Pierre man testifies against 'Chu Memorandum'

Sep 12 - The Daily Republic

The electricity generated from hydroelectric dams is creating some friction in Washington, D.C.

The hotly contested "Chu Memorandum," named for Department of Energy Secretary Steven Chu, was up for discussion Tuesday during a House Natural Resources Committee hearing in Washington. Written testimony included some from Ed Anderson, manager of the South Dakota Rural Electric Association, based in Pierre.

The Department of Energy argued in a memo sent in March that increases in rates to hydroelectric power for the country's Power Marketing Administrations (PMAs) are needed to help with repairs to infrastructure for the hydroelectric energy grid.

Opponents say rate increases are not needed and would strain family budgets.

Anderson was scheduled to speak out against the plan Tuesday at the hearing but had flight problems and could not make it.

"Secretary Chu's efforts to take the PMAs well beyond their statutory mission, sending rates on an upward path in the process, threatens to fracture a public/private partnership that should be used as a model for developing other similar partnerships," Anderson said in his written testimony.

The Western Area Power Administration (WAPA) is the PMA that controls the hydroelectric power from the dams on the Missouri River in South Dakota. WAPA provides a portion of the power delivered to customers by rural electric cooperatives and municipal electric utilities. The hydropower is provided by WAPA at "cost-based rates."

Congress has also mandated the electricity generated by federal hydroelectric plants be sold at cost and also has specified who in each region should get priority access to the federal electricity, namely the "preference customers."

The PMAs' transmission systems overlay the transmission and distribution systems of utilities in 20 states, which represent about 42 percent of the continental United States.

In the memo, Secretary Chu directs "that each of the PMAs' strategic plans and capital improvement plans recognize the changing nature of the electric sector, including but not limited to complying with NERC reliability standards, integrating variable resources, scheduling on an intra-hour basis, centralizing dispatch, responding to solar flares and minimizing cybersecurity vulnerabilities."

Anderson hit on some of those topics in his written testimony.

"Electric cooperatives have been promoting energy efficiency and demand response programs for decades and I know that Western, working with electric cooperatives and others, doesn't need to be pushed into variable resource integration with thousands of megawatts of installed renewable resources already integrated into their system," he said.

U.S. Rep. Kristi Noem, R-S.D., a member of the committee, was also at the meeting and spoke out against the plan Tuesday. Noem said the memorandum has created a lot of conversation and concern in South Dakota

"I've been meeting with many utilities across South Dakota," she said. "One told me just a week and a half ago, they have a 30 percent increase they have passed to customers because of federal regulations."

Panelist Joel Bladow, a senior vice president of Transmission Tri-State Generation and Transmission Association in Colorado, agreed with Noem.

"The PMAs have done a great job keeping their transmission system up," he said, noting that transmission line upgrades need to be weighed against the cost that will be transferred to customers. "Everything is a balance; everything can't be shiny new all the time."

Noem suggested the PMAs themselves should decide when upgrades are needed.

"Who is the best person to make that decision -- someone in Washington, D.C., or someone out there actually looking at the lines?"

Lauren Azar, senior policy adviser to Chu, testified at the hearing and said the memorandum is needed to keep up with the 21st century electric grid.

"Our overall goal is to keep consumer bills as low as possible while ensuring our nation has the infrastructure needed to remain competitive in a global economy and accommodate regional choices to meet consumer demand," Azar said.

In June, about 160 House members and senators sent a bipartisan letter to Secretary Chu expressing concerns with the missions outlined in his memorandum. The House also passed bipartisan appropriations language prohibiting funding for any new activities in the document.

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