Monday, August 15, 2011

Mark Hatfield, Saint Bonneville

All of us draw on personal events or experiences to give us our sense of the value and dignity of other people.  These experiences, constantly reprocessed and reconfigured around new information, become the basis of what we actually think and do. 


For Mark Hatfield, the former United States Senator from Oregon who died last week, there were several experiences that we publicly know of and they shaped a person whose high moral purpose was the lead in every obituary.
As a teenager driving his Mom’s car, he hit a pedestrian in Salem, Oregon and the woman died.  As a college student, it became his job to drive African American performers like Marian Anderson and Paul Robeson back from Salem to Portland where they could find a hotel that would rent them a room.  His naval service had him piloting the landing craft that put men on Iwo Jima and Okinawa and, on the return trip, the various parts of them.  Less than a month after the horrible flash, the young naval officer was walking the streets of Hiroshima.  After the war, he was stationed in French Indochina.    
An aloof, seemingly patrician, man, Hatfield's policies were populated by real people he actually saw.  The positions he advanced in his Senate career were rooted in actual images of suffering, death and justice.

At Hatfield’s retirement dinner, President Clinton said that the Senate will now have to hire a Chaplain. 
High purpose did not affect his ability to take care of his home state and the region.  In particular, he protected, shaped and drove the Bonneville Power Administration through crisis and reform. 

Bonneville Power Administration

Every republican president since Eisenhower pledged to get rid of the Bonneville Power Administration and one democrat, Clinton, toyed with the idea of letting it become a victim of deregulation.  Since he took office as a United States Senator in 1967, it was also part of Hatfield’s career to keep the agency intact, headquartered in Portland and responsive to the Northwest congressional delegation.
The Reagan Administration put on a sustained assault against the agency throughout its term of office.  Early on, the Reagan initiatives were poorly timed.  The region had just completed a reform of its own, the Pacific Northwest Power Planning and Conservation Act became law a month before Reagan took power and it apparently resolved a number of questions.  Would the aluminum industry in the Northwest have an assured supply of energy?  Would residential and small farm customers of private utilities share the benefit of Bonneville’s lower rates with customers of public utilities?  What was to be done about the declining fish returns and who would pay?  What role would conservation play across the region and who would pay for it?
It was a grand bargain with a clear regional consensus that seemed to settle a large portfolio of future  Bonneville issues.  However, the collapse in 1983 of the region’s nuclear building program and the subsequent debt default on two of the plants had Bonneville’s future clearly on the line.  Bonneville’s rates shot up to cover its share of the abandoned plants and the financial viability of its defaulting customers was in doubt.

Energy Northwest

Peter Johnson, an Idaho businessman, was then Administrator of Bonneville.  To the public power faithful, Johnson was the man who would try to take down the agency for his boss, Ronald Reagan.  But Johnson was no ideologue and realized that the real boss of his agency was the northwest delegation and, within it, the Senator whose inclinations, committee assignments, seniority and party affiliation relative to the administration was his boss.
With the republicans in control and Senator Henry Jackson relegated to ranking member of the Energy and Natural Resources Committee, the boss in this crisis was Mark Hatfield, chair of the Appropriations Committee.  Together, under withering criticism at home and across the country, Johnson and Hatfield held the organization together during the crisis and found a way to survive. 
A series of laws had been complicating the electricity industry and adding cost for some time.  The National Electric Reliability Council in 1968, the National Environmental Policy Act in 1969, the Clean Air Act in 1970, the Clean Water Act in 1972, the Endangered Species Act in 1973 all added an extra amount of care and diligence to the production and transportation of electricity.  The Public Utility Regulatory Policy Act in 1978 put privately developed electric power on a roll in the country that would peak in the nineties.  The Pacific Northwest Power Planning and Conservation Act in 1980 put conservation in the forefront of energy planning and natural gas went through a series of deregulations that cut its cost.   Congress put electricity on its deregulated path with the Energy Policy Act of 1992 and California began the changes in state law that would put Uncle Market in the driver’s seat by the millennium.
Events gathered.  Shortly before the passage of the Pacific Northwest Power Planning and Conservation Act, House Energy Committee Chairman John Dingell added a word to the bill’s language about fish.  “Protect and mitigate” had long been a staple of the fish language in federal law, but Dingell’s amendment, adding the word “enhance,” would have huge implications for the cost of Bonneville electricity. 
Coincident with the power act was the publication of author Bruce Brown’s book about how dams had destroyed the magnificent salmon runs on the Elwha River on the Olympic Peninsula and how hatchery fish were a dangerous innovation crowding out the precious wild stocks that ultimately would save the biological diversity of Northwest salmon.  Mountain in the Clouds was a kind of Silent Spring moment, connecting the dots of Dingell’s “enhance” with Brown’s concept of “wild” and the requirements of the Endangered Species Act.
As the decade of the nineties began, Bonneville was trapped in a cycle of growing debt propelled by higher costs.  Salmon enhancement had become a small industry in the Northwest.  The debt in 1993 was $16.3 Billion and was 96% of the agency’s total assets.  BPA was a couple of bad water years away from losing its low cost advantage and having customers with a choice choose another provider.  In 1992 and 1993, BPA’s costs exceeded revenues by $600 Million.   More than half its revenue was directed toward debt service.  In fact, in 1996, the wholesale electricity market was a better choice than BPA, a first. 


Fortunately for Bonneville, Hatfield was back as the Chairman of Appropriations in 1995 and provided the leadership to ward off a potential calamity.  Hatfield helped the agency cap its salmon enhancement costs and refinance much of its Treasury debt, stabilizing its finances.  Hatfield retired after his term was over in 1996.
Hatfield’s retirement would mark the close of a period where the Northwest had a particularly strong position in the national legislature. Speaker of the House Tom Foley was not elected in 1993, Senate Finance Committee Chair Bob Packwood resigned in 1995 and Hatfield retired in 1996.
Hatfield’s efforts to protect Bonneville were not his passion but his duty.  But Bonneville is grateful to have had his confident judgment even if it didn’t have his heart.

1994 GAO Report on Bonneville's Financial Condition
Live Better Electrically, 1957

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