Idaho Reports; Student Financial Aid and Power Re-Generation

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 goes on national television tomorrow night to make a major budget pitch to the American people. The president is expected to add sparks to the already heated debate in the Congress over how to fashion a federal budget and perhaps more importantly how to reduce the record federal budget deficit. Mr. Reagan has already agreed to a budget compromise with Senate Republicans that aims to cut the deficit by fifty two billion dollars next year. The plan calls for controversial changes in Social Security cost of living adjustments for reduction from what the president had wanted to spend on the military cuts in agriculture and health programs and elimination of some programs like federal revenue sharing and Amtrak. The

budget plan also calls for major changes in the federal government's student aid programs. The changes would for example place new restrictions on federally subsidized student loans. That's where we focus our attention tonight with the new education secretary William Bennett endorsed federal aid reductions recently he said some college students in America might have to practice what he called a form of divestiture stereo divestiture automobile divestiture three weeks at the beach divestiture. Whether or not the proposed reductions prompt a run on the pawnshop as students get rid of their stereos. It does seem clear that what the Reagan administration has proposed would affect most Idaho college students. The plan student aid cuts would save something short of 3 billion dollars over the next three years. That is still more than a billion dollars short of what the president originally proposed to save the savings would come by limiting to $8000 the amount any one student could receive in federal grants and subsidized loans and students from

families with an adjusted gross income of more than $60000 would not be eligible for any federal aid. According to one Idaho survey 80 percent of the students for example at Lewis Clark State College and Lewiston receive some form of financial aid. The figure at the University of Idaho is about 60 percent. Needless to say most students and higher education officials oppose the cuts particularly so the students since the federal reductions are being seriously considered in Washington at the same time that students in Idaho who attend state supported schools are seeing their education costs go up. The State Board of Education just last Friday moved to hike student fees by $10 a semester for full time students. That will increase the person Vester fees from two hundred thirty five dollars to two hundred forty five. That move was made state board members say to make up for what they consider an inadequate higher education budget as appropriated by the last session of the legislature. Tonight we'll try to sort through the likely impact of the proposed federal student aid cuts

and the state increases. We begin tonight with Jane Freud the student body president at the University of Idaho in Moscow. His friend joins us tonight in Moscow. You oppose this student fees when they were discussed before the state board last Friday. Could you tell me just briefly why. Well the Senate felt the need to send a message to the state legislature that students should not be used as a cure all to make up for shortfalls in the funding of higher education. For this reason we opposed any increase in the institutional maintenance fee. Did you disagree as well with the board's rationale which was that in order to maintain some semblance of quality they had to do this. Well we've we've seen these increased increases in the institutional maintenance fee over the period of the last several years and yet we haven't seen the dramatic increase in quality that they keep

telling us we will get if we keep paying these feet. So the message of the nutshell is if the legislature is not going to appropriate the money that the state board and others think is necessary for higher education the student shouldn't be the pocket book of last resort so to speak. Well well the question is when is it all going to stop. Because yes in fact they keep coming back to the students and saying hey we need some money to make up for what we didn't get from the state legislature. And sooner or later that the max the maximum amount the students want to pay is going to be hit and we're going to have some problems. Well are we are we at that point now. Depends on the individual students. I would assume with some students we are at that point and for that reason they might not come back to school at the University of Idaho or any university in the state where I don't think we're at that point with all students.

I saw your counterpart at Idaho State in Pocatello quoted as saying that he thought this would result in enrollment declines at state schools. Oh yes I would agree with Todd I think that any increase in fees is going to affect an element in some way and with this increase in fees you will see some students who will not be able to attend college. Let me shift to the other part of the subject we're talking about tonight namely what the federal government the in Washington the president and Senate Republicans at least have agreed to. Let me ask you first if you don't mind do you receive some financial aid to go to school. No I don't. What impact will you. Do you see these proposals having on students who do receive financial aid. Well I think when you're talking about cutting back financial aid that students are going to receive that you're going to have some students who won't be able to go to school because of these cutbacks. University of Idaho we have

approximately fifty eight hundred students who receive some sort of financial aid. And I think if these cutbacks are President Reagan has proposed are put through that you will see some of those students who won't be able to go to college. So in effect a student might be qualified in every way every other way academically qualified but just won't have the money for one reason or another. That's right. Well what's what's wrong with that I guess. Isn't that a way to limit to limit access to what is a valuable commodity after all that education. Well if a student is academically qualified and can make the grade so to speak in education in a in a university even they should have the opportunity to do so. They shouldn't be discriminated against economically if in fact they have the intelligence and the brainpower to make it through a college education. Let me just ask you finally you know the argument of course in Washington is that we've got to do something to reduce the federal

budget deficit and we can't keep exempting one program here and one program there or we don't get at the problem. How do you answer that. Well. I I just firmly believe that when you're dealing with higher education that people in colleges and universities across this country are the future and if we don't make some sort of investment in the future it's not going to matter what the deficits why in the future because you won't have the people there to help solve it. We'll come back in a moment thank you. Our second view of this tonight comes from a financial aid administrator Dan Davenport handles that job at the University of Idaho he joins us also tonight in Moscow Davenport what does it cost to students on average to go to the University of Idaho. Well Mark any plans on what type of category the students and one of their own and Idaho residents in and out of state. Well let's take Tommy and let's take it I don't know we figure it cost approximately forty nine hundred dollars for an Idaho student to come to the

University of Idaho and. And live in the dormitory for nine months. It's almost $5000 a year. Yes. What is the impact of taken together what the State Board of Education has done now to increase student fees and if some significant reduction comes about in federal aid will we see where we see less students be able to come up with that five fewer students be able to come up with that $5000. Well I I'm not sure I can can indicate anything that will happen as far as the increase in fees you know I think all of us hate to see that the cost of education increase but yet to to offer a quality education funds are needed so I don't feel qualified to say where those funds should come from I am concerned. With the federal proposals and the cuts and the effects that have on our students. What would happen. We figure that there's been two proposals come out of the administration the original budget proposal and then just recently a compromise between the Senate Republican leaders and and the

administration. The original proposal that would come out from President Reagan would affect approximately 3000 of our students and we would probably lose in the neighborhood of one and a half to two million dollars in student financial aid. That's the proposal that I tried to outline as we started the program of placing a cap at $8000 on what any student could receive and play saying. If a student came from a family with a $60000 adjusted gross income or more they wouldn't qualify. The original proposal had caps of twenty five thousand dollars for what we call the campus based aid Pell Grant program and thirty two thousand five hundred for the guaranteed student loan program. But now that has been increased to sixty thousand for the guaranteed student loan program I have not seen the exact proposal only bits and pieces of it so I'm not sure of some of the effects but I think there are some things in that proposal that we need to be concerned about. First of all. The original proposal came out with a $4000 maximum amount of financial aid for students.

The new proposal comes out with a maximum of eight thousand dollars of some type of help for the student that could be a contribution from parents that could be spouse working. So we could see a student that is married and spouses working contrib maybe the spouse contributes forty five hundred five thousand dollars the student earns $3000. The cost of education is $12000 for that student. That student would not be able to receive aid because between the spouse and the student they come up with $8000. Who's going to cover the extra $4000 for that student to go to school. We just ask you finally about one thing that will come back to some of these things later. It is frequently said that there is considerable fraud and abuse in this student loan program and that's perhaps one reason that's being used as a justification to try to scale it back. Well I don't believe that otherwise I probably wouldn't be in the financially business I think at one time back in the. 1980 when we allowed that

all students regardless of their income category to be eligible for guaranteed student loans. We probably did ourselves a lot of harm and saying that. Regardless of how much money the student has they can pick up a guaranteed student loan because they would have to pay the funds back the federal government. I don't think it's true I think that you'll find most of our students say that with all the different regulations and requirements that we give them. I think that we do a pretty good job throughout the country in giving out federal funds. Not that much fraud and abuse that I don't think so and when we do find it we don't hesitate to prosecute. Welcome back sir thank you. Criticism of the Reagan administration's financial aid proposals came recently from what some will see as a surprising source the former as regular administration education secretary Terrell Bell writing in The New York Times recently Secretary Bell who is now teaching at the University of Utah called the current aid program quote good public policy. Bell made the point that reducing financial aid will encourage a shift away from highly

priced private schools to sate state supported public institutions. That view is also held by Dr. Arthur du Rocher the president of the College of Idaho in Caldwell a school that is generally referred to as a small private liberal arts college. Dr. garage or this package will hurt private schools. Yes indeed. It WILL hurt. Private schools. Considerably Mach II. At our institution. We're talking about a loss of an excess of six hundred thousand dollars two possibly three hundred eighty three students out of five hundred seventy five. The policies that we now have in this country. Date back to 157 when the National Defense Act was. Passed and we were worried about Sputnik before and we didn't have enough teachers and we certainly didn't have enough scientists and physicists and so we made a commitment as a nation. To try to to improve access. That was one of the

major major points that we had. We wanted to improve access of low and middle income students to higher education and we did it. To two to emphasize the fact that America has always suggested that it can't be any greater than the education system it provides for its students. Now in guaranteeing access the government since 1957 and I think the American people have also suggested. That students ought to have access to more than one kind of institution. They ought to have access to private schools as well as to public schools. They are different. They offer different choices and a student with a good mind ought to have an opportunity for that choice knowing that they're going to have to pay more for the private education well start public sector rebel who whom I quoted a moment ago said if in effect it

seemed to him that this policy was running counter to the regular administrations philosophy which is to encourage private education to encourage the private sector to thrive so that the public's after sector doesn't have to be so big I guess that's exactly what it exactly is to Davenport said you when you talk about a five thousand dollar cap let's say cost $12000 go to Stanford University and let's say about two percent of the people could be admitted to Stanford University. And OK if you have a $500000 cap and they suggest at the parent so the student can legitimately and without too much pay 5000. Of that. That 5000 is subtracted from the eight thousand. And so they're eligible for $3000 worth of aid three thousand twelve still leaves a lodge nine thousand dollar amount so if the person is wealthy that is no problem. But for the low income and for the low A middle income off of the middle

income that has more than one child it becomes in an impossibility Mark. And then there is say is access is blocked. So these students who might now be attending a school like yours like the college of Idaho will they not. Obviously you're saying that some of them won't be able to afford to attend that kind of school. Will they go to the private to the public schools. Will they not go to school. Oh I would hope that they would continue to go to college. But our financial aid director suggested to me this morning that perhaps is as much is that we could should we could see a decline in Roman up to possibly 40 percent. And that's hard for my mind to fathom from this morning's discussion for deciding private schools at our college at the college divide that we could expect a drastic decline in Rome and perhaps as much as 40 percent. Could you remain viable if that happened now. I would think I wouldn't think so or we would have to start tailoring the

college toward recruiting only students who have. The financial resources available to attend a school that will cost him a thousand dollars. And that's something he would like to do what we would like to have access and the basis of ability. Q And if a person cannot afford it. Then try to find a means not to waste a mind that comes our way. Welcome back sir thank you. Finally now a view of all of this from a state legislator who led the effort earlier this year to head off tax increases in the state legislature that would have allowed for additional higher education appropriations in Idaho. State Representative McKnight Barr is also a general agreement with the effort to scale back federal educational assistance streamline more why. First let me take a little exception to your statement to mean that I led the effort to hand off taxes that's not true. I opposed tax increases. That they brought forward but. Our primary job is to distribute the money

in because we don't give higher education and public schools the money the request doesn't mean we're trying to head off a tax increase. We've got to treat all state government equally. Now let's get back to the other thing and I agree with a lot. It's been said here but this nation if we don't do something with our federal deficit with our budget. That's so. High at the present time we may end up with nothing. I don't suppose anybody can tell us really what would happen if the federal government took out bankruptcy. I tried to figure out that for years now I don't know where we go or what we do. And I think that all young people. That want to have an education if they want to work for it then take the time to do it they can have it. I think that that the states have the obligation to help them. Personally I don't think just the federal government in the Constitution and whatnot. Gave. Any indication that it was a right for the federal government to fund. Students and I

think it's commendable that taxpayers will put up the money for student loans. And that the the young people today. I know are being paralyzed for past performances of students. Now Mr. Davenport said that there wasn't a lot of abuse in that student loan thing and I disagree with him. I think that 40 percent of all student loans are in trouble. And under the federal mandates today the way they are. We can't collect a lot of those. Without. Changing the law so we got some way to legally prosecute and get him. But your point is in a nutshell that the deficit of is of such overriding importance that we have to in effect swallow some of this tough medicine in order to deal with it. Every segment has to. I wasn't but a couple of weeks ago the governor of the state was around. Talking to the farmers and they react the same way that the students can and these people here do. We can't afford to give up the federal help. It's going to ruin us

every every segment of industry you have business and whatnot are in the same boat. They're willing to let somebody else might decide. But not that portion that they're in. And Mark somewhere some time. This thing has got to reverse itself or we won't have a nation to to do the things that we're doing. Let me just ask you this final and then we'll put it up. You've heard Dr. garage or hear say and the folks in Moscow say that one of the one of the effects of all of this will be a declining enrollment and a limit limiting access in effect to maybe just the students who can come from wealthy families for example relatively wealthy. You know first off if a person has a desire for an education and is willing to take a couple years extra and will work for it he can get that education. Now granted if he hasn't got the desire to go do it and he wants it done in four years or three years then he may drop out and quit but that

doesn't tell me that he's got a strong incentive the incentive to educate himself and and. Take advantage of the advantages. Of the living he'll derive from a better education. OK on that point let me open it up and go back to Dr garage or first talk about that point just representing my bar says if the student's willing to maybe take a little longer and work a little harder they can still do it. Oh well certainly people can and should be expected to pay. At least part of their educational bill and the part that worries me the most is the loss of student loans loss of student loans. And he mentioned that there's 40 percent to fall. Well I don't know about the rest of country but Colorado is three point eight. Percent default and we've never really been very high. Maybe it's the Idaho mentality to pay your bills back and I don't. Doubt it. But I would also add that it's not a problem now terms of I know you don't want to do it but I would throw this is the challenge.

Just about every history book will tell you that the best investment this government ever made was the World War 2 and the Korean conflict G.I. Bill of Rights. Where they helped people gain access and get an education and I don't know how many times over that cost have been paid back and additional taxes that people learned because they improve themselves and got a better job. And I don't think that cutting back on access of bright people is either good for the National Defense of the country and it's certainly not good for the cash register of the country because educated people earn more and pay more taxes and reduced that love. Now I am isn't much in agreement that we need to cut cut that deficit it's terrible. But I don't know if you do it on the backs of those who eventually are going to be the taxpayers that cut it back. Well. Dr. Grossman brings up a good point. But by the same token. You know. The federal government is operated on taxpayers money and the people in the education field stay in contact with the

people in the education field. They don't you know that and have to put up with. It mingle and put up with the people who pay these taxes and when you see what they have to go without and the things that has been requested and education as a higher top priority in this state. Then there is some resistance to it. Now let me bring in one point here that I just. Was given to me by our Budget Office this afternoon and this may be of interest to all of these folks that. The real issue for Idaho is not. The level of the federal appropriation at this time. For the student loans. But the manner in which it's being distributed. And if Senator McConnell and Senator Sampson represented Craig's installing two would. Be able to have any influence in this area they could help our situation here. But the eastern the eastern universities and colleges through their congressional people. For some reason have got an advantage. Of where the money is being distributed.

And and I would like to see that you're shaking his head yes is that true Mr. Davenport. Yes that's very true. We've we've had the Department of Education run studies over the last six or seven years and we've found in some cases institutions have received states that are similar to Idaho in the Northeast every see seven eight ten times more financial aid when they have the same number of students and their per capita income is approximately the same. What about at night bars point that there is more abuse of this program than the news than you seem to indicate. Well I think that any program that we have whether it's in TV media financial business downtown there's always going to be some type of abuse. I think that in the state of Idaho the guaranteed student loan program the default rate is less than 5 percent and that's a continuous default rate we can't write those loans off after one year as some lending institutions can. I

agree with Representative Nye bar that that we all need to help in cutting back the budgets and I don't think that you'll find many financial aid people that that will disagree with that statement. I think our concern mainly is when we look at student financial aid let's look at it in a time when we can look at the programs overall. Let's don't come in with an ax and start cutting here and here and here and not knowing what's going to happen with those cuts and I don't think I think use excuse me I think he's saying represented Marc are saying that the ax is just exactly what we need right now the deficit is so big that it acts as necessary. Well that's fine I believe that we can accomplish some of the same things in other ways in in financial aid the last few years we've taken approximately an eighteen point nine percent real cut in real dollars. We also have something coming up in the fall of 87 in that the Higher Education Act. Ends and we'll look. We're looking at reauthorization and I think that that is a

time for a lot of these proposed changes to come in. I don't have any problem with sticking with our current funding levels for fiscal year 85. It's not enough money for us. Freeserve In other words right this Friday let me ask you about something that's been said here about maybe students working a little harder taking a little longer. Secretary Bennett says divest themselves of their stereos or whatever. Is that a viable option for a student. Well there's always the option of working a mortgage to get your education and I think Representative Nybo was right in that some some people if they really want to can work and take the extra time to get through school. But on the other hand some people can't and they need that financial aid perhaps to get in to a college that they might not be able to get in by work alone. Regarding this this divesting themselves of stereo some I assume

as Mr. Davenport said that there are abuses of the financial aid program but I don't know that they're to the extent that the stereo is in the three week vacations in Florida. The people I know don't don't get that kind of. And if it is to Davenport let me ask you finally about Dr. Rogers point that maybe if these cuts go through in this magnitude his school for example could lose 40 percent of its enrollment presumably some of those students would want to go to the University of Idaho which could help you. Right. Well I'm not concerned. I am concerned about enrollment but my main concern is can we fund the students that that need the aid here at the University of Idaho or can we find them throughout the nation. I don't know what happened with the students I think that would would depend on a lot of different things. OK I want afraid we're going to have to leave it there and we'll come back to it another time I'm sure on this point and Mr. Davenport thank you for joining us from Moscow tonight representing by bar and Dr. Gross we

thank you gentlemen. That's our time for tonight will be back tomorrow I'm Mark Johnson. Goodnight. OK. Funding for idle 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. 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 more Cunningham foundation. Good evening. In about 10 days from now the Idaho power company will go back in the hearing room to commence the next round in a long running battle with the Idaho Public Utilities Commission. The battle is over the rates that the utility pays to small power producers in this state. The company wants the rates that it pays to those small power producers called code generators sharply reduced. The commission is clearly reluctant to do that saying investment in cogeneration now is a good buy for the future. Tonight with the commission the power company and interested parties on both sides of this debate will join the debate over cogeneration. It is a major energy decision that will affect

your electric bills for a long time to come. Code generation can mean anything from a tiny dam on an irrigation canal to this large wood waste plant at Potlatch is a lumber mill in Lewiston. The infant industry was born in 1978 when Congress passed the public utility regulatory policy act in an atmosphere of energy shortages and rising costs. Purpose set out to encourage conservation and the development of new energy sources and thus to offset the need for expensive new power plants and dependence on foreign oil. Encouraging cogeneration meant requiring utilities to buy power from independent producers at rates that would ensure that the new industry would be profitable. Those rights the law said must be just and reasonable for consumers in the public interest and not designed to discriminate against small power producers. They must also it said be no higher than the cost of other available energy sources. I don't use Public Utilities Commission moved

quickly to encourage cogeneration setting rates that rank among the highest in the country. Almost 8 cents a kilowatt hour 4 percent think Power and Light down to five and a half cents for Washington water power and Utah Power and Light. None of those utilities like those rights especially at a time of energy surplus. But it has been I don't hope our company that has waged an all out war against them. The company has contracts with thirty eight small power producers including this Boise Cascade wood waste project in Emmet and it says it's negotiating with dozens of additional developers ratepayers will soon see their bills go up about $2 a month for the first group of code generation projects. And I don't hope our's says cogeneration could cost 80 million dollars a year. By 1988 close to 30 percent in rate hikes for power it says will not be needed for at least 10 years. But Public Utility Commissioners say those numbers are way out of line and they believe the power may be needed sooner than the company says. And they say

that in any case it will someday be a very big bargain. This war of words has sometimes been nothing short of nasty. Commissioners have called I don't hold power and outlaw company and have declared themselves quote wary of its apparently endless appetite for harassment of small power producers. I don't hold power for its part has branded the commission's rate structure Neo economics and on several occasions company president Jim Bruce has had to be ordered to sign contracts now with a hearing on the company's latest request to lower rates set for May 6. The future of the fledgling cogeneration industry is once again on the line. And I do hope our company is clearly gearing up for the cogeneration battle. The company has commissioned a study of the issue that will be done via Boise State University. They'll be serving Idaho power customers on that subject next month. And plans are in the works to mount a major advertising campaign perhaps later this year. We turn now to the cogeneration view from the company and the commission. Jim Bruce the chairman of the board of

Baidoa power company will make the company's case. Conway Ward a member of the Public Utilities Commission speaks for the regulators. Mr. Bruce let me start with you. Why is this such a bad deal for the ratepayers as you see it. Well Mark you first of all I think I need to correct a couple things. When we talk about a battle I say I don't think there's a battle as such. There is probably a difference of opinion and I guess that's everyone can have a difference of opinion and we have we have attempted to present our our viewpoint with respect to the cogeneration. We realize that purple always put in as it said in the start of the purple I was put in for cogeneration to reduce reduce the imported oil and that was leave. That was the overriding policy with respect to it. I hope our company had used a court oil in 10 years we don't use it for generating facilities but I think the I think the thing that we are very very concerned about.

It is a fact that we are in a city in a surplus. We have been a surplus for the last several years and all of our forecasts show that that continuing surplus will continue up until the late 1990s we have no requirement to build any new plants. We are no different than every utility utility company in the northwest the PNU c c the public power Council. I thought you didn't like North West. Generator companies. Yes and plus C plus C the council that was set up. They've come out with the forecast with respect to the amount of power BPA has come out with forecast there. Oh forecasting a large surplus of power. So you're saying if I could just put it a little differently that your customers the utilities customers are buying energy right now that you flat out just don't need and it's a trick pedal somewhere somewhere else that steps correct in and we're paying we're

paying a high price. If that's higher than we can sell it for. And. As a matter of fact you know we we look didn't go through Idaho in Idaho we paid the highest rates are far higher than washing water park company Utah Power and Light Company and when I say wheat that's our rate payers in Oregon we pay a much less rate and so to put Pacific power like Portland General Electric in Montana and out of the sense you have no discretion about buying this power if it's there you have to buy it at the rate that the commission says you should buy it. You're asking for them to lower the rates that's correct because they're under under purpose where you you have the question you have to buy it. That's true but if you don't need it on your system load. And if a surplus there's no requirement that you have to pay an inflated price for it. And that's the avoided cost and what it cost determine is that it determined upon what it costs you to acquire additional resources if you knew the cost that you would avoid by Abisai exactly right.

OK. Commissioner Mr. Morris makes or what seems to be a convincing case that the public frankly doesn't need to buy this energy right. Will I disagree with that on several grounds. But but let me back up and and start from the from the first premise which may be in some ways we made a mistake in not just standing on which is that it's the law. It's a flat law that the utility must buy the generated power. That's the end of the law. That's the federal law which we're charged to enforce. It's a good law in my opinion and and it makes some sense and it's not something. Unfortunately I think that can be explained in that in just a few words. But but the gist of the law is this that the utility must pay to a code generator. The costs that it avoids by signing that code generator up and those costs are based on the utilities own costs. And it's true that at the moment

we have a surplus the magnitude of that. Let me just interrupt you there today briefly to clarify that point about the avoided cost. In other words I do hope our has to pay the cost of these co generators that it would have to pay if it had to build a new plant site. That is right. As computed at the time when the plant would be built not tomorrow necessarily if the plant is to be built in in. Let us just take a hypothetical and say in 1905 then you have the rate is not equivalent to what that plant would cost model it's less than that because it's discounted for the surplus that you have over the intervening 10 years. You're right and that's a crucial point. The rates are attempted. We attempt to set the rates in a way that will take into account the surplus and the economic value of that surplus. So you know if that's what you're saying that to buy this power now even if it's at a cost that the company thinks is awfully high. Some years from

now that's going to be very smart. Certainly some years from now they'll be a crossover point at which contracts entered into today and these are long term. Thirty five year contracts will be beneficial to the rate payers and I don't think that's just a hypothetical argument I think that's. It can be demonstrated relatively easily. Why not enter into the contract later. Now that is the the crux of the of the argument. There are two reasons. One you can't simply suspend the legal obligation of the utility to buy the power. And this is I think the centerpiece of our of our difficulties or the disregard the federal law exactly. We have what I think is a very sensible way of approaching this and that is that as the surplus has diminished the price of electricity then the then the cost of the of the code generators and small power producer supplies will go down too. We have

proceedings in which we will review those costs. In fact as you mentioned at the Hilton we have one scheduled to begin in May 6. There is no doubt in my mind that those costs will come down over a long period of time they'll come down probably significantly. But it would be just the absolute backward thing to do at this point to take it down to where the company wants their core their proposal is one point four cents per kilowatt hour. Correct. Well I think so. It's obvious you will not have a building of anything at that that will bring this whole this whole process of developing these projects to a standstill. Yes and it's not only that I IMed as a practical matter relatively indifferent about that about whether code generators do well or don't do well. But again you come back to the question of what is the law the law entitles them to avoid costs and that is not the avoided cost. OK computation. Mr. Bruce you know the commissioner's argument that they're just following the law and he actually sent

over the letter has a lawyer I'd have put a fairly knowledgeable with respect to the law and I have to say that you know that the that the law says it breaks for purchased by electric utilities shall be just and reasonable to the electric consumers of the electric utility and in the public interest and shall not discriminate to discriminate against qualifying code generators for qualifying small part producers but is said be just unreasonable to the electric consumers of their electric utility. What about the commissioner's point though that if you bring it down to somewhere in the area of what you're talking about that you'd stop this development. Well I think when you put a level of rate on at. The rate that we're talking about and you liberalize it it comes up to higher than than what we're talking about. And that's that's been part of the rationale and in the avoided cost pressure now. But I again. You know the loss is a day a qualifying utility may seek to facility may seek to have a utility purchase more energy or capacity than the utility requires to meet his total system look

in such a case while the utility is legally obligated to purchase any energy or capacity provided by the qualifying facility to purchase rate shall only include payment for energy or capacity which the utility can use to meet his total system load. These rules impose new requirements on the purchasing utility to deliver you unusable energy or capacity to another utility for subsequent sale and then which is what you do what you're doing if you want to that you mention. I disagree obviously that in that the simple answer to that is the utility is not paying for capacity that it will never use the question is is all of this energy and capacity worth the full value of what they're paying for right now today and the answer is probably not but you have to take into account that these are 35 year contracts you cannot set a rate at the front end of a contract which fails to recognize the value of it in the Bakken.

OK I'm going to let you respond that you know so well it's about 35 years and I agree with that and that's one of the problems because thirty five years you're getting into a contract for which you're bound for 35 year period. Tommy does know. I don't know what will happen 20 years from now or 10 years from now there may be a new a new acount whole new technology which me lower the cost of electricity it may not I don't know. But when you tie up something for 35 years you're bound to that. And that's a contract if you and I were required to sign a contract and that that's effective and that affects the rate payers of I'd hope our company were paying the rate payers are already being asked now to pay right now for something that may or may not help them in the future. All right we'll come back to our own the power company has found what some might see as an unlikely ally in all of this. The Idaho natural resources legal foundation whose members include some of the state's most prominent conservationists. That group will intervene in the hearings that are scheduled on this subject next month Bill miners of Meridian is the president of that

group which is primarily concerned about the environmental impact of some cogeneration projects. What are your specific concerns Mr. Warner. Our very specific concerns aside from what has been discussed up to this point in time the effect on the rate payers which which I'm not qualified read to speak. Is the impact or the effect that this epidemic shall I say small hydro development under the cogeneration premis is having or could have on our fish and wildlife resources in the state of Idaho. Its effect that it's going to have perhaps not simply on one particular project but the Salmon River Basin is next and there's ample. The last count I think there's something over 50 or 60 small hydro projects proposed in Salmon River Basin. The cumulative impact of those proposals worry us and their impact on the migration of the salmon and steelhead of the impact on other wildlife values that are associated associated in that basin and we therefore as a representative of the community

conservation community in the state are concerned have gone before for previously to try to get them to vote for it being the federal deadline really Regulatory Commission asking them to do a cumulative impact on these particular projects. And of course it's not only on the Salmon River to other rivers in the state as well. Yet the Commission has told you I think in agreeing to let you intervene that they might not have oversight over these environmental questions. Well this is a possibility and this is something that we don't know it perhaps comes back to another intervention that the Idaho Wildlife Federation to the National Wildlife Federation Audubon Society the Natural Resources Defense Council and others as have petitioned the Federal Energy Regulatory Commission to go back to rules making it as much as it appears that they are not complying with the law relative to what or how applies to them pounding water on a renewable resource and I might read if I may the definition of small power production facilities include solar electric systems wind electric

system systems that provide produce electricity energy from waste biomass and electric energy storage facilities. The conferees intend that water be included within the meaning of the term renewable resources which are suspect to hydro electric utilities as existing dams. If I interpret that right that means existing dams out doesn't mean that we go in and build new dams it doesn't mean we go in and do diversions or other types of things which most of these small hydro projects are envisioning the power companies giving you some money to study this question. The park company has been a supporter of our Legal Foundation and I happen to be the one who approached the park company asking for their support across the board for our if you have a list of Idaho's wildlife and that's the resources they alone others have been contributors to the fund. Yes come back Mr Myers thank you very much. Our final perspective on this tonight comes from a small power producers perspective. Ellen should know with represents many Idaho small producers through the firm consulting associates childer with the

first about Mr. Miner's concerns about some of the environmental issues here you have a good case. I don't think he does Mark. In fact I'd like to invite Mr. Miner's down to some of the projects that have been completed and are up and running. One of the projects that we first completed down in Title I don't home now has wetlands that are attracting winter waterfowl. And you know we've seen Canadian geese in there and whistling swans. And that particular project we cooperated with the Idaho Fish and Game in building goose nests the project us impound some water but the diversion structure is far less than the criteria that that is set up by the State Water Resources Department for diversions for showrunner and patients so rather than have any you might actually be helping them. Yes and indeed on that particular project we have a bass fishery there where we never had one before. They're proud of that. Two years is Durham an epidemic of these projects

that cumulatively could have an environmental impact to some major proportion. I think that it that it will have an environmental impact. Let's take for instance the Salmon River Basin that Mr minor's mentioned the Salmon River itself is so much in during the spring runoff that you could almost walk across the water it is so bad. And of course that hurts spawning habitat that has come mostly from from scouring from high bringing runoff. Now when you divert water into a penstock and you lessen the Scouring in the spring runoff you're lessening the cell Taisha node that ultimately gets into the Salmon River. And indeed most of these projects are wholly contained on land that that is privately owned by farmers and ranchers who are really in trouble financially as farmers and ranchers separate and distinct from the environmental concerns your your position is that these rates really ought not to be touched at all that to tamper with them in effect will bring this

industry to a halt. That's right. The commissioner was absolutely correct when he said the law is the law. And what the commission takes into consideration when they set our rates is what it costs for the power company to build facilities in the future. Let's take what it's costing the rate payers today for the new facilities a power company is bringing online now back in 1979 or 1980 the power company brought on the Boardman plant in Boardman Oregon at a rate yes a coal fired plant at a rate of one hundred and four mills. That was back in around 1980. They're boarding the plant this year because it's a high cost high cap the load plant is coming in about four hundred forty six mills. And this is exactly the type of high priced facilities the commission is trying to avoid. There cascade united and with their preliminary figures where they retrofit

the powerhouse facilities to a dam that the government built for them is coming in about 85 Mills Now you compare that with what where we're bringing in. And per unit of productive ability we're coming in about sixty seven mouths. OK I had a pretty good buy for the repairs. They opened it up on that point Mr. Bruce said it makes a makes a point. Well I think she's completely wrong the figures used with respect to vomit when when when Borden was running why those costs were less cascade was fairly high. But when you realize that the rate payer gets advantage of the depreciated cost every year on that. Plan already planned to be built and the cost goes down the cost of the ratepayer goes down. Conversely with a cogeneration plant the cost goes up as the cost escalate into 35 years.

What do you have with a plant just built by the company. Right there has a plant is depreciated and you have a very low cost facility. What do you have at the end of 35 years with a co-generation contract. You had a contract you paid paid a lot of bills at the rate they were has nothing nothing absolutely nothing. Because you don't have that's the end of the contract and you have not bought the boat the facility which you do when you buy a plane. It's just what I'd like to use for that. The variable portion of our rate which may either go up or go down is connected directly to the company's ability to manage your own maintenance and operation on a low escalation rate for instance a company last year by their own annual report. The escalation in and the cost of maintenance and operation increased 15 percent. Now if the company continues to increase their maintenance and operation even over the cost of inflation of course the commission is going to look at that increase and that's what they're going to consider in the increase of our variable portion of our rate which is only

about 10 percent. And so if the idle power company can keep their maintenance and operation expenses down then our rates will go down. It's as simple as that. Just to go up let me go back to this environmental question Commissioner you heard Mr. Miner's concern about the proliferation of these projects will be environmental impact do you have any jurisdiction over that. Well I don't think we have. Jurisdiction directly over it there are agencies that have jurisdiction over the environmental matters and as far as I'm concerned I hope there are some very strictly enforced. And there undoubtedly are filings on projects that should not be built. Then they should not be built for environmental reasons. But I would hate to see an economic program attacked on environmental grounds that we would obviously throw out the benefit with the burden and I might add just one little thing I think it's important to keep in mind here that we've talked about this as if it's a.

A sudden revelation that we all share that we have a surplus. I would I would keep in mind that it was not too many years ago Mark that I was on this program and then responding to the to the argument that the pc won't get out of the way and let us build enough power plants. Our position then was that Meade was overstated. My personal position I can't speak for the other two commissioners is a problem. The surplus is overstated now and it's better to chart a course that over time will give us the cheapest power rates. And that's what we think we're doing this to writers. Is it your position that these rates are at such a such a point that they might actually encourage some of these bad projects bad from an environmental standpoint. I don't believe there's any doubt that that's the case. The These rates are higher. What are fueling the fire. What are keeping me interested in these projects going and I think that that rate has to come down to I thought every level is equitable to the to the consumer the same

level maybe I think you would find that the interest in these types of activities would certainly diminish. Well as Joe says quit all together. Well this is possible I would like to say that we are conditions that are desirable and if that were to happen late I would say we are concerned as far as these are applicable to Idaho's free throwing strange no other features. Perhaps that our concern is not as great. But on free flowing streams such as the Snake River Basin in the stream in itself of the water in the stream the roads the power lines and the other features that have to go into service these developments. All of it adds up to in our mind a very significant environmental concern which has not been addressed by fir or anyone else that I'm aware of. Let me ask this we just have a short time left. Is there any way that these what seem to be rather polarized positions can be compromised in some way that everybody wins a little bit loses a little bit.

I think so I think if if the brakes you know. All the surrounding states or good Washington they have their subject is a purple look all the all the states are subject to purple and yet we're the highest of any of them it is those and in Idaho we have the highest rates higher than Washington waterpark company higher than Utah park like company and what the result is when we don't have a need all of the only people who pay are going to pay for the repairs now you can save Well your pain and pain for something in the future that's just exactly the quick argument in effect that you pay you pay ahead of time and let me just ask you this quickly if we were to bring these rates down considerably. Could we start this process back up quickly enough certainly to when we realize that the only that is exactly what the what the organ commissioner is talking about doing. Can we do that commissioner. Oh I don't have any doubt about it. We are not opposed to the right is where the level for sure we're not opposed to the rate coming down as a matter of fact we've said if the program is successful it ensures the rate will come down because it will

push off the time at which you will need new plants and that decreases the rates under the methodology we used to figure the rates. So if the rates come down and I assume they well that means it's working the way that you're going to get to reach lower. We were actually asked one time just to just to look over and yes yes yes go ahead. I was typing what I know if you're one of the thing I think relative to this environmental concern is that we are successful before for again getting them to redo their rules and regulations and look at what they have a purpose in that. In fact says we may be able to address some of these environmental concerns because that would then require an environmental impact statement and if there is general it can we just real quickly fairly compromise this in some way that meets some of your concerns and the coal power companies too and I think one of the first ways to compromise that is to have some of these Fish and Wildlife associations visit some of the sights seen indeed one of the projects that we're working on in chalice the Idaho Conservation League and even daughters is true and it's working.

All right you're on leave it there I'm afraid Commissioner Gordon as General thank you for joining us tonight Mr. writers and Mr. Bruce thank you gentlemen. That's our time for tonight will be back tomorrow I'm Mark Johnson. Good night. Something 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 coming him foundation.