Idaho Reports; Trade Restraints and Coal Power

The funding for Idaho reports is provided by the Friends of four 10 and 12. The Corporation for Public Broadcasting and by a grant from the laurel Moore Cunningham Foundation. Good evening. President Reagan recently made a major economic decision a decision likely to affect your pocketbook for a long time to come. Yet it was a decision for the most part that was given very little notice in this part of the country. The president's decision was to reject a call for import restrictions on foreign steel into the United States but instead of imposing official quotas on imported steel. Mr. Reagan wants to negotiate voluntary restrictions with many countries who have over the last year accounted for over 20 percent of all of the steel bought and sold in the United

States. The White House has presented this voluntary program of restrictions aimed at reducing imports to 18 and a half percent as upholding the administration's free trade principles. Others however see the effect as imposing quotas without calling them quotas. So why is all of this important to you. Well for starters as the New York Times pointed out in an editorial any tampering with the free flow and pricing of steel will push up the cost of everything as the newspaper put it from Thunderbird's to Budweisers. One estimate says Mr. Reagan's voluntary import restrictions will cause Americans to pay as much as three billion dollars a year more for things that are produced with steel. Farmers have been worried about a move to import to restrict steel imports as well. Fearing that the exporting countries will retaliate by refusing to buy as many American farm products and the steel industry and steel workers of course have been worried to the Steel Workers Union says 200000 jobs have been lost in the industry and not allowing so much foreign steel into this country puts even more jobs at risk. So tonight with two

economists union official and a former State Department official who has worked extensively on economic issues we'll try to sort out some of the messages contained in the president's big decision about Steele and how they might affect you. Our first new tonight comes from Dr. William Fallon. He's a professor of economics at UCLA. He has a popular radio commentary on economic issues. And in addition as president of the International Institute of Economic Research Dr. Alan does this decision in your view make economic sense. Well about as much as mostly economic policy decisions make which is not a great deal I think to understand that sort of thing. You turn not really to good sustained for a well-established economic analysis you turn to politics and you consult the specialist and dad in abnormal psychology. So it wasn't it wasn't a good policy decision. Well I was brought up by a wise man

to believe that in this world of scarcity and misery typically the best you can do is to minimize losses not to maximize profit. And as a loss minimization decision you make very good sense. I don't think there's any great mystery. Speaking as an outsider to be sure as to why the decision was made the idea was to come as close as the president and his advisers thought feasible to what they really did want without alienating an excessive number of people in the community. In other words quotas without calling them quotas for some sort of restrictions without well certainly restrictions. There can be no question of that. We might quibble over whether or not it is a quota but I think probably we ought to say it's quotas by the back door. And what's wrong with that fundamentally. Well what's wrong. In any word has any efficiency the

market been permitted to perform does wondrous things. The market is an institutional device same process and mechanism and procedure through which the community indicates its preferences and registers cos no one is in charge in the sense of an economic czar. But the collection of information on both demands and costs lead people in their own private grubby ways in their own self-interested manner to use resources in the best way possible. And whenever you have restrictions subsidies penalties you you have a distortion you short circuit the market mechanism and this particular case could have been worse. It is not disastrous. After all the world has had much greater disasters and will have more in the future. But it is in the wrong direction.

OK. Would you agree with the assessment that I mentioned a moment ago that it's likely to cost the average consumer a substantial amount. Well evidently I do not have hard numbers which I have tried to play with. I did see an editorial in the financial newspaper yesterday saying that steel pases might raise some 6 or 7 percent as a result of this. Now whether it's six or seven or five or eight no one decided Hedden cannot be sure. And that impacts everything from automobiles in refrigerators doesn't help. Certainly so far as that crater goes now there are other considerations. But but one consideration is what happens if the price of steel and yes of course if they go up. Let me ask you finally the White House has attempted since this decision was announced too to couch it in free trade terms saying that the president has always believed in free trade and this is basically fundamentally an issue of keeping trade barriers as low as possible. Is it that. Well I try to be

tolerant to really truly people who bear the responsibility of making public decisions. It's easy for the academic economists to draw himself up nobly and say if I were in that position I would call them as I see them in I see them right. And so I would call them right. In fact it has to be very difficult. That has to be difficult as evidenced by the fact that this president and all of his predecessors and all who come do not in fact consistently call them right. And there is no legitimate way that this decision can be classed as a free trade policy. That's manifestly absurd. But you call it that way in the hope of convincing some voters who may be sympathetic while at the same time offering some protection for those who want the protection. So you try to minimize the losses we say again we'll come back. Thank you. Democratic presidential candidate Walter Mondale has advocated direct quote is on imported steel quotas that he says would limit imports to about 17 percent of the U.S.

market. Mondelez generally supported the position of organized labor on this issue even though he has spoken directly in the past in favor of free trade. For another view of all of this now we turn to a union official Jim Kern's is the president of the Idaho AFL CIO. Mr. Kerns as I understand it your view would be that the president's decision just didn't go far enough. Well I think the president and this administration is they don't have an industrial policy. There is no free trade and there's no free trade in this world right now. We operate on one set of rules the rest of the world operates on another steel decision is going to cost jobs. Our trade deficit will probably go up more and for every billion dollars of our trade deficit that goes up. The Department of Commerce says we will lose 25000 additional jobs in this country. We must lead by using our muscle by using whatever means that's

necessary to develop a and indulge in international trade policy along with the rest of the world where we don't continue to compete on a on a basis that is not fair or equitable. We're letting other countries Japan West Germany Brazil Korea all of them said our trade policy by their tariff barriers are there barriers that they put up in their own countries and they have many. We talk about protectionism. Those countries and most foreign countries that we deal with with the possible exception of Canada have very very restrictive barriers protectionism for their own industries. We don't we open our markets as wide as as a business will allow them or want them to be opened up. And the way the our strong dollar is right now the way the economy is where we're taking the beating the workers and businesses in this country are taken a terrific beating. Now the president of course says he can he can have his special trade representative Ambassador

Brock sat down with representatives of these countries Brazil South Korea a couple of the biggest importers of steel into this country and negotiate directly across the table and say we can arrive in agreement where you will voluntarily limit your imports much as the way the Japanese limited imports of automobiles. Can that work. We have agreements now that says that it's illegal to dump steel in this country. And we have restrictions that we can place on it. We pointed out and I'll say Labor and the steel industry pointed out to the president that certain countries were dumping steel and depressing the market. And they did anyway unless we're prepared to to develop an industrial or an international trade policy with these other countries and follow through gentleman's agreements are going to work. The general I think it's called a General Agreement on Tariffs and the other words free.

Basically is a is a handshake type operation in that in your view is that those just don't work for they don't work. OK I know you have a very different view of the the economic ramifications and we've just heard from Dr. Allen. He says that this would be an inefficient decision and directly tampering with the marketplace even though you don't call them quotas. What's your view on that. Well again I don't want to repeat myself but the free market place or the quote unfettered free enterprise system does not work in working in international trade. If everybody cooperated the way that our country operates then we could compete much more efficiently on an international trade basis we do. We can't trade that way. We're going to take a beating our strong dollar right now Costus 60 percent on goods that we would try to put into another country. Automatically the prices go up 60 percent because of our strong dollar.

Again it just this president and one side rule them and a different set of rights. There's no to let me just ask you finally one quick one quick thing. This decision was made according to some of the analysis I've read in part because there was a great concern in the agricultural community that farmers would suffer if some direct restrictions were placed on imports. Was this a tradeoff. Basically farmers against steel workers. There was a very political decision that was made. It was interesting the day that we're going to have a hand shake on steel imports. We also had a trade agreement written up on what kind of subsidies we're going to give the farmers. And it's interesting that that and God bless them for getting it because at least we're getting on somewhat of an equal basis in the agriculture industry and what the rest of the international world does. But we're giving some subsidies are we we're going to we're given some long term interest loans or interest free loans for farmers to be able to compete.

We've been losing our share of the of the agriculture international trade since 1980 film like $10 billion plus our own down to four to half a billion. And this at least is going to help the farmer stay competitive out of the international market. He kicked steel in the rear and it helped a farmer. The gentleman next to me said that he wanted to alienate the smaller number he picked steel as a smaller number and he's right because we're out of work. We'll come back. Thank you. A look now at how this decision might affect the American farmer particularly the Idaho farmer. That view comes from Dr. Jim Jones an agricultural economist at the University of Idaho in Moscow. He teaches courses dealing with international farm trade and Dr. Jones joins us tonight in Moscow. Now what about Mr. Kernes his last comment there that basically this was in a way a political trade off giving the farmers something wrong and not giving the steelworkers something. Well I would agree that it was political as has the other two commentators.

I don't really see how we can say that the farmer gets very much out of this particular action by the administration. Agriculture in the United States is one of those sectors that has to depend on exports we all know that and protectionism and this voluntary restraints is the same horse with a different mouth is one of my colleagues said earlier to me today is quotas or even in the sense tariffs and any restrictive policy like this is unethical to the interest of the agricultural community that depends heavily on exports. How so. Well obviously protectionism eventually comes back to haunt you. It helps the consumer. First off while we're well I'm supposed to talk about the farmers perspective. We can't forget that ultimately it's the consumer that we're all concerned about farmers are consumers too and it haunts them in that they pay higher prices. But from the

point of view of the farmer the agricultural sector is primarily an export sector and protectionism is a beggar thy neighbor type of action that eventually comes back with restrictions on the other side that hurts our markets. We saw immediately the effect of the textile policies of this administration on our sales to the Chinese. This was very direct and maybe in a way the Chinese did us a favor by at least making a blatant to us that there is two sides of this kind of picture the administration should maybe just interject that the administration placed imports on Chinese restrictions on Chinese textiles and the Chinese retaliated immediately by saying well we're not going to buy my run but amounted to a half a billion dollars worth of farm exports or something direct translation for our action. And that's what farmers were worried about in this case

right. Right. OK. And on another perspective when when we talk about trade our buyers are our customers to buy from us. They have to sell us and ultimately our restriction reduces countries such as Brazil who apparently will be impacted by this action that the administration has taken. It reduces their purchasing power which is one of the reasons that we are having difficulty of course today selling in the first place. Now finally when we talk about higher steel in this case as I said earlier the farmer is a consumer in this case the farmer is a consumer of inputs and tractors and combines and so forth. And so the higher costs associated with the steel inputs the that will in turn be passed on to the farmer by the farm implement industry is another consideration. So I don't see in any way that you could say that this policy it is restriction and it certainly is

not something that aids the agricultural sector at large. OK Dr. JONES We'll come back for a moment. Thank you very much for a look finally at how well these voluntary restrictions can work to limit imports. We turn to Dr. Amos yielder for 25 years a State Department official serving in many foreign and domestic posts specializing in economic affairs. Dr. Yoder is now a distinguished professor of political science at the University of Idaho where he joins us tonight. You heard Mr. Curran say Dr. Yoder that he didn't think these gentlemen's agreements like the president has proposed really worked very well. What's your view of that. Well I think he also says it's a matter of least of several evils. The this is a very political matter as the speakers have indicated and the purpose of the negotiating is quotas with foreign countries voluntary quotas as foreign countries is to keep it from going into a tariff tariff if Congress gets cranked up on a tariff it takes them a year or so to have the hearings and pass the tariff. Now it gets set into concrete and

it's awfully hard to change. Quotas are one step down from tariffs they're hard to add they're hard to change but these voluntary quotas that we negotiate with foreign countries. This puts the political power into the hands of the president and his advisor Mr. Brock and so forth. And they can bargain and deal with these individual countries and they've been doing it for I think around 25 years that textiles was is the best known that you've mentioned. They've done this for the past 25 years. They've negotiated these types of voluntary agreements and surprisingly enough it is easier to negotiate textile agreements on jeans or T-shirts and shirts and so forth and to do this year after year then or at least administration things aren't I think with some justification that it is to put this whole process into a tariff or a formal quota procedure. So you're saying in effect they do work pretty well. Well they do work but they're restriction they're hard on the consumers.

And as all economists will say or most economists will say eventually their quotas act to the disadvantage of everyone concerned. Whether you're selling or buying the Reagan administration as I mentioned earlier has tried to paint this as a free trade issue. Let me ask you if in your view this administration really has a coherent trade policy or does any administration really develop such a thing. I think your last statement is close to the truth. I don't think any just by the nature of the beast it's hard to have a coherent trade policy and sort of a matter of putting band aids here and there and trying to keep protection as well from raising. Now this particular act is thought to perhaps cut back steel imports as much as 20 25 percent and the textile quotas from year to year generally don't roll it back. They just keep it from increasing. So this is a protectionist type

of a voluntary quota that Mr. Brock intends to negotiate. More so than many of the other quotas that have been put into effect. In fact I read someone's analysis saying that it might be the most protectionist decision that this administration has made. Well yes. And I think that's probably that's probably correct. They put off a similar or they have been putting off a similar thrust by the copper industry. But this one it's it is protectionist. Let me just ask you finally Dr. Yoder in your experience in the State Department I read another analysis of this decision which said basically that the only free traders in any administration are sort of the middle level managers in the State Department and the Commerce Department who have the luxury of looking at these things without taking into account the domestic political concerns first statement it's not quite accurate. The Wall Street Journal reports that six of the president's advisers were against this

step but he took it anyway. There were congressmen in to see him and a hearing was held in which the results were that we should protect the steel industry more. So you also get some free traders at the top level but at that time. But at that level they're also realists and they realize this is a political process and one of bargaining and dealing with the various interests concerned. OK well let me open this up and invite all of you to get back in whatever you want. But let me go first back to Dr. Allen. Does this administration have any coherent trade policy that you've been able to ascertain. Well I suppose it depends on both the adjective and the noun what you mean by coherent and what you mean by policy. Our president like most to have been in that position talks a very good team a few play a game which is any place near as good as what the talk so one can talk about ideals and objectives and general criteria. And so far as I know the president believes that I think he probably doesn't understand it

very well but he knows what he likes even if he can't explain it but when he comes down to the nitty gritty of trying to patch the world up and get along and make do for another month or another year rather then we do indeed have our patches here and there. And that gives an impression of lack of coherency. But let me add this. I would suggest that we would like the world to be more receptive to a good economic principle to be more enthusiastic for allocating resources through the dictates of market calculations. That it isn't necessarily Why is that just because the rest of the world engages in mercantilist actually knows that we ought to join them. So I guess that's direct almost a direct response to what Mr. Kernes was saying earlier about Sanger that us having one set of rules by which we plan the rest of the world having a different set of trade. But do you acquiesce do you capitulate in their foolishness or do you try to

exert pressure to make the world better. No. Let me interrupt and ask Mr. Kerns to come in on that. We've got to do one or the other. I think that my own opinion is I don't think this is the opinion of the National AFL CIO. But what direct government intervention in steel where we're talking about steel here is that we were governments out there that are subsidizing their industries at a loss. So they can penetrate our marketplace and basically destroy jobs destroy an industry. I don't know if they're going to do that on purpose but they know what I'm talking about then West Germany Japan and the other producers know that the United States is not going to take any firm action against them doing it. They've done it in the past and are going to do it again. We've got to come to some sort of an agreement on on trade. And I think agriculture is our hammer. You know we're the food basket of the world and the North American continent. Let me ask the agricultural economist

about that Dr. Jones in Moscow. Can we use the agricultural hammer to make the other other countries play fair. Well I don't think that that hammer is going to have much impact with this kind of policy. I'd like to come back to this thing of fair trade and how the world works. And it's true of course that there is a lot of restriction isn't out there and that other actors don't play fair or by the rules that we would like to. So consequently there is this constant political process of can we somehow hammer down these restrictions. Now the thing that disturbs me about this. It's true that say if we go into negotiations with others that if we're going to try to get them to open our markets we sometimes do that by trading or usually end up doing that by trading off and

removing some of our barriers. And that is the reality of negotiation. The problem is that what we're talking about now is not that kind of a device we're talking about instituting a new protectionist device and we already have plenty of protectionist devices to trade off. And in a sense what we're doing here is a little bit analogous to contracting the disease to enjoy the cure. So I don't think we need more restrictions that we can go out and try to trade off with the common market in Japan. Mr.. Well I you know we've got that we've got the problem. I'm not an actor. I'm probably the only Donek economist here. You are now boasting right. I guess I'm just one of the few when the people off the street and we know that we're we're in trouble. We know that we've got a trade deficit that that is that is really hurting this country. We know that other countries operated different rules.

We've got to find a common ground. Lawrence McWade of Gray says that Russia and Mexico are depressing the natural gas prices which to their feedstock for ammonia and they're selling it below market price and it's quote depressing us ammonia prices and we're not talking about ammonia prices to the consumer as I am a consumer but as a consumer as it is to industry and our companies that build fertilizers and this sort of thing or are not able to compete on the international market because of these subsidies now we've got an agricultural green with Russia. I think it's the only bilateral agreement that we have with Russia with trade some avenue has to be raised to get everyone to play it the same rules. OK let me go that. Yes sir Mark I think in this process it's just the nature of the thing that the consumer always gets short shrift. The people with jobs to lose are the ones that can exert the most political pressure and get the most sympathy.

But the consumer who pays for it across the board with the higher prices for automobiles higher prices for shirts higher prices for machinery and so forth gets hit. And the other thing from particularly from the point of view of Idaho is that we export about two thirds of our wheat here and if and if we don't buy things from other countries they can't buy from us. It's that simple. And in order to get dollars we have to buy for them. We have to buy things from them. And so by cutting down on on the imports it's making it harder and causing our farmers to lose money. Let me just ask you Dr. Yoder finally about 15 seconds. Do we have these. Are we going through a cycle of worldwide protectionism right now or is it a cyclical thing that changes from time to time. I think it is somewhat cyclical. When you have unemployment and when you are coming out of a recession that there is a tendency to be more protectionist but these are voluntary agreements have been in place for 25 years. Right.

Mean some of them I'm sorry I'm going to have to interrupt you there. Dr. Yoder and Dr. Smith. Dr. Jones I'm sorry Jay in Moscow. Thank you gentlemen for joining us tonight. We appreciate it very much. Mr. Kerns Dr. Allen thank you gentlemen. That's our time for tonight. I'm Mark Johnson. Thank you for joining us tonight. When the funding for Idaho reports is provided by the Friends of four 10 and 12. The Corporation for Public Broadcasting and by a grant from the laurel Moore Cunningham Foundation. It's now been nearly a decade since Idaho power company proposed the construction of a 1000 megawatt coal fired power plant near Boise.

The plant would have been called Pioneer. Recent public utilities commission ruling wrote the final chapter in the Pioneer story. So tonight with some of the principals who fought the battle over the plant. We'll assess with this energy issue has meant to Idaho. Good evening. The controversy over the proposed pioneer power plant was a major political economic and energy issue throughout much of the 1970s and southern Idaho for good or bad. And there is still the debate about which it was it affected utility bills political futures and public attitudes about energy development in this state. Idaho power company long ago abandoned plans to build a coal plant in southern Idaho. But those who felt that Pioneer should have been built in the 1970s will still debate those who fought it being built.

Then the pioneer story officially began in November of 1974. Idaho power company made the application then to build the huge more than 800 million dollar plant south of Boise in the summer of 1975. The public utilities commission began the first in a series of hearings on whether the plant should be constructed at the final hearing in a packed room. Democratic governor Cecil Andrus joined the list of those who was opposed to the plant and his opposition turned out to be very significant perhaps even a pivotal event in the spring of 1976 an advisory vote on the plant was held in three southwestern Idaho counties by public vote. The public spoke and rejected the idea of building the plant by about a two to one margin. And finally in September of 1976 amid much controversy the Commission denied the power company's request admitting the energy pioneer would produce would someday be needed. But saying that the site near Boise was not environmentally suited to the project. The commission recently made what well could be the last decision about Pioneer. The U.S. ruling that the Idaho power

company ratepayers would pay for only about 2.3 million of them more than $14 billion. The company spent to plan and propose pioneer that final ruling on Pioneer brings us tonight to look back on the 10 years of Idaho history and to assess an energy decision that was important when it was made years ago. And in many ways is no less important today. We begin our look tonight with comly Ward. He's now the president of the public utilities commission at the time of the Pioneer decision. Mr. Ward was a staff attorney for the commission and he wrote the order denying the building of the plant near voici. We'll also talk with James Bruce the chairman of the board of Idaho power company. Mr. Ward let me just begin by asking you about this most recent decision that is being spelled as the final decision on Pioneer. Why did you allow just really a fraction of the costs that the company incurred in proposing pioneer. Well I have to speak for the other two commissioners on this one Mark because

I didn't sit on the final hopefully final decision because I've been a participant in the original in the original case so I excused myself. But you summarized that I think very well what the PC essentially did. Commissioner behind commissioner Swisher is split the costs up trying to provide for recovery of the costs that were taken in the initial steps of licensing and excluding engineering costs or costs that they felt the company undertook on its own hook without having the license costs that in the commission's view that legitimately rate payers should not be assessed. Yes that falls. Mr. Bruce the company decided just a few days ago not to appeal that decision any farther. Why. Well number one we felt that

it was a controversial question. We felt that by the time you go through an appeal you're three years down the road from the timetable the Supreme Court we felt probably that we would not be successful in an appeal. When you say that pioneer may be the end of Pioneer I think that's what we. We feel that it should be that. I think it points out. We have I have a difference of opinion on all the expenditures that were made. I think we were doing the things that are necessary to really make a definitive final cost study planning study with respect to respect to the plant. We were following procedures that had been followed from almost not and tonight. We didn't do anything different. And we felt that they were good and valid expenditures that would save senior rate payers money in the long run.

So out that we did not build it. And as a consequence I think what it points out to me is that there is no guaranteed return for the public utility that's sometimes said but that's not the truth because as you can see here there is a substantial amount of monies that there will be no return and that will be absorbed by the stockholders. I think I'm almost hearing you say that in a way you wanted to get this behind you once and for all. I certainly think so. The pioneer. I think it's behind now. It was a traumatic issue for a company for everybody to work for Idaho part company and I won't go into the pros and cons at this moment but I think you know we knew we were engaged in a very high energy increased energy use at that time. We had you know I was just thinking last year we had about 2400 new new customers on our system in the 70s and run in 10 of the 11000 irrigation usage was very very heavy and increasing it

to 80 to 100000 acres a year. Those things are behind us. We've had a lot more come summation which is good. There's just no question about it. I think you're just in a different era. And we went outside we went down on me. We got an order in 1979 when we dismissed the final alternative for Pioneer which was a 500 megawatt unit. We went down and got permission to the convenience and essentially from the commission to go ahead with the building of mommy and me that's a coal plant that you own. Yes. And part of it in Nevada I think one of the things on the Pioneer that thousand megawatts I know have a lot we have never considered really that idle power company would own it in the pure quill people or in joint ventures in joint ventures over Jim Bridger and joint ventures and Barton and joint ventures and balmy and but those things were all behind us. I want to come back to a couple of those points but let me just go back to Commissioner ward here. I mentioned that the rationale that the commission used back in 1976 was the

environmental concerns about locating a plant in the Boise Valley but there was more to it than that really wasn't there. Well there was a lot more to it. We had a witness on the stand in the West water power case a month or so ago said something that really struck struck me because I think it described a lot of people in the room including myself what he said was I got into this business as an environmentalist meaning that in the regular regulation of utilities and he said it's been years since I thought of myself that way. And I think that that was the way pioneer went and that's the way it is the education process that people went through participated in that is they may have come in because of environmental concerns. But generally speaking if they stayed through the whole long debate the debate tended to shift towards economic concerns to pay. How much is it going

to cost and who's going to pay and in the end I think that was at least as big a factor as the environmental concerns and maybe maybe larger richer. I think I agree with that 100 percent. I think the economic factor was one of the big when we we we went in at the start and we laid out what the costs would be. We did not want to hide that. And I don't think anybody could contend that we did. We we went in and got some bad press because you were considered bad guys with bad press. But nevertheless we were too slow on it. And because of the fact that it was going to it is going to cost money and we wanted to point that out. And that's one of the things that we did the studies for so we could show you what the costs were going to be. Was that what it came down to and I'll ask this to both of you in the public's mind. I mentioned that advisory vote which I think surprised a lot of people that it went the way it did. Was it as you look back on it the public's concern about what it was going to cost. Well yes I think a large part of the public

perceived as the debate went on that they knew intuitively that plants like this are expensive. But I think they perceived as the debate continued over the years they are really expensive especially compared to the hydroelectric power that we've been living on up till that time. But I think in some respects the public reaction is is perhaps overrated as a factor here. For instance those advisory votes I know the three people who were sitting on the commission then very well. And the plain truth of the matter is from day one. Well Mike mentioned none of them are on the commission. None of them on the commission now. From day one all three of them were going to vote the way they sought after after they heard the evidence and considered all the arguments regardless of how the public the public sentiment might have been Mr. Bruce. Well I think one of the things I think on the environmental issue. One of the things

that impressed me was that we had a vote in Elmore County. I don't need a county but we had a vote in Canyon County and that Canyon County was 60 70 miles from the plant. And still the vote in Camden County a very conservative county was in opposition to Piner. Well it had to be on economics you just had to be. That's how much it was a lot was made at the time about Governor then governor Anderson's testimony before the commission. Some said and some still say that he shouldn't have done it that it was improper for him to do. Did that have much of a factor. Mr. Well I'm trying to get inside the head now of the commissioners and how they saw the commissioners at that time I think it had an effect in that it was symbolic in a sense. And obviously when the governor of the state of Idaho speaks no matter what party he is no matter who he is. It's incumbent upon the public officials to listen carefully to what the man has to say. It was really an

unprecedented thing for them yes it was it was unprecedented. I think maybe politically it was more important in the end in that whether people approved or disapproved of what Governor Dean did there. I think there was a great deal of respect for the fact that he did it in an open way. You know and a lot of states still today the way that process would have worked if a governor was opposed on a hot political item like that is he would have conveyed his sentiments to the PC behind closed doors. And I think there was a lot of respect for that and that was probably the biggest legacy of his testimony. I might just mention that we invited him to be on his program. He once was not declined. Mr. Bruce I read recently in this most recent testimony about these costs that the company incurred that you told the commission that you conducted some surveys after this plant was

proposed to perhaps find that acceptable alternative location and it basically came down to many people thinking that the plant should be built but nobody wanting it build in their county. That's exactly right you. Everybody wanted energy. Everybody talked about having sufficient energy. But when you talk about where you build the plant in what county they say put it in the other county. Well you know it's kind of like building a highway. You put it over there everybody needs it but you don't do. You don't want it next door to you. So that that becomes one of the one of the group problems when you when you're in that kind of situation and once you start with an advisory vote I can almost tell you know my conclusion and probably have an advisory vote in that particular county they're going to say no in the next county might see you you should have a copy of that. You also said in that same testimony that this was to quote you directly two years of intense trauma for the power company and for the state. How did that affect you personally.

Well I lost all my humor. I can say no it was it was really we thought what we were proposing was he was the best course of action. It was not done lightly. And we and again you have to go back in the context of the times when you had you had an entirely different energy usages you had entirely different things happening with the company. We had a we have a statutory duty to us to serve. We were very concerned that we would not have enough energy and that's what we were doing trying to solve that and really you don't make money because the company doesn't make money out of building things sure it increases the rate base. But basically the return that you get is still the still to come. CONAN And so you don't make money from that but you do have that statutory duty and at that time all of the things and I think the studies that you studied a little while there were some

differences the study but you folks over in the U.S. indicated that there would be that kind of need. And that was all over the all over the country. Now it's obvious that things that have happened that there's been certainly there was some over projections. And those are due to a variety of things in the in the Pacific Northwest I think was due to the fact that it based on critical water planning and you only have critical water every 50 years or something like that and that makes a lot of difference when you don't have critical water. You have a vast vast amount of power coming out of the Columbia River system. I want to just ask Commissioner ward one final thing and then we'll move on to our other guest who I mentioned the political impact of this decision aside from Governor address's involvement then governor Anders's involvement. You as I recall and I covered the story a little bit at the time when you were appointed to the commission. There was some fallout. Was there

not political fallout over your involvement in this decision. Well a little bit. Actually I don't think as you recall my nomination was confirmed by a resounding margin of one vote in the Senate. But I don't really think it had that much to do with pioneering it. It had to do with a lot of other it had to do with energy policy per se and pioneered focused the division really in the country and in the state. And obviously at the PC over what the energy policy would be and I think it did serve to a range of political forces in a way into sort of opposing camps on on how we handle these questions. Yes it did. And in the end I think that was good. I think that debate had to take place. But I don't I think it's fair to say of the of the members of the Senate when I went

through that process that it wasn't really a pioneer I was I was rather surprised that I didn't really think it was tit for tat. You know you you beat pioneer so now here's your moment of having a chunk taken out of you. But I don't think it was that I think it was genuine concern over the direction of energy policy. We'll come back. Gentlemen thank you. Rarely in the last 10 years has an issue generated as much public attention and frankly grassroots politicking as did the pioneer decision. We turn now to one person who was active in that public effort to oppose the construction of the plant. Now Father Gill now heads the Idaho citizens coalition the late 1970s he helped form a group called Citizens for alternatives to pioneer. It was called CAP at the time. Your father good why did you get involved in this. I think the whole community was involved. It wasn't just me and I think everybody was involved. It had been raised by the media the newspaper the print

media and television media to a public issue a political issue. So it wasn't just my my involvement I think everybody was aware of it the letter to the editor and the booths people handing out flyers and people going on half of the man that was just a lot of action. I remember personally I remember a few issues in the last half dozen years that that generated as much day to day attention. That's a rare thing that's happened. A rare thing that happened in the state of Idaho and a rare thing for the country. And one of the good things that happened here that hasn't happened elsewhere so we don't have a whole lot of power plants in the state of Idaho that are being shut down or dismantled or terminated because we don't have a need for the power. So I think we the the the beauty of this pioneer thing was that the people in this state had an opportunity to have a say about a very important public issue and that that say was that they

as a process they learn so much everybody learned a tremendous amount about energy what we needed to do because for so long this had been it and just the thing in advance really you know accepted whatever came down and it was a great education thing for people all over the state of Idaho not just in this area we had to tithers letters in the PUC files from as far north as Moscow and as far east as Firth in Idaho Falls our people giving testimony public testimony on these from all over this state. So people just had a tremendous opportunity to learn and they learn how what was happening with energy and they and they had a further opportunity to have a say in it. And I'd like to just mention that this is a very rare thing in public issues and a very very important thing. So we don't have this with other issues. For example there's tax issues that don't get the public visibility that don't people aren't aren't informed enough to get angry.

And as a result why the democratic process that we're involved in suffers. So a lot of decisions. One for example that I can think of right now are being made behind closed doors. People have no input into it and that's the one I refer to as the swan falls decision where we had a lot of public things. We've had legislative fight. But right now we have a a behind the closed doors deal is being cut and the people have no knowledge of it or what the heck it's about or even you you're one who thinks this one falls issue is related. It is related to the right to. Yes. The the justification for Pioneer that a primary justification was the belief on the part of the utility company which they got from the Department of Water Resources that there would be three hundred seventy two thousand acres of new land brought into cultivation over the course of their planning period and I think that was in 1989.

There would be three hundred and five thousand acres that would be converted from from to sprinkler irrigation and that that would take up all of the wood potentially all of the power that were generated by Pioneer. So now we have a non issue it's long falls where a diversion in arrogation to versions of the sort that were envisioned in the Pioneer plant could cause the same thing to happen again. And our utility rates our electric rates could skyrocket here. People don't even know what's happened you know it's just. And you could say well this is just how it is. Well it's a time for decisions on that issue. Let me just get one quick very important quick comment on you. I take it that you're one who believes that we are better off maybe much better off today because the decision was made the way it was made in the late 70s when the on the Pioneer Yes. Oh I think we have saved ourselves billions of dollars. You can just look around the country here just to the neighboring states the state of Washington where they built those wups power plants.

Twenty one billion dollars that's been sunk in them and there's no way they're ever going to get the money back just in Montana where they have the Colstrip strip three Enchong strip for cost for 75 percent complete and the plants are not used and useful because there's no market for the power. We have a much finer relationship between demand and the power supply in my opinion than the neighbor and we saved ourselves. We saved a lot of money. Let me open this up and go back to Commissioner ward on that. How has this decision impacted essentially the rates that Idaho power couple with company customers have paid since the decision was made. They've gone up faster or slower about the same as they would. Well I think Miles I think fairly obviously right had pioneer been built that thousand make Watson assume for the moment that I know power had had either taken in by themselves or or been unable to get or keep

partners in the arrangement. I think it's clear to clear today that our rates would be considerably higher and we'd have considerably greater excess capacity now. The fact is that the power that we need more than more than we need. Exactly and no place to sell it because simply we in the northwest we have so much energy to sell now that we cannot transport it all to California is to interrupt your right says get Mr. Bruce on that point do you agree with that. Well not not completely because maybe what we have at the time of the Pioneer when we started on Pioneer after that we we did some other things. Completed the fourth unit to Jim Bridger put in a 50 unit and at that Brownlie and went went with the Army units down in Nevada which when completed will be 250 megawatts on our company system so. So not completely and those costs were that we encourage are very similar.

Basically in the time frame. So I think we did not. We never were part of part of a nuclear plant. You always have to have a little look in every lifetime and we did not get in those and I I I guess and I I knew it was we could a thousand megawatts on our company system singularly would have been far too much. We had never I'd never anticipated that we would do that. We could have you would have had a partner or somebody to partner for five years. Yeah. Financed the plan and then to use some of the yes. Right. But but that's all over. That's on the line. How has this changed the public's attitude. Mr. Fothergill obviously you said that you thought to be educated people. Has it changed the public's attitude about something like conservation. For example I think if you can't there's no way we can look back to the way it was. So it's as I said elsewhere it's like the whole community went through the

looking glass and there's the we can never go back to seeing things the same way that they were in 1974. So we have not only conservation energy conservation which has become a part of the habitual thinking of people in this state and elsewhere in the country. We also have small power production in co-generation and load management and and the various things that the power company has done with energy conservation so that our Bruce says we're in a much different environment. We sure are entirely yours too. It was a major break. Mr. Ward let me read back one sentence out of the order in 1976 to you. It says there is very little evidence of a firm public commitment to the sweeping social economic and political changes necessary to foreclose growth and conserve energy. Sort of a not very optimistic assessment of the ability to conserve at that time. Was that wrong. Well yes and no. It is wrong in the

sense that I didn't foresee and more importantly that the commissioners for whom I was writing that section did not foresee that there would be a grand revolution in the way people used energy and thought about energy but of course the strange part about it is what I learned from that experience is that's not the way grand changes take place. People don't wake up in mass one morning on some Monday morning and say we decided we're going to conserve energy. Now they don't. It just doesn't happen like that. And what what happened and is is that over the course of time as as as people perceive that first of all this was important. And second of all involved a lot of money and energy prices were rising as as in many ways we chose haphazardly we chose the absolute perfect course between that commission and the public and Idaho power because what we did is we we started picking up energy in

small increments comparatively small compared to the central plant. And as those increments begin driving rates up little by little conservation began taking hold more and more and that it matched beautifully and it was rather haphazard it was not a grand policy. See any one person or thing. No unfortunately we're out of time. Gentlemen Mr. Bruce I want to ask you about how this has changed the company. But I guess we'll save that for another program. Well good night. Good to have you here. And I just have this word for you here. Thank you Joe. Thank you. That's our time for tonight. We'll be back tomorrow. I'm Mark Johnson. Good night. Funding for Idaho reports is provided by the Friends of four 10 and 12.

The corporation for public broadcasting and by a grant from the laurel Moore Cunningham foundation why don't we look again. Arnold feels like talking with Congress very very critical of operations you're of look at making them outdated. Which group. Are all working. I've.

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