Portland will sell hydroelectric power to Portland General Electric from a plant at the city’s Bull Run Dam.(
Portland will sell hydroelectric power from a city-owned plant at the Bull Run watershed to Portland General Electric in an opaque deal that could lose taxpayers money over the next three years in an effort to make money later.
In the past, the city paid PGE to maintain and operate its hydroelectric facility then sold the power to the utility. The deal netted the city an average profit of $300,000 a year over the last four years.
PGE’s contract ends Thursday, however, and the utility told Portland months ago that it no longer wishes to operate the plant.
On Wednesday, the Portland City Council unanimously approved three contracts needed to operate the plant and transmit power to the grid, including a deal to sell power to PGE so long as the city does not tell the public how much PGE will pay. A city risk analysis said the deal could yield the city $3 million to $8.5 million over the next 15 years.
But it could also lose the city as much as $2 million over the next three years if the city has extremely dry weather.
Portland is considering putting taxpayer dollars at risk to sell hydroelectric power, and it won’t tell the public exactly how much it stands to make — or lose — from the arrangement.
Water Bureau officials insisted that agreeing to keep how much PGE will pay quiet was necessary to get the utility to agree to a deal that was in the best interest of the city. They say PGE will pay the city above-market rates – something city taxpayers will be able to learn for certain only after the fact, when the utility reports its power purchases to federal regulators.
The city was able to get PGE to pay above market price for its power by agreeing to keep the price confidential, water commissioner Nick Fish said.
"The idea somehow that we’ve taken an approach against our ratepayers is Orwellian," Fish said. "This is how we got a better return."
The city did not solicit proposals from other energy companies before agreeing to PGE’s deal.
Mike Weedall is a member of the water bureau’s advisory committee, the Portland Utility Board, and the retired vice president of energy efficiency at the Bonneville Power Administration.
Weedall told committee members in a meeting last week that the city could have made a lot more money. He said he’d talked to people in the industry who said they would have loved to bid on the project.
"The only way to find out the real value and to get maximum value is to put it out to bid," Weedall told The Oregonian/OregonLive Wednesday. "To me, it’s just simple."
The power purchasing deal was among three contracts approved unanimously by the city council Wednesday. Commissioner Dan Saltzman was absent.
The other two contracts run for five years. The council approved paying PGE $200,000 a year to maintain the facilities necessary to transmit power. Commissioners also agreed to pay Eugene Water & Electric Board $420,000 over the five years to schedule the power transmission.
Last month, the council agreed to pay Energy Northwest, a Washington agency, $8 million to operate the hydroelectric plant through 2022.
Fish acknowledged that the deal carries risk, but said the city’s Chief Financial Officer Ken Rust determined that risk is "very small."
Fish said "time will tell" whether the city’s deal with PGE is in the public’s best interest.
"I’m not here to oversell or undersell this deal," he said. "I’m here simply to say I think this is the best deal we could cobble together under the circumstances."
The Morrison Bridge closes to all users 8 p.m. Wednesday until as late as 5 a.m. Thursday.