Pend Oreille County wants bigger piece of wealth from Seattle's dam

PEND OREILLE COUNTY — Three hundred miles of power line have traced the unlikely connection between Seattle and Pend Oreille County for four decades.

Seattle gets about 40 percent of its power from Boundary Dam, tunneled into a limestone cliff. Its curved face stretches 740 feet across the Pend Oreille River near Metaline Falls, a mile south of the Canadian border.

With just 13,000 residents, Pend Oreille County is isolated enough to see moose and mountain lions from the road, and the Selkirk Mountains loom over the small farms and frozen forests that line the slow-flowing river.

And from the dam, Seattle gets more than just heat and light. Seattle City Light makes millions from it, selling excess power on the open market — an increasingly large part of the utility's revenue.

To compensate Pend Oreille County, Seattle pays an annual fee, which last year was $1.3 million. Now, leaders of this poor, sparsely populated and isolated county want to share in the riches Seattle has found on their river. They're pressuring Seattle to triple its annual fee.

"It's kind of like we're the cow and they're getting the milk from the cow in our barn," said County Commissioner Laura Merrill, "and so there is an impact in Pend Oreille County."

Although the impact fee has risen only with inflation over the past decade, Seattle quadrupled its surplus energy sales during the same period — to a peak of $161 million in 2007.

When the county commissioners asked for more money, Seattle offered, more or less, what they'd already been getting — payments that would increase with the cost of living. Now Pend Oreille County has hired a high-powered Seattle consultant to negotiate on its behalf. If the county gets what it wants, the annual payment from Seattle City Light would equal nearly a third of the county's general-fund budget.

Seattle officials say their contribution more than covers the community's costs associated with the dam: road maintenance, public safety, additional students in the schools. Boundary Dam, Seattle says, provides good jobs in a place where opportunities are scarce.

Seattle took a risk by building the dam in 1964-67, said City Light Chief of Staff Sung Yang. Now Seattle residents should reap the benefits.

Besides the impact fee, Seattle City Light sells power wholesale to the Pend Oreille County Public Utility District, saving Pend Oreille ratepayers almost $20 million last year, by City Light's estimates.

"I get the fact that they probably are experiencing challenging financial difficulties," said Yang. "Then the question is, should they look to another government body to address that?"

"Forgotten corner"

Pend Oreille County (pronounced pahn-duh-RAY) is an hour north of Spokane, a smattering of tiny towns linked by two-lane highways, and supported over the years by timber and mining. There are no stoplights within its 1,400 square miles. King County has nearly 850 people per square mile; Pend Oreille County has nine.

"We refer to ourselves up here as the forgotten corner of Washington," said Vickie O'Brien, who owns a hair salon in Metaline. "We have this little area up here that's so pristine and so nice, but there's so many poor people."

As the construction industry struggles nationally, the area's timber mills have closed their doors one by one. Just before Christmas, the Teck Cominco zinc mine announced it was shutting down indefinitely, laying off 150 employees. Another major employer, Ponderay Newsprint, also is reducing workers. In December, Pend Oreille County's unemployment rate was 11 percent.

The county has very little tax base and an aging population.

"I think now is the time to come to some kind of a resolution that's more fair to Pend Oreille County," said former County Commissioner Dean Cummings. "The only thing that we — Pend Oreille County — have to offer the west is natural resources."

Seattle City Councilmember Bruce Harrell, an attorney and chairman of the council's energy committee, said Seattle's offer to continue the same impact fee is fair. There's no reason Seattle should have to share its dam's success, he said. The city's only obligation is to pay for its impacts.

"It's about the impact of the dam on the community," he said.

Even Tom Metzger, the Pend Oreille County prosecuting attorney, acknowledges that county officials don't have much leverage in the debate. State law requires Seattle to pay an impact fee, but the amount is not specified. If the parties don't reach an agreement, the county might not get any money at all from Seattle this year. The county is appealing to Seattle's sense of fairness.

Resentment, requests

In Pend Oreille County, politicians and residents harbor some resentment toward Seattle. They feel the west side of the state doesn't understand their rural lifestyle or their conservative politics. They're outnumbered in the Legislature. Regardless, they find themselves somewhat dependent on Seattle.

Seattle paid for the county's school for grades 7-12 as part of the original deal in the 1960s to build the dam. Since then, enrollment in the Selkirk Consolidated School District No. 70 has fallen by nearly half, and seven bond measures to remodel the school have failed.

Last year, out of desperation, Superintendent Nancy Lotze tried to strike a deal of her own. She asked Seattle City Light to give her 30 years' worth of the district's $150,000 portion of the annual impact fee upfront so she could rebuild. She says she never heard back.

"I realize that Seattle is not going to just hand me the money to build a school, even though that's what they did in 1964," she said. "In the next 30 years, if I don't get some help with facilities, I'm not sure I'm going to have a facility to hold school in."

Yang questioned whether he could give the school district money even if he wanted to. State law limits what the utility can use ratepayers' money for, he said.

But Lotze and other officials in the county say Seattle City Light is partly to blame for the district's predicament. The utility agreed to pay for the new school, but only if two school districts consolidated. County voters had opposed consolidation, and all these years later, Lotze feels some voters resent that.

The dam also created a reservoir that attracted retirees and summertime residents to the area. Lotze said they vote against bonds because they don't have kids in school.

Hiring a heavy hitter

Cummings' term is over, but his outspoken commitment to raising the impact fee prompted the county to hire Bob Royer, of Seattle's Gallatin Group consulting firm, to take up negotiations with the city.

Royer is a former Seattle deputy mayor and used to be communications director for City Light. Cummings began this fight from the dining table in his double-wide trailer off Highway 211. Royer will take it up from a Belltown high-rise.

In September 2007, Seattle Mayor Greg Nickels and City Light Superintendent Jorge Carrasco traveled to Boundary Dam to celebrate the dam's 40-year anniversary.

The day was rainy and cold, but about 50 community members drove the 12 miles of windy road to join employees and officials at the entrance to the dam for the celebration.

"We hope that we, over the 40 years, have been a good and reliable partner to the community," Nickels said in his short speech. "This is one of those things that ought to be a win for everyone."

A news release issued by the city called the dam "a hidden jewel." But it also misspelled Metaline Falls.

Staff researcher Gene Balk contributed to this report.

Emily Heffter: 206-464-8246 or eheffter@seattletimes.com