Press Release

Portland, Ore. – Ten Western Governors today recommended short-term steps that should be considered by all levels of government and the private sector to remedy the immediate electricity crisis and long-term measures that would ensure reliable and secure energy supplies.

The agreements were reached during the Western Governors’ Association’s Energy Policy Roundtable that concluded today. Governors attending the meeting were Dirk Kempthorne, Idaho, WGA Chairman; Jane Dee Hull, Ariz., WGA Vice Chairman; Tony Knowles, Alaska; Gray Davis, Calif.; Judy Martz, Mont.; Kenny Guinn, N.V.; John Kitzhaber, Ore.; Mike Leavitt, Utah; Gary Locke, Wash.; and Jim Geringer, Wyo.

"Without question, short-term responses to deal with the immediate crisis are essential," Kempthorne said. "But if we don’t want to see a return performance of the conditions we face today, it’s imperative for all of us to support steps that can provide a reliable, long-term and affordable supply. The economic health of our states, our region, and our nation depend on it."

Below are the documents approved by the governors.

Governors' Recommended Actions for Addressing
Immediate Electricity Problems in the West

The reality of the western electric power system has inextricably linked the energy futures of western states. Extraordinary wholesale electricity prices in the western wholesale power market have spawned much-needed power plant construction for the first time in a decade. However, these plants will not come on-line soon enough to mitigate the high prices and shortages in parts of the West.

Governors across the West have already called for and implemented conservation measures. However, we also believe the additional steps listed below should be considered.

1. Encourage California and power generators to enter into power supply contracts to reduce dependence on the spot electricity market. Long-term power contracts will reduce reliance on the volatile wholesale spot market and stabilize prices to consumers. Non-California utilities and direct end-use customers that rely extensively on the spot market should also reexamine their power purchase practices in order to appropriately hedge themselves against future price spikes.

2. Request utilities and state and tribal public utility commissions to adopt rate reforms that send more accurate price signals (or a proxy for such price signals ) to consumers. This is the first step in empowering customers to make wise decisions about their energy use and to make investments that reduce their total use and cost. This means developing and deploying technologies that allow building owners and other consumers to receive more accurate price signals that encourage them to reduce or shift consumption to off-peak times.

3. Ask Vice President Cheney and the federal inter-agency task force to accept as part of its mission to work with the Western Governors and tribal leaders to streamline regulatory processes to enable retired generation to be reactivated, existing generation to increase production, and new generation and natural gas and electricity transmission to come on line while protecting public health, safety and the environment. States, tribes and federal regulatory agencies need to expedite the review of any permits required to bring retired generation on line. They also need to expeditiously develop a plan that would allow existing back-up generation to come on-line without violating human health and environmental standards.

4. Ask state and tribal public utility commissions and all non-jurisdictional utilities to approve demand-exchange tariffs under which customers can voluntarily agree to reduce demand in exchange for compensation. A number of utilities have demand exchange programs underway and more utilities need to implement them. For example, Portland General Electric allows customers to voluntarily shed their load. The power can then be sold in the high price wholesale market. The profits from the sale of power are shared between the customer (90%) and utility (10%).

5. Ask state and tribal public utility commissions and non-jurisdictional utilities to eliminate barriers to clean distributed generation that can be in place in the next 12-24 months. Distributed generation includes small turbines (e.g., less than 5 MW), high efficiency co-generation, fuels cells, etc. that are typically installed on the consumer’s property, a practice sometimes referred to as net metering. Utilities have frequently blocked the installation of such technologies through cumbersome business practices or complex and inconsistent requirements for connecting such generation to the transmission grid. Requirements to ensure safety and reliability of the grid should remain in place.

6. Ask utility distribution companies and state and tribal energy agencies to develop energy efficiency measures that provide savings beginning within the next six months through technical assistance, financial incentives, accelerated penetration of new technologies, and appropriate regulation. Ask PUCs, state legislatures and tribal councils to take steps necessary to encourage funding of such measures (e.g., including utility costs in rates, adopting system benefit charges which are a non-bypassable fee on each kilowatthour sold).

7. Where states and tribes have not already acted, direct state and tribal agencies to accelerate the implementation of efficiency practices and investments in state and tribal buildings and ask the federal government and local government to take similar action.

8. Ask Congress, state legislatures and tribal councils to expand assistance to low income families and families and individuals with fixed incomes to help pay high energy bills.

9. Enact federal legislation consistent with WGA resolution 00-009 that would: enable the establishment of enforceable system reliability rules; provide for delegation and deference to the West; and enable the creation of regional advisory bodies of states and provinces.

10. Encourage WGA to seek the creation of a centralized grid-wide database that tracks prospective demand, and tracks generation and transmission facilities under construction, that are permitted, in the permitting process, or under consideration.

11. Support efforts to ensure the availability of information on loads, transmission, and generation where necessary for ensuring the adequacy, efficiency and reliability of the grid.

12. Continue to implement the region’s short-term conservation strategy adopted January 10.

13. Conduct a regional assessment of whether and how gas supplies and its transmission can be increased in time to meet summer peak load demand.

To maintain the Western Governors’ commitment to a healthy and viable economy in the West we need to pursue a national energy policy that will result in (1) abundant and diverse energy resources available to consumers and (2) more efficient use of energy. All of the West’s energy supply and demand options should be pursued.

1. At a minimum, supply-side policies should address:

Permitting Energy Facilities -- Streamline state, tribal and federal processes for siting new generation, electric transmission and natural gas pipelines while protecting public health, safety and the environment.

Coal -- Implement R&D and tax incentives to promote the development and deployment of new technologies to increase the efficiency and lower the emissions from coal-based generation.

Renewables -- Accelerate the development and deployment of promising renewable energy technologies through the extension and expansion of state and federal production tax credits and state and tribal policies such as system benefit charges, portfolio standards, renewable resource-based utility tariffs, and/or creative new incentives.

New energy development – Enable exploration and development of promising domestic oil, gas, coal, geothermal or wind resources where lands, air, water, fish and wildlife, and other environmental resources can be protected.

Environmental Regulation – Review environmental and natural resource policies to ensure they are as efficient as possible. These policies include the air quality regulations for health and regional haze. See WGA resolutions 99-013 Principles for Environmental Management in the West and 99-012, Air Quality Reform and Flexibility - Western Air Quality Initiative; and 00-015, Regional Haze. These policies advocate collaboration, flexibility to achieve compliance, and implementation of economic incentives.  Credit trading programs are preferred over command-and-control approaches.

Energy Infrastructure – Support economic and environmentally sound energy infrastructure investments to transport energy to markets.

Urge (1) construction of a pipeline to move natural gas from Prudhoe Bay along the Alaska Highway to the lower 48 states, (2) the expansion of natural gas pipeline systems in the lower 48 states, and (3) the expansion of electrical transmission capacity from areas rich in energy resources to load centers.

Encourage a stable economic environment conducive to construction of needed electrical generation.

Convene a workgroup of major transmission system owners to identify where bottlenecks occur and to recommend needed new transmission facilities.

2. At a minimum, demand-side policies :

Encourage rate structures that give utilities an incentive to reduce consumption.

Encourage long-term stability of government and utility conservation programs.

Accelerate the development and deployment of new, more energy efficient products in the market place. These activities accelerate the penetration of new technologies into the market place. Such efforts are best implemented at the state, tribal and regional level often with the assistance of the federal government.

Review and improve the energy efficiency of building codes in Western states and tribal lands.

Accelerate the development of federal government appliance efficiency standards that are cost-effective standards and recognize the unique conditions in the West (e.g., dry climates).

Support of federal R&D that maximizes the development of energy efficiency technologies applicable to the growing Western region.

Support of federal, state and tribal tax incentives to accelerate the introduction of new energy efficient technologies.