Western Governors Association Electricity Transmission Roundtable
Salt Lake City, Utah

May 9, 2001

Good morning. Let me welcome all of you to Salt Lake City for this WGA meeting to discuss electricity transmission issues. Let me thank our host governor, Governor Leavitt, and let me recognize and welcome Governor Martz of Montana, and Governor Geringer of Wyoming.

Let me also welcome and thank all of the participants who have traveled here today to join us. We look forward to your insights and your opinions.

Any comprehensive long-term energy strategy has to address three key issues: generation, conservation, and transmission. So far, much of the discussion and debate on our energy situation has focused on the first two issues, but there’s been too little discussion about the third. Today’s meeting is an effort to change that, and to bring more focus to the issue of transmission that I believe is needed.

We can create all of the additional generating capacity we want and need – and indeed, we should. But unless there is a secure system in place to move that energy to where it’s needed – if there are bottlenecks or weaknesses that impede or endanger the ability to transport that energy – then all the new power plants we build won’t help us get to our goal of a reliable and affordable energy supply for the long term.

How we address the issue of transmission will determine how well we will be able to bridge the issues of supply and demand – the ability of the utilities in the West to connect both the current and the projected need for additional energy. Two weeks ago, the Federal Energy Regulatory Commission approved an order that marks the first step in the development of a regional transmission organization that would cover eight western states – what’s known as RTO-West. I look forward to using this new FERC rule as a jumping-off point for our work here today.

When we held the WGA Roundtable in Portland this past February, I opened the meeting by describing four principles to guide or discussions. I’d like to do the same thing today, and to talk about five issues that I hope we will address today. Issues that are complex – but critical -- to the decisions that need to be made on the transmission system in the West. Call them the "Five R’s" – Rates, Reliability, Reserves, Resources, and Relicensing.

The first "R" is Rates – how the cost of an updated transmission system will be spread among the ratepayers of our states. Right now, transmission costs are provided by one of four methods:

Utility customers within a service territory paying a uniform rate that’s approved by a state’s Public Utility Commission.

So-called "wheeling rates" set by FERC, that a utility pays to send its power through another utility’s system.

The Bonneville Power Adminstration building transmission capacity, and passing the costs on to its’ customers.

And, energy generators building transmission capacity to deliver their product to their customers.

So far, this combination of both regulatory and market-based cost recovery has worked well for the region. The question we should explore today is whether it is adequate for our future needs.

The second "R" is Reliability – how can we ensure that the system gets the energy to where it’s needed and when it’s needed. That involves upgrading our existing systems as well as constructing new ones. But it also involves the physical security of the system.

Many of you here remember the blackouts that plagued most of the Pacific Northwest for days back in 1996. And you will remember that what brought the system to a standstill – The Weakest Link, if you will – was an overheated transmission line that sagged into a tree branch in Malad, Idaho. That single action started tripping the switches that ended up shutting everything down. So we need to also recognize the physical aspects of reliability in our discussions.

The third "R" is Reserves – how the transmission system can give our region a better reserve capacity, while at the same time utilizing both our current and our future generating capacity more effectively.

The fourth "R" is Resources – the issue of transmission systems’ physical proximity to the generating facilities and the resources that power them.

Whether it’s proposed coal-fired generation in such states as Montana or Wyoming, or whether it’s proposed gas-fired generation in Idaho or Utah, the distance between generation and transmission raises a host of issues involving cost and capacity.

And the fifth "R" is Relicensing – the regulatory issues that will be involved with transmission facilities.

Since our transmission system crosses a variety of lands across the West, officials at every level of our government – federal, state, local, and tribal – have a responsibility and a role to play.

If we focus our discussions today on the issues involved in these five "R’s" – rates, reliability, reserves, resources, and relicensing – I believe we can develop new ideas and common principles that will move this discussion forward.

When Dwight Eisenhower became our nation’s 34^th President in 1953, he vowed that a national priority would be the creation of a modern, efficient, and interconnected system of highways across the country. Congress had authorized an interstate highway system in 1944, but little progress had been made. By the time he first took office in 1953, less than one-fourth of the existing interstate road system was considered adequate for traffic.

As Allied Commander in Europe during World War II, he saw the strategic importance of a modern national road network with Germany’s autobahn. As Commander in Chief during the Cold War, he knew the importance of being able to move military personnel and equipment quickly and reliably. And as President during a time of economic recovery, he understood that a modern interstate highway system would be an indispensable part of the nation’s future economic growth.

I believe that we should bring the same level of commitment and perseverance to the issue of upgrading our energy transmission system that President Eisenhower brought to the issue of upgrading our interstate highway system. Both systems are essential to our national security, and both systems are essential for our economic security.

With that, let me now recognize one of the WGA co-chairs on energy issues, Governor Geringer of Wyoming.

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