OLYMPIA – One of this session's David vs. Goliath matches involves Pend Oreille County in the role of the shepherd with the slingshot, and Seattle City Light, starring as the over-sized  Philistine.

The utility may take issue with the characterization, but few other people would have objected Thursday during the Senate Government Operations and Elections Committee hearing, which passed along a bill designed to solve the long-standing dispute between the two over the Boundary Dam.

The city utility owns the dam, built in the 1950s, and uses much of the electricity to keep the lights on, the homes warm, the stores and coffee houses open in Seattle. It also sells the excess power, at a good rate, to other users across the West.

It doesn't pay local taxes, but instead pays a negotiated impact fee to the county for the dam. When the latest 10-year contract on those fees expired in 2008, negotiations over the next 10-year agreement broke down. Pend Oreille County thought they should be considerably higher; Seattle City Light disagreed.

The Legislature held off jumping into the dispute last year, but it dragged on for 2009, and Pend Oreille County was sorely missing those payments. $1.3 million is not chump change in a place with high unemployment and underemployment. This year, Rep. Joel Kretz, R-Wauconda, dropped a bill that ordered a utility of a city with more than 500,000 people (read: Seattle) that has a dam in another county (as in Pend Oreille)  to negotiate impact payments, keep making payments set up under an old contract while negotiating a new one, and pay the cost of arbitration if negotiations break down.

Considering that there are considerably more legislators who represent Seattle than Pend Oreille, and Democrats control both houses, one might have thought Republican Kretz's bill had about as much chance as the Jamaican bobsled team getting the gold. But no...

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Pend Oreille County officials explained their plight and Seattle City Light officials offered their rationales at a House committee hearing, and the bill moved forward

Kretz said he had good bipartisan support, including a sympathetic ear from Speaker Frank Chopp, and the bill passed the House 93-3 last week.

Thursday it was in the Senate Government Operations and Elections Committee, where Chairwoman Darlene Fairley, D-Seattle, was also sympathetic to Pend Oreille's plight.

"I'm truly shocked, but it looks like Seatle City light is opposed," she deadpanned.

Kretz said that since the bill surfaced, the utility has signed a short-term contract and made a $2.1 million payment. But even that's cheap, he said. If Seattle City Light were a Public Utility District, it could be forced to pay $6.5 million under the fomula those districts use. And if it were a private utility, it might be paying $9.5 million or more in taxes, based on the value of the dam.

Lobbyists for the utility tried to tamp down any ill feelings. Dave Arbaugh conceded "this issue  clearly has become supercharged." The utility and the county clearly need to reach an agreement and the bill "is becoming a little bit of a distraction."

Nancy Lotze of the Selkirk School Board, which gets some of the impact payments, agreed that the situation has improved. "But it wasn't until the House bill moved they offered the payment.

Jackie Kerns, another representative of the utility, argued the county gets more than the impact payments out of the utility: 39 jobs, emergency medical services at the north end of the county, where the dam is located, a bunch of stuff it has to buy from local suppliers and 48 megawatts of juice, at cost.

The power at cost is the result of an old lawsuit, Kretz said later. It's not like Seattle City Light just offered it to the county.

Sen. Joe McDermott, D-Seattle, said the utility isn't solely at fault. "The level of distrust on both sieds is unfortunate." But he declined to amend the bill and voted to move it to the Rules Committee, the next step on the way to the floor.

As it's currently written, the bill would require the utility to continue making payments during negotiations and pay for the cost of arbitration if talks break down. Kretz said there may be a move to add a formula to the law, to set a schedule for payments and avoid future disputes when the next 10-year contract expires.

There's also another idea he's toying with that could cause the utility even more heartburn. The utility makes impact payments because it doesn't pay local taxes. He could discuss with House Democrats the prospect of declaring that a "tax loophole" at a time when they are looking everywhere for loopholes to close. That could have the paying taxes like a private utility in the neighborhood of $9.5 million or more.

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