WA:Demand For Power Driving Up Prices

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Demand For Power Driving Up Prices Source: The Columbian Publication date: 2000-11-10

Northwest utilities and industries want more power than the Bonneville Power Administration has to sell, and prices are going up. The federal agency is proposing a 15 percent charge onto wholesale rates that go into effect in October 2001. Some 130 customers, including Clark Public Utilities, would pay more for their electricity.

What effect the increase will have in turn on the rates paid by Clark County residents is uncertain. The utility signed its contract with the BPA a few days ago. Rates are not specified at this point, only approximated.

"We've known for a long time that power prices were going to be higher than what we were hearing," said Mick Shutt, Clark Public Utilities spokesman. "We just didn't think they could match the numbers they were suggesting."

The utility will buy about half its power from the BPA, with most of the remainder coming from the River Road Generating Plant. The proposed BPA rate of about 2.2 cents per kilowatt-hour was roughly what Clark is paying for non-BPA contracts that expire next year.

Even with the increase, to about 2.6 cents, "They're still the cheapest thing around," said Shutt.

Clark residential customers pay about 4.7 cents a kilowatt-hour the electricity consumed in an hour by a 1,000-watt appliance or the equivalent, such as 10 100-watt light bulbs.

The average residential customer bill is about $80 a month.

Clark's problem in setting rates for 2001 is the natural gas that fuels the generating plant. "We are struggling with the power-cost portion of our budget," said Shutt. "Gas prices have been fluctuating crazily in the last few weeks, and we haven't been able to get a handle on what our costs will be."

Utility officials have been looking at several ways of minimizing what appears to be an increasingly likely rate increase for 2001. Options include refinancing the power-plant debt to reduce the cost of the facility's electricity, and entering a hedging agreement. Through hedging, investment houses that expect long-term gas prices to fall agree to cover the cost of any price increases and reap a profit when costs go down.

Meanwhile, BPA officials say the region's power demands for "firm" power electricity the federal agency must supply now total 11,000 megawatts. That's 3,000 megawatts more than the federal Columbia River dam system can generate. That means the BPA must buy power in the volatile open market.

Utilities like Clark have turned to other suppliers in recent years as their power prices fell below those of the BPA. Price hikes in recent months, due to factors that include California's deregulated market and a slowdown in the construction of new power plants in the Northwest, have prompted customers to return to BPA deals.

Some 135 public utilities have signed BPA deals, 127 of them for 10 years and the remainder for eight years. BPA officials say the proposed 15 percent hike is due solely to the higher cost of electricity it must buy to make up the difference between customer demand and the agency's supply.

The proposed increase must be reviewed by an administrative law judge before submission in spring to the Federal Energy Regulatory Commission.

http://cnniw.yellowbrix.com/pages/cnniw/Headlines.nsp?category=Utilities:Electricity&ID=cnniw&scategory=Utilities

-- Martin Thompson (mthom1927@aol.com), November 10, 2000


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