Power Struggle Coming

DAYTON - To get a glimpse of what may be in store for Dayton if a proposed new electrical distribution line is approved, one need not travel far.

Anyone who has relatives or friends in College Place may know that some residents there are hooked up to one power company while their neighbor may get their electricity from another.

Anyone who has worked as a first responder in College Place knows the challenge of figuring out what power company serves the dwelling or business that happens to be the scene of that night's emergency. The planning of new developments in College Place isn't much easier with two power companies. And when the power goes out on a stormy night, whose juice is it - Pacific Power's or Columbia REA's?

Just about the only thing that College Place and Dayton would not have in common is the small forest worth of utility poles lining College Avenue with Pacific Power's going down one side and Columbia REA's going down another. Columbia REA says its services in Dayton would be strictly underground.

Pat Reay, administrator for the City of College Place, admires the two companies' corporate neighborliness in his town but abhors the effects their overlapping services have had on his administration and his community.

"We are the poster child for the duplication of (electrical) services," he said. "It's a mess."

But some customers who have switched to the new kid on the block seem happy with the more affordable service Columbia REA provides them and believe it all adds up to healthy competition.

"Not only is our power bill better, but we're dealing with someone we see every week," said Tim Payne, superintendent of the College Place School District, which switched two of its campuses from Pacific Power to Columbia REA.

"They have been a very good partner," Payne said about the cooperative. "I haven't heard about too many unhappy REA customers here."

The Proposal

Columbia REA this sum­mer submitted a request to the City of Dayton to use its right of way for the installation of a primary un­derground

distribution line roughly following Commer­cial Street across town. The Dayton-based rural electric co-op says it wants the new service to provide its headquarters office with power. The building at 115 E. Main St. is currently served by Pacific Power of Spokane, REA's com­petitor and a company requesting the state to approve a 21-percent rate hike. But Columbia REA Spokesman Scott Peters hinted that the door is open to serving more than just the company's own building. "If there are other Pacific Power customers who ap­proach us and inquire about the value of membership in a locally owned and managed nonprofit we will be happy to explore providing service to them also," he said.

The Columbia REA ap­plication, which comes be­fore the Dayton City Coun­cil later this fall, raises a number of thorny questions about the future of pow­er

service in the city. Will Dayton earn the dubious distinction of becoming the second community in the state where two electric utili­ties

compete directly for the same customers - a situation state and local officials say clearly violates the spirit of Washington laws designed to avoid power-service re­dundancy? "That's the fear," Dayton Mayor Craig George said. "Competition is good, but duplication is a waste of money."

Columbia REA said it does not see its proposal as a duplication of services. Instead, company officials believe that lower rates and underground service will bring big benefits to the Day­ton community. "We see no negative impacts in any regards in Dayton (or College Place) because of competition be­tween

Columbia REA and PPL (Pacific Power)," Peters said. "In fact, we see positive consequences. Columbia REA is a local, nonprofit cooperative who provides timely service to our members, we have lower commercial rates (improv­ing local economic health) and our commitment to Day­ton, College Place and Walla Walla is to provide modern underground facilities."

The company's applica­tion comes at a critical time. The long-term franchise agreements Dayton signed with both power companies almost a decade ago are up for renewal by early next year. Meanwhile, Columbia County wants to put in a high-capacity fiber optic cable across town, possibly in the same area Columbia REA plans to install its pro­posed new service line. And Pacific Power has submitted a large rate in­crease

request to the state's Utilities And Transportation Commission. To make matters even more interesting, the Day­ton City Council recently appointed Jim Cooper, a Dayton resident who is em­ployed by Columbia REA, as its manager of financial services filling the seat va­cated by councilwoman Micki Varney. Company and city officials say Cooper will have to excuse himself from any of the discussions to avoid a conflictof interest.

How We Got Here Power cooperatives emerged earlier in the 20th century. While most town residents in Columbia, Walla Walla and Umatilla counties enjoyed access to electrical services, fewer than one of out every fivecountry resi­dents did as late as 1935.

That same year, Presi­dent Franklin Roosevelt established the Rural Elec­trification

Administration to encourage the expansion of services in the countryside by providing loans to launch these targeted utilities. In 1939, the first group in this area took advantage of the new program and formed the Columbia County Rural Electric Association. In May of 1940, 69 miles of line served 90 members.

Since then, Columbia REA has grown to more than 4,500 member accounts and nearly 1,200 miles of electric line throughout Walla Walla, Umatilla and Columbia counties. It has added servic­es

such as Wireless Internet by its subsidiary Columbia Energy, LLC. But since the agricultural market remained small, Co­lumbia REA went after new suburban developments and, in some cases, existing urban customers so it could build economies of scale.

In most cities and coun­ties, city-owned utilities control power services or electric companies - large utilities and rural coopera­tives

- have agreements that divide territories between them to avoid duplication. Often they've agreed that the closest utility gets to serve the customer.

But in College Place and Dayton, city officials granted franchises to two power companies, believing it could have economic ad­vantages: lower power rates and more jobs. In Dayton's case, concerns about esthet­ics were to be addressed through a right-of-way or­dinance that gives the city control over the routing of utility lines.

At the time, Columbia REA's general manager Tom Husted said it was not "REA's intent to grossly duplicate facilities within the city.

"REA's intent is to pro­vide an alternative for those customers who choose to do business with a local com­pany, and REA simply asks for the same opportunity that the present supplier has," ac­cording to the minutes of the 2000 meeting during which the franchise was approved. Since Columbia REA began offering electric ser­vices in College Place, some residential and business cus­tomers, such as the Meadow Brook Elementary School, have left Pacific Power for the rural cooperative. The City of Walla Walla, which recently granted Co­lumbia REA a franchise agreement, switched provid­ers for its wastewater treat­ment plant and is expected to save $25,000 a year, accord­ing to the cooperative. The service line REA is now requesting Dayton to approve will allow residents and businesses here a similar choice. Waitsburg officials had an informal meeting with Columbia REA repre­sentatives two years ago af­ter the cooperative expressed an interest in exploring a franchise there, but the com­pany did not follow up.

It shows that smaller util­ity companies continue to look for ways to expand.

"With two aggressive electric companies, that's going to happen," said State Representative Terry Nealy, who serves on the House Energy and Transportation Committee. He noted that "true duplication should be avoided."

The Legal Loophole State law discourages but doesn't prohibit the kind of situation that now exists in College Place. RCW 54.48.020 simply states "the legislature hereby declares that the duplica­tion of the electric lines and service of public utilities and cooperatives is uneconomi­cal, may create unnecessary hazards to the public safety, discourages investment in permanent underground fa­cilities, and is unattractive, and thus is contrary to the public interest and further declares that it is in the pub­lic

interest for public utilities and cooperatives to enter into agreements for the pur­pose of avoiding or eliminat­ing such duplication." Bill Clemens, regional community manager at Pa­cific Power, said his compa­ny has approached Colum­bia REA twice to discuss an agreement dividing service territories but was rebuffed each time. Columbia REA officials have a different recollection of the discussions.

"In the only occurrence I'm aware of, PPL walked away from the negotiating table," Peters said. "At this point in time, we do not feel it is in the local customers' best interest to eliminate competition."

Although a utility like Pacific Power is much larger and thus has the advantage of scale, they are regulated by the state, while Columbia REA is not. It can make rate adjustments and put in new services with mere approval from its board of directors, while Pacific Power has to seek approval from the state.

"We don't see that as competition," Clemens said. "They can do what they want, and we have our hands tied." "We agree with the RCW that we should avoid dupli­cation through agreements," he said. "We already serve all customers in Dayton. Co­lumbia REA has none." Peters said his company believes the RCWs are in­tended

to avoid duplication of overhead lines, and that the company follows the legislative declaration by putting its services under­ground.

The cooperative may of­fer lower rates to customers, but there's a cost to installing and maintaining new service lines plus removing indi­vidual hookups, explained one state official who didn't wanted to be named in this story.

A few years ago, after some Pacific Power custom­ers started leaving that com­pany for Columbia REA, Pacific Power asked the state's Utilities and Trans­portation Commission for a tariff adjustment to cover the $200 it cost them to remove their equipment from these customers' properties, the officialsaid.

Where From Here? Dayton Mayor Craig George said he has talked to Reay in College Place. Even if the esthetics of the electrical service lines can be controlled, the city's emergency responders and planners are going to face "the nightmare" of dealing with two power companies, he said.

"We're going to have to take a stand on that," George said.

There is also the ques­tion why Columbia REA hasn't taken advantage of its franchise agreement with Dayton before.

"In the past, we haven't felt there was an opportunity to save significant money for the cooperative by building into Dayton," Peters said. "After the last three PPL rate increases and their cur­rent 21 percent rate increase request, there is a significantcost saving to us to provide service to our officein Day­ton, and as a local nonprofit company, probably save money to other businesses that approach Columbia REA." The current REA and Pacific Power franchise agreements expire in late January. Renewal discus­sions and consideration of REA's proposed service line are expected sometime in the next several weeks.