This is an unexpurgated version of the second half of a presentation given to the public at the offices of the Snohomish County Public Utility District on October 24, 2002; the first part of the presentation repeated earlier speeches like this one.
I'm going to use the word "Commies" from time to time, and I want to explain that. A lot of people think that after the Berlin Wall fell, that was the end of Communism, and Communism was discredited. But the Commies didn't all die from shame and disappear from the face of the earth. Instead they scurried around and became environmentalists. Like Mikhail Gorbachev and Green Cross.
Because you know what? The central failure of Communism, crippling economic development, is a central goal of environmentalism. And I don't mean to imply that all environmentalists are Commies. Great Americans like Teddy Roosevelt have recognized that we need to have conservation, the wise use of natural resources. But an awful lot of environmentalists are watermelons: green on the outside and red on the inside.
Ronald Reagan once gave a famous speech where he said: "You and I are told we must choose between a left or right, but I suggest there is no such thing as a left or right. There is only an up or down. Up to man's age-old dream, the maximum of individual freedom consistent with order, or down to the ant heap of totalitarianism." And your job when you see a government official or environmentalist, is to try and figure out whether he is pushing us up or down.
And I want to say that the problem is not just with the salmon managers, or with the Bonneville Power Administration, or the Snohomish County Public Utility District, the problem is that if America were a house, it would be riddled with termites pushing us down toward totalitarianism. I call them the Dark Forces.
The Dark Forces pushing out down will be hidden behind of a lot of high-minded talk. They will talk about a perfectly planned society, with an ever bigger government that controls every aspect of our environment, and this goal is more important than anything to them. They will lie, and keep public information secret, and destroy documents, and breach contracts, and disobey every law in sight for the Great Glorious Plan. It is by those fruits that you can see them most clearly.
They will even commit treason, because to them, the very concept of treason is old-fashioned; the concept of national sovereignty is old-fashioned. The concept of the United States is old-fashioned. They think we need a new global government to handle global environmental problems. They even say this openly, because no one seems to care.
And these Dark Forces are reaching further and further and further. They want the land. They want the water. They want the electricity. They want to control everything.
The Dark Forces have taken over many public power districts. Seattle wants to rip out the dams that public power constituents rely on. Seattle sits on its hands when the National Marine Fisheries Service says it can't widen roads because, and I quote: "more roadways permit more growth, and that's something that's not in the best interest of fish". You can't be looking to these people for leadership on public power issues, because they are all pod people from the planet Gore.
And the Dark Forces are hypocrites. Consider the Ballard Locks. The Corps of Engineers says that the locks kill about a third of the salmon migrating through them. That's worse than all the Snake River Dams put together. Four or five cities in Eastern Washington have passed resolutions saying, hey, Seattle, why don't you take your own medicine and remove the Ballard Locks. Drain Lake Washington and restore lots of salmon habitat.
But you know that will never happen. Seattle wouldn't want to ruin the view for all those beautiful lakefront homes. Seattle likes things the way they are, in its own neighborhood. Seattle wants to tell rural Northwesterners what to do with their property, but as for Seattle property, well, gosh, we can't afford to make those kind of changes.
Now do you see why I call them the Dark Forces? This is the very face of evil: we demand, as a moral imperative, that you destroy your property, to serve our interest. But we won't pay you for it. And we won't live by the same rules we want you to live by.
And one of the saddest things about all this is that every step of the way, as the fish fanatics dismantle our great hydropower system piece by piece, the people from Portland and Salem and Olympia and Seattle and Boise and Helena, they all say well, we should just compromise, and not rock the boat. We should find a balanced strategy. We should reach consensus.
The people in the Methow Valley can tell you all about "consensus". A bunch of outsiders showed up saying let's find a "win-win" solution that takes your water away so that we can all feel good about saving the earth. (By the way, there are so many "endangered" fish in the Methow River this year that NMFS authorized a special fishing season, and the only legal way to do it was to pretend like it was scientific research.)
Anyway, these do-gooders are so wrapped up in themselves that they spent your money to hire the Washington State University survey group to tell them what they're doing wrong. Let me read you a paragraph from their report:
"The limited support expressed for NMFS from survey participants came disproportionately from liberal Democrats who are inclined to trust in other and their government. These are not the predominant norms of the Methow Valley, unfortunately."
To this, I say thank God. At least we still have some citizens in the State of Washington who have the same view of government that the Founders of this Nation did. Let me continue:
". . . the more citizens knew about the issues . . . and the more involvement they reported . . . the less likely they were to feel that NMFS acted in good faith in their environmental negotiations. With respect to the dissemination of collaborative enforcement efforts elsewhere in the state, the same 'liberal Democrat' profile obtains; well educated liberals who possess post-materialist values tend to believe that the process has promise of producing outcomes that are acceptable to all parties concerned.
In other words, the "balance" or "consensus" thing is a fairy tale that liberals who don't know anything believe in.
So when I hear "balance" or "consensus", I say bullshit. The Federal Government already owns more than half of the land in the country. How much more control do we need to achieve "balance"?
I say that appeasing the Dark Forces means that the Dark Forces win. Two years ago, your public power leaders made a deal, to keep their mouth shut in the rate case in exchange for no increase in rates. And what happened? They made a deal with the Devil, and the Devil didn't live up to his side of the bargain. What a surprise. You have to root out evil, you can't compromise with it.
Bruce Babbitt, when he was President of the League of Conservation Voters, summarized the plan of the Dark Forces, and I quote: "We must identify our enemies and drive them into oblivion". The Sierra Club has a more politically-correct version: "endless pressure, endlessly applied". I hope you understand that you and your constituents are the enemies that the Dark Forces are trying to drive into oblivion.
We are here in the offices of a public utility district, and we should remember that district by district, your ancestors, and maybe even some of you, fought a tough fight to bring low-cost electricity to the Pacific Northwest. The investor-owned Utilities, who I will call IOUs, fought like rapid badgers to kill BPA before it even began. They were not going to wire the rural Northwest until Hell froze over, because they had their monopolies and they were set.
Now some of you in the audience may be Democrats, and some of you may be liberals. And I know that once upon a time, before Commies took control over nearly every important institution in this country, liberals thought it was more important to help people than animals. Liberals like FDR deserve credit for building the great hydropower dams of the Pacific Northwest, even if he did have an Administration full of Commies. And the liberals put engineers in charge of BPA, and the engineers delivered. They brought industry to the Pacific Northwest, industry that built the planes and ships that helped win World War II, and later supplied the world with airplanes.
For fifty years, the Pacific Northwest has enjoyed a comparative advantage in our competitive world. We had the cheapest electricity around. We borrowed money from the federal government to build the most advanced power system in the world.
But over time, we went from having an agency run by engineers to an agency run by lawyers, and now by the sort of people I regard as the lowest of life forms, the lobbyists. An engineer will make his decisions based on objective facts; a lawyer will make his decisions based upon the law; but a lobbyist will make his decisions based on which way the political wind is blowing at any particular instant. And the enemies of America put out of lot of political wind.
Today, we have higher electric rates from BPA than in many parts of the country where they have to dig up fossil fuels and burn them to make their electricity. Here's a little chart the folks at Weyerhauser prepared last month:
You might think that's an amazing achievement: BPA managed to take a system with no fuel costs at all, that was nearly paid off, and still wind up charging these high prices. But there's nothing amazing about it. Every Communist government manages to achieve the same thing by centralized economic planning. Yet we keep electing politicians who convince the Sheeple that more government planning is just what we need to solve our problems. We're almost to the point where we can trust ordinary citizens to tie their shoes, but for everything else, there's government.
Maybe that's why these heartland states like Oklahoma and Utah, where there aren't a lot of Commies, have the lowest rates, while here in Snohomish County, we see some of the highest rates. And I don't mean to imply that Snohomish County PUD is full of Commies, but Snohomish has to buy its power in the Pacific Northwest, which is full of Commies. Down in Portland, they organize antiwar protests, and cheer at City Council meetings when someone mentions the attack on the World Trade Center. I can remember sitting in hearings at the Oregon Public Utility Commission, when the Commies pointed to Cuba as a model for restructuring Oregon's electric power market.
We have an army of Commie-style power planners, who plan their way into one power crisis after another. They paper over the lost jobs and broken dreams their plans cause by calling them "conservation".
And now the planners demand that the Federal government take over the electric transmission system with new cartels called "Regional Transmission Organizations". And they are going to manage transmission congestion Enron-style by having swarms of speculators bidding up transmission rights instead of building new transmission lines.
Back in the late 1970s, when it looked like BPA was going to run out of power, the politicians got together and passed the Northwest Power Act, which was supposed to assure an adequate, efficient, economical and reliable power supply for the Pacific Northwest. For the first time, BPA had the power to augment the hydropower system with other resources.
And the sorry history of that power is that BPA screwed up massively, over and over again. There was the Tenaska project, where BPA wound up agreeing to pay ridiculous prices, backing out of the contract, and paying huge damages. Then BPA screwed up by refusing to exercise the power at all, except for politically-correct projects, like wind power. And when we ran out of power in the year 2001, did anybody point the finger at BPA? No, because the lights didn't go out for most of the voters, BPA just cut off the big industries instead.
Another feature of the Northwest Power Act was the idea that it was unfair to punish the voters in the districts that hadn't voted in public power districts, and wound up paying higher rates to IOUs. And so the politicians commanded that whenever BPA's rates were lower than IOU rates, BPA's ratepayers would have to subsidize the residential and small farm customers of IOUs. This is called the "Residential Exchange" program.
That worked fine until the 1990s, when BPA managed to screw up so badly that its prices were higher than the market prices, and the IOU prices. So under the law, BPA didn't have to subsidize the IOU customers any more. But the IOUs all went running to their pet politicians and got them to pass a law declaring that BPA had to pay the IOUs hundreds of millions of dollars a year no matter what the law said. But the politicians were sick and tired of hearing this whining from the IOUs, so they said, and I am quoting House Report 104-293 here: "Bonneville and its customers should work together to gradually phase out the residential exchange program by October 1, 2001".
Here I want to introduce you to BPA's worst Administrator, Judith Johansen. I first got involved with her when she was capitulating to the lunatics by agreeing to spill millions of dollars worth of power in a scheme that BPA's own models said would kill fish. And I still remember her telling me on the phone, in substance, that she knew it was stupid, but that by doing it we would show good faith with the fish advocates, and gather data to prove that the spill was a waste of money. That was in 1994, and BPA has been spilling ever since.
Administrator Johansen was so hell-bent on pushing politically-correct programs that the best people were driven out of BPA. They told her that what she was doing was illegal. They told her that what she was doing wouldn't work. And then they saw that telling her the truth had "career consequences".
But that's not the reason I think she was the worst Administrator. I think she's the worst Administrator because on October 4, 2000, about the time she was supposed to be wrapping up the elimination of these subsidies to IOUs, she executed a strategy to lock them in for a ten more years. Specifically, she promised to provide 1900 megawatts of power or money from 2002-2006, and then 2200 megawatts of power or money from 2007-2011. When I say power or money, I mean BPA can either sell them power at low cost, or pay them the money that represents the difference between cost and market.
A month later, she resigns her position as BPA Administrator. Then she starts working for the IOU that is one of the biggest pigs at the Residential Exchange trough: PacifiCorp. And guess what, now she's the CEO of PacifiCorp, the U.S. agent for Scottish masters who own PacifiCorp. But I suppose that's just a coincidence.
But wait, the story gets better: she's replaced by the person I think is the second worst BPA Administrator, Steve Wright, who had the bad luck to inherit the awful mess she has left.
The heart of the power crisis in 2001 was simple: California was growing like mad, mostly because it is politically-incorrect to have borders anymore, and California hadn't built a new power plant in ten years. So eventually, something had to give. And when the drought hit, BPA didn't have as much power as usual to sell to California, and there just weren't enough generators to keep the lights on.
If engineers were still running BPA, they'd say, we can solve your power problems in a heartbeat. We can put in new turbines that generate 10% more power, which by coincidence turn out to be "fish-friendly" turbines that will for all practical purposes solve the problem of salmon mortality in the turbines. We've known about these turbines for more than ten years, but no one lifts a finger to get the Federal government to install them. You know, it's even worse than that. Some of these dams have empty turbine bays just waiting for turbines, and no one will put them in.
So what did Steve Wright do? Well, ironically, he managed to repeat the same mistake of WPPSS all over again. What was WPPSS all about? Well our energy planners decided we, it's always "we", have to build a dozen nuclear power plants all at once. Why? Because the consumption of electricity was going up by several percentage points a year, and the idiot planners assumed that would continue forever, no matter what the price of electricity was. Technically speaking, they assumed that the demand for electricity was inelastic: it would not bend in face of higher prices. But as prices went up, demand went down, and all of a sudden we had no need for all the nuke plants.
But last year, when Administrator Wright saw that he needed to buy power to keep the lights on, he turned around and started buying out contracts left and right. A lot of you have probably heard about the one or two year contracts he signed with aluminum companies, paying to terminate BPA's obligation to supply them power. But how many of you have heard that he turned around and signed ten-year contracts with the IOUs, paying them to get out of the crooked supply contracts Administrator Johansen had engineered.
And you know what else? Steve Wright higher price per megawatt to buy out those IOU contracts than any other contracts. He paid them roughly twice as much per megawatt as the other purchases BPA made. So now you all are on the hook to fork over $2 billion between now and 2006 alone, just to line the pockets of the IOUs. But I suppose that's just a coincidence. At least until he shows up working for the IOUs too.
By the way, on October 3, 2002, the Senior Vice President of BPA's "Power Business Line", Paul Norman, responded to complaints about rate increases by saying that payments by BPA to get out of its contracts were, and I quote, "by far the biggest driver of our rate levels".
But that's not the whole truth. We learned just a month ago that during the year 2001, BPA spent $1.5 billion buying power "for fish", to support the idiotic flow and spill programs I was talking about earlier. Why was BPA buying an extra $1.5 billion worth of power in the middle of a power crisis? I can't tell you for sure. One possibility is stupidity. They had their fish plan, and they were going to stick to it whether it made sense or not.
Maybe they were trying to to manipulate the market themselves. You'll find in the records of BPA's formal administrative hearings on rates that BPA expected to make lots of money selling "nonfirm power" because of high market prices. One of the smaller reasons BPA is in trouble is because the market came down, and BPA's projections of reaping big profits in the market turned out all wrong. And that, by itself, is about a $600 million mistake.
Now the latest piece of crookedness has to do with yet another rate increase that's coming. Next month, Administrator Wright is going to announce whether BPA will trigger a "Safety Net Cost Recovery Adjustment Clause" in its rate schedules, which could produce another 10% increase in rates. And I want you to understand that he has no legal basis at all to do this.
Your public power representatives agreed to a clause in BPA's rate schedules that says this rate increase can only trigger if, and I quote:
