Senators say rate projections disastrous By JIM MANN The Daily Inter Lake Senators from the Northwest told the chief of the Bonneville Power Administration on Thursday that projected rate increases would be disastrous to the region. Steve Wright, BPA's acting administrator, was told to develop a way to minimize rate hikes and mitigate the impacts that result. BPA officials recently projected that the agency may have to impose a 90 percent rate hike by October, forcing utility companies to pass the costs on to customers. Industry leaders are predicting dire economic consequences. And the pain will be especially acute for rural economies that may depend on just one or two industrial operations, said Sen. Max Baucus, D-Mont., who met with Wright and Sen. Ron Wyden, D-Ore., in Washington, D.C. "This meeting was designed to send a signal to the BPA that I want to make sure that we protect our jobs and consumers as power rates go up and we in Montana don't suffer because other states want our power," Baucus said. Wright told Baucus that a supply-demand imbalance, strong potential for a regional drought, and faulty energy deregulation in California have prompted the crisis. BPA, a federal agency that provides about half the region's electricity, acquires most of its power from 29 hydroelectric dams. But it also has to purchase some power on a market that has seen skyrocketing prices, and it has to make regular payments to the U.S. Treasury. Those factors have prompted the projected rate hikes. After a separate meeting with Wright, Sen. Conrad Burns, R-Mont., said BPA must pursue every avenue to minimize impacts. "I understand that they have contractual obligations to produce power and bills to pay. I know they are struggling to meet their responsibilities," Burns said. "That being said, these significant cost increases would have a devastating effect on Montanans." Burns said new power-generation facilities are the long-term solution to the problem. "Thanks to overreaching environmental concerns we have had only a 4 percent increase in generation of power in the Northwest, while the area's rapidly growing economy has produced a 24 percent increase in demand," he said. "This is simple supply and demand." Baucus and Wyden asked Wright to develop a multi-faceted plan to produce and transmit power. Improved transmission lines, additional hydroelectric turbines and energy conservation campaigns were among the ideas discussed. The best solution to the the energy crunch rests with California, said Baucus. "If they can solve it in California, then more power to them, because that will certainly help us in the Northwest," he said. "That's the big enchilada." http://www.dailyinterlake.com/

-- Carl Jenkins (somewherepress@aol.com), February 10, 2001

Answers

Very interesting. The Bonneville Power Administration projects a need for a 90% increase in the price of electricity. And, it hasn't even "deregulated", although California's having done so is part of the problem!

Amid the political posturing and bureaubabble, the closest thing to an explanation for the sorry state of affairs is buried in four sentences in the middle of the article. Unfortunately, to my jaundiced eye, they raise more questions than they answer. Let's dissect each.

"Wright told Baucus that a supply-demand imbalance, strong potential for a regional drought, and faulty energy deregulation in California have prompted the crisis." Has the supply gone down, the demand up, or both? This is the paramount issue and it's glossed over. Is their generation down? If so, why and how much? How does that increase operating cost? Unless shown otherwise, demand should change slowly over the period at issue here and have been anticipated in planning. Supply, however, can drop fairly rapidly due to unplanned events, like more maintenance than expected. How does a strong potential for a regional drought impact current operations and increase present costs? It is even less clear how "faulty energy deregulation in California" makes it more expensive for BPA to sell its electricity. In fact, it isn't at all clear how "deregulation" in California had anything to do with the electricity shortage there. Of course, it had a lot to do with the financial fiasco but the generation plants seem to be down for maintenance, at least half unplanned. Is anything like that happening in the BPA operation?

"BPA, a federal agency that provides about half the region's electricity, acquires most of its power from 29 hydroelectric dams. OK as far as it goes. How much is most? Are they turning out the normal amount? If not why not? Has the cost of operating these hydro plants increased and, if so, why? If it hasn't, the burden of the 90% price increase has to lie elsewhere.

"But it also has to purchase some power on a market that has seen skyrocketing prices, and it has to make regular payments to the US Treasury." How much is some? If the cost of operating the hydro plants has not increased, this expense would seem to be a major source of the increase. What do regular payments to the Treasury have to do with an increase in costs? Is that something new, or more smoke and mirrors?

"Those factors have prompted the projected rate hikes." Clear as mud. About the only real source of higher costs is the portion of electricity the BPA buys on the open market. They must buy a fairly large portion, the price is very high or a combination of both. In which case, why all the extraneous blather. Is there a pony under there?

-- Warren Ketler (wrkttl@earthlink.net), February 10, 2001.

And the solution is to build more power plants. Bight shiny power plants with no gas. More apparatchik hot air. This nation could power itself for years if we could find a way to funnel this hot gas into a pipeline.

-- David Williams (DAVIDWILL@prodigy.net), February 10, 2001.

We in the PNW are experiencing an abnormally dry winter -- which up until this weekend has been accompanied by clear skies and warm temps -- but the snow is falling around Portland tonight, and we may be in for a cold snap. Meanwhile Precip this year has been measured at 37% below average and with winter nearly over, "the window" is closing on the possibility of catchup. I could be seriously mistaken, but I believe the reservoirs and hydro dams are NOT designed to operate off the VERY bottom of the waters in reserve: so once reservoir levels drop significantly it may be that there is insufficient force or water pressure behind the turbines to effect power generation.

Snowfall in PNW likewise is well below normal, and if I'm not too far off I believe snowpack is something like 54% of normal for this time of year. Snowpack of course means runoff in late spring and summer -- and at this rate it appears there will be precious little. So looking ahead, there is a long-term question for generation.

My recollection is that BPS had some REALLY HEAVY DRAWDOWNS in the months following rollover -- i.e. in February and March of 2000, while former Sec. of Energy Richardson was making noises about an "archaic" grid being prone to outages. If BPA released an unusually high amount of water last year, then the reservoirs began THIS rainy season at a deficiet, and there has been no chance to make it up.

Because of the Cal. crisis BPA has been under the Clinton/Bush federal order to sell to California despite their narrow capacity margins. They give it away for free basically: So Cal has said well they probably won't be able to pay for that, sorry. When BPA sells (or gives away) under emergency order, it must recoupt the power potential either by generating more through drawdowns, or buying on the spot market, where prices are in the stratosphere. It is purchasing to cover local generation shortfalls, excarebated by a semi-drought locally and the California "gimme for free" demand , that is going to oblige BPS to raise rates to stay solvent. OTHERWISE, BPS will run through it's cash-on-hand and just like PG&E and So Csl Ed, it will have no credit for the purchasing of power.

-- Squirrel Hunter (nuts@upin.cellrelaytower), February 10, 2001.

My recollection is that BPS had some REALLY HEAVY DRAWDOWNS in the months following rollover -- i.e. in February and March of 2000,

Squirrel Hunter, do you have a link or a source for this?

-- spider (spider0@usa.net), February 11, 2001.

Thanks for the weather input and sorry to be so slow getting back. It sure looks like it boils down to "potential for drought" and "has to purchase some power on the market". The other "factors" were smoke, or insurance. To get a specific figure, like 90%, at a specific time, Oct, requires a specific figure of how much power has to be bought at a particular price. Otherwise, would't you think a guy trying to cover his fanny would give some kind of range, like 80 to 100%. This, of course assumes that the BPA costs are fixed. Or, is the 90% a fat figure concocted to cover unstated contingencies, a WAG or just a number to soften up the folks for things to come? Oct must be when the chickens come home to roost from the long hot summer.

You mention the force feeding of California. If that comes out of BPA's hide, wonder why that wasn't among the factors.

The really big news is your reference to REALLY HEAVY DRAWDOWN in early y2k. That sure would contribute to water shortages and raise suspicions about what is really going on behind the scene. The published info in CA concerning the number of generation plants down for unplanned maintenance has been equal to or exceeding planned! That doesn't match my experience some years ago working on reliability, maintainability and inventory control for the military. The whole purpose of scheduled maintenance is to reduce to a minimum the unscheduled and was usually very effective. One would think power plants are pretty much in the same "boat".

-- Warren Ketler (wrkttl@earthlink.net), February 12, 2001.

Annual preciptation from the National Weather Service is measured from October 1st. Is that why we keep hearing October mentioned?

-- Martin Thompson (mthom1927@aol.com), February 12, 2001.