BPA: $$$ for wiring the northwest with fiber

[Brian High]

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   Northwest energy agency's Internet push attracts corporate critics

   Copyright ) 2000 Nando Media
   Copyright ) 2000 Associated Press

   By JOHN HUGHES

   WASHINGTON (February 16, 2000 10:19 a.m. EST
   http://www.nandotimes.com) - The idea seemed grand - the federal
   agency that plugged the rural Northwest into the electric grid would
   help bring the Internet to small towns.

   The Bonneville Power Administration has been doing just that since
   1996. The agency, as part of an upgrade of its electricity
   transmission system, has spent $127 million stringing 2,000 miles of
   fiber-optic cables along power lines in Washington state, Montana and
   Oregon.

   BPA plans another $126 million in fiber-optic investments in the next
   four years in the three states and Idaho.

   Places like Reedsport, Ore., a town of 4,855 along the West Coast,
   have had few options for high-speed digital access, as
   telecommunication providers first flocked to the more lucrative urban
   areas.

   But after the BPA strung cable through Reedsport last summer,
   residents saw the prospect of more choice and lower prices.

   Jim Hough, the city manager, envisions weary urban dwellers moving to
   Reedsport. They would take advantage of small-town life while hooking
   up to worldwide e-commerce.

   "Telecommunications technology is so important ... it is just as
   critical today as electrifying rural America was back in the 1930s,"
   Hough said.

   But not everyone supports BPA's venture into telecommunications.

   First, private industry complained that government agencies have
   unfair advantages over private competitors, such as low-interest
   financing and some tax exemptions.

   Then on Capitol Hill last year, congressional critics called on BPA to
   write a report - due this spring - on the rationale for stringing the
   cable.

   Now some House members wonder why BPA seems to be making what the
   members call unauthorized investments in fiber optics.

   "The federal agency ... seems to be venturing into the commercial
   telecommunications business," said Reps. Bob Franks, R-N.J., and Marty
   Meehan, D-Mass., in a Jan. 28 letter to Energy Secretary Bill
   Richardson.

   Rep. Peter DeFazio, D-Ore., a fierce defender of the BPA, dismissed
   the letter as a case of "energy envy" by northeasterners who covet the
   Northwest's clean and cheap hydropower.

   "The letter is full of inaccuracies and hyperbole," DeFazio said.
   "This was clearly written by someone in the fiber-optic industry."

   To DeFazio, the effort by the Portland, Ore.-based BPA makes sense.

   The agency needs the fiber-optic lines to control remote, unmanned
   transmission stations in its four-state power system. The digital
   lines are replacing a microwave system that was less reliable and
   carried far less information.

   But here is where the dispute comes in.

   Anticipating rapid expansion in future years, BPA is installing far
   larger cables than it needs in the near term. The agency is then
   leasing the excess capacity to telecommunication companies, local
   consortiums and other providers.

   The excess capacity is so great, critics wonder if BPA is really
   stringing the cable just for its electricity grid - or a new telecom
   business.

   "Just looking at the quantity of fiber BPA is placing indicates the
   possibility that it is really building some of this network as a
   telecommunications provider," said Richard Potter, manager of state
   advocacy for GTE in Washington state.

   Dick Munson, executive director of the Northeast-Midwest Institute,
   contends the BPA is a "rogue federal agency." He calls the fiber-optic
   effort an "extremely backdoor, clandestine route to use taxpayer
   dollars to venture into a new business that in my mind is totally
   inappropriate."

   The institute, a Washington, D.C., policy group, examines what it sees
   as regional inequities and has long been critical of the BPA.

   BPA defends the leasing of the cable space. The move helps BPA
   ratepayers by recovering some of the cost of stringing the
   fiber-optics for the electric grid.

   Plus, the agency says the effort is a public service. BPA is leasing
   the cables at a discount rate in rural areas that have been
   underserved in high-speed, digital access.

   "Nobody is providing this service to the rural areas," said Perry
   Gruber, a BPA spokesman. "Bonneville has the unique positioning and
   legislative authority to do that - and that's what we're doing."

   Gruber said the Bonneville Project Act, along with an April 1994
   letter from President Clinton, give the BPA all the authority it needs
   to lease the excess fibers.

   DeFazio said stringing fiber optics has become standard practice at
   scores of public and private utilities across the nation. "BPA
   absolutely has authority to do what it needs to do to ensure the
   integrity of its transmission system," he said.

   DeFazio and Gruber say ratepayer dollars - not taxpayer dollars - are
   being used for the fiber optics.

   Hough, the Reedsport city manager, credits the BPA for doing just what
   it did in the 1930s with electricity - giving rural areas access to a
   key technology.

   "It's important that the technology that is revolutionizing the
   communications industry is brought to rural America, rural Oregon, at
   the same time it is brought to the metropolitan areas," he said. "It
   makes sense."
   ______________________________________________________________________

    Copyright ) 1999 Nando Media


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