emotional, colorful "David vs. Goliath" arguments. The issue, once again, is simple: Is it fair that 75 percent of Utahns are denied an opportunity to benefit from projects that all taxpayers helped build? |
