Boundary Dam on the Pend Oreille River supplies Seattle with almost half its annual electricity needs

Seattle Times
Diane Wear, John Hankey
and Laura Merrill
Special to the Times
July 6, 2009

WHEN we travel to Seattle and look at the impressive skyline at night we see a little bit of Pend Oreille County in the glow. We live 300 miles away, but we're the place where almost half of the energy that lights up Seattle comes from.

That's us, in the upper right hand corner of the state, just below Canada and west of Idaho. Our county has hosted Seattle City Light's Boundary Dam since it was licensed and built nearly 50 years ago.

We've been a bit ambivalent about Boundary Dam ever since. There was a big fight between City Light and Pend Oreille County Public Utility District about who would get the license to build a dam on that site. Our utility lost.

The dam and its big power lines have had real impacts on Pend Oreille County. It has affected our fisheries and recreation. On the other hand, Boundary reminds us every day that we're an important part of an amazing electrical system that serves our region well and provides for several Pend Oreille County families.

Every 10 years, our county commission and City Light have negotiated a compensation agreement because, as a public agency, City Light does not pay property taxes — the lifeblood of county government. Past agreements have come and gone without too much discussion, but times have changed and the dam's impact, the market and the economy are all different. So when City Light came along with the new agreement at the end of last year, we vowed to take a hard look at it.

What we found has caused us to reject City Light's proposal, take the first steps to change the state law that governs host-community agreements, and prepare to intervene in the federal relicensing of Boundary Dam.

We compared the financial benefits of a new wind project to what City Light would provide to our county through its proposal. We were amazed to find that wind projects bring counties who host them $5,000 to $10,000 in property taxes for each installed megawatt. City Light's proposal is just a bit more than $1,000 for each megawatt of capacity.

We compared what a private utility would pay in property taxes if it owned Boundary Dam. We found it would pay three times more than what City Light proposes. We pursued the tax question further and found that City Light had contributed just $1,000 a year in sales taxes to our county during the past five years.

We discovered that the financial value of Boundary Dam had changed as the Western energy market deregulated. Before deregulation, Boundary power was used in just a handful of energy transactions. Ten years after, however, the Western electricity market is home to hundreds of thousands of trades for many different kinds of services.

With Boundary as the engine, City Light's wholesale revenues average $160 million a year the past five years. That money goes to lower rates and pay off debt in Seattle. We think a little bit of that money should fairly compensate our county, where the power is produced.

The fair thing to do is to move levels of compensation to host counties to match what new wind projects create and we've proposed a way to implement it gradually. If we can do that, then we'd feel a little better about seeing that Pend Oreille County glow in the night sky above Elliott Bay.

Diane Wear, John Hankey and Laura Merrill are Pend Oreille County commissioners.