NW Heat wave brings electricity sticker shock

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Wednesday, June 28, 2000, 12:00 a.m. Pacific

Heat wave brings electricity sticker shock

by Ross Anderson Seattle Times staff reporter

Fed up with $1.60 for a gallon of gas? That's peanuts compared to electricity prices around Seattle and much of the West.

Trapped by a regional heat wave and a drop in energy supply, utilities like Puget Sound Energy suddenly find themselves paying wholesale prices of $1,000 per megawatt-hour (MWh) or more to keep those air conditioners humming.

That's 50 times the market price of about $20 just a few weeks ago.

"Things are pretty hectic out there," said Charlie Black, energy-risk-management director at Bellevue-based Puget Sound Energy. "A couple of years ago, the average price was down around $15."

It could be worse. A California utility reportedly paid a record $1,400 for a megawatt-hour of power yesterday. And that state was warning "rolling brownouts," short-term outages caused by energy shortages, may be in the offing if temperatures don't ease soon.

In the short run, at least, this week's prices will not show up on Seattle-area electricity bills, utility officials said yesterday. But if wholesale prices continue to zoom upward, they eventually will be reflected in consumer rates.

"And these prices should send a pretty dramatic message across the region," said Perry Gruber, a spokesman for Bonneville Power Administration (BPA), which markets federal power in the Northwest.

This week's crunch comes after warnings from the Northwest Power Council and others that the region faces a 1-in-4 chance of blackouts or brownouts during the next four years unless new generation plants are added to support the region's burgeoning population. Critics, however, say the gap can be filled by improved conservation programs and by "renewable" energy, such as solar and wind power.

This week's wholesale price spikes are caused by a combination of increased demand - mostly for air conditioners during the West's heat wave - and an unexpected drop in energy supply. The supply declined because of the emergency shutdown of a nuclear-power plant at Hanford, and routine maintenance shutdowns at other coal and gas-fired plants around the region.

The Hanford plant, the Columbia Generating Station, closed because of technical problems and is expected to remain out of service at least 10 days, Gruber said. But BPA so far has managed to buy enough power to fill the gap, he added.

Normally, Northwest utilities make money at this time of the year. Hydroelectric dams are operating at capacity and Northwest demand is relatively low, so surplus power is sold to California utilities. Just two weeks ago, BPA and Northwest utilities were banking windfall profits from power sales at up to $750 MWh to the San Francisco Bay Area, which experienced three days of record heat.

A megawatt-hour is 1,000 kilowatts (or 1 million watts) consumed over an hour. The normal rate on the open market is 2 cents per kilowatt-hour, or $20 per megawatt-hour.

Seattle City Light, which serves much of the Seattle area, is "doing OK," reported spokesman Bob Royer. The utility, which gets most of its power from hydroelectric dams, sold some power to California utilities for $750 MWh.

But City Light is worried about August, when reservoirs drop and hydro power is less plentiful, Royer said. "We'll be in the same market. You live by the sword and you die by the sword."

Puget Sound Energy, which serves much of Western Washington, including Bellevue and other Eastside suburbs, has met the demand this week by buying bits of power - mostly from British Columbia - at prices that have zoomed "over $1,000 at some points," Black reported.

The utility thinks it can keep the power flowing until the Fourth of July weekend, when demand usually diminishes as office buildings close down

http://seattletimes.nwsource.com/news/local/html98/powr28m_20000628.html

-- Martin Thompson (mthom1927@aol.com), June 28, 2000


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