Complaints by Utah Power & Light Co. have prompted government investigators to suggest that Congress review a policy that could help public power systems take away customers from investor-owned UP&L.
At issue is the practice by the Western Area Power Administration to build power lines with more capacity than it needs to distribute hydroelectric power from federal dams - and to allow the excess to be used by public power systems to expand their markets.The General Accounting Office said it generally finds nothing illegal about the practice, according to a report to Rep. George Miller, D-Calif., chairman of the House Interior Subcommittee on Water and Power Resources. The report, finished in December, was just recently made public.
The GAO suggested that Congress may still want to review the matter to ensure it approves of the policy's results.
The report was prompted by complaints from UP&L and others about a proposed $34.8 million WAPA transmission line between generating stations at Craig, Colo., and Bonanza, Uintah County, Utah.
UP&L has sued to stop WAPA from building it, contending it would have much excess capacity. The federally subsidized line could allow exchange agreements between public power agencies enabling their expansion into areas served by UP&L.
The GAO would not express an opinion about whether the Bonanza/Craig line is legal because of pending lawsuits. But it said it found nothing illegal in 26 other similar line construction projects by WAPA.
Lloyd Greiner, WAPA's Salt Lake area manager, said WAPA's authority to build the line was upheld in federal district court recently. He said the primary purpose of the line was to enhance service reliability for federal power contracts with Utah customers. At present, only a single line is available from western Colorado into northeast Utah.
Greiner said UP&L was involved in the initial planning of the line and was familiar with the technical aspects of the project from the beginning. He said the intent of the line is not to serve new customers. He said the extra capacity is intended to serve future growth in the area.
Alene Bentley, Utah Associated Municipal Power Systems spokeswoman, said the excess capacity will eventually be used by member cities and co-ops to meet new growth in existing markets. UAMPS and two Colorado-based groups are participating in funding the line's construction.
The GAO report also confirmed some of UP&L's fears, saying, "Representatives of two other utilities confirmed that they are, in fact, participating in Craig/Bonanza to gain access to new markets.
"These public utilities are in a surplus generating position and they see Craig/Bonanza as a transmission path to obtain sales to Utah and California.
"UP&L may also be concerned that the line would permit power from Colorado to flow through Utah to the 500 kilovolt line in western Utah and on to California. As a result, UP&L could lose potential markets elsewhere."
The report said WAPA justifies building such power lines to increase the reliability of its delivery of federally generated power to public power agencies.
It said extra capacity often results, which helps accommodate unplanned electricity flow and can compensate for unexpected loss of a line or other system failures.
The report said WAPA also says some line construction projects would not be cost-effective without the added revenues coming from selling the use of excess capacity to public power companies, and sharing construction costs with them.
For example, WAPA officials estimated revenues from use of excess capacity on the Craig/Bonanza line to exceed $5 million a year. The report also said Craig/Bonanza's total cost was estimated at $34.8 million, with WAPA estimated to pay up to $22.6 million and the rest paid by other power agencies.