BPA Warns 'Reduce Power Consumption Or Else'

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

BPA Warns 'Reduce Power Consumption Or Else'

Your electric bill may be heading sky-high, with the Bonneville Power Administration announcing a possible 250 percent rate increase. KOIN 6 News reports that BPA's customers are facing a significant rate hike, which could mean the end of some businesses and the elimination of hundreds of jobs in the Northwest.

BPA is asking customers to drastically reduce their power consumption or face the consequences.

In this drought year, Northwest dams alone cannot generate enough electricity to satisfy demand. To supply the area, BPA must pay high wholesale prices to purchase power on the open market.

Acting Administrator Steve Wright says that passing along to BPA customers the outrageously high rates is not acceptable because the Northwest economy can't handle it.

On Monday, Wright asked everyone to "stop playing chicken and step up to the plate" and take some "draconian measures" to reduce consumption.

http://dailynews.yahoo.com/h/6000/20010409/lo/358342_1.html

-- Martin Thompson (mthom1927@aol.com), April 09, 2001

Answers

Ultimatum to Northwest: Cut Energy Use or Else April 9, 2001, 02:00 PM E-mail this story Print this story

By Abe Estimada, kgw.com

Standing amidst a dizzying array of flow charts outlining the seriousness of the Northwest energy crisis, Bonneville Power Administration acting chief Steve Wright urged consumers and utilities to save energy or stare down the barrel of triple-digit rate hikes.

Urging immediate action between now and June to avoid "grave economic consequences" for the region, Wright on Monday outlined a four-point proposal aimed at reducing energy usage by 5 to 10 percent.

BPA had warned earlier of rate hikes of up to 90 percent. But with the region gripped in drought, BPA revised its forecasts, saying rates would jump 250 percent or more if it is forced to buy from the volatile energy spot market.

“We must focus instead on what we can control if we expect to minimize the size of the coming wholesale rate increase," Wright said.

"The most most immediate way to decrease next year’s rate increase, quite simply, is to decrease the amount of power that BPA has to buy on the market.”

Perhaps the most controversial appeal BPA made Monday was for direct service costomers like the aluminum industry to get off the power system for the next two years.

Some aluminum plants would not be able to afford the huge price hikes, Wright said. By agreeing to leave the Bonneville system for at least the next two years, the aluminum industry would help "reduce the size of the rate increase for all other customers in the region."

“It’s not our intention to drive the aluminum industry out of this region, but we are continuing to encourage the industry to move off the Bonneville system after the 2006 rate system ends because there’s not enough power supply to meet all the demands put on us," Wright said.

Wright said BPA it will help aluminum companies operate profitably without having to rely on Bonneville.

For months, BPA had warned of massive rate increases starting in October. Reduced streams flows to run hydroelectric dams and scant rainfall during the winter are to blame for the Northwest's energy crisis.

"Supplies there are tight, and prices are sky high. This is what's driving our rates up," Wright said.

http://www.kgw.com/kgwnews/top_story.html?StoryID=17412

-- Martin Thompson (mthom1927@aol.com), April 09, 2001.


Major rate hikes, reliability issues threaten NW power system

4/9/2001 The region’s federal electricity system is headed for wholesale rate increases of 250 percent or more after Oct. 1 unless its customers–the region's retail utilities and large industrial customers–make commitments to reduce energy use within the next 60 days, the Bonneville Power Administration warned Monday. In January BPA said wholesale rates could rise 60 percent on average for the next five years beginning Oct. 1, 2001, and potentially 95 percent in the first year. Circumstances have gotten worse since then.

“Recent developments in the market now require a first-year increase of 250 percent or more, absent vigorous efforts to reduce demand,” said Steve Wright, acting BPA administrator. “This could double the retail rates of many Northwest consumers.”

Wright said an increase of this magnitude would have major economic consequences: “Already some businesses have closed and people are out of work due to high energy costs. Such an increase portends vast economic troubles – more businesses closing their doors and more lost jobs. Those with lower incomes would suffer disproportionately.”

The drought is leaving the region short of electricity this summer and winter, which could pose reliability problems but, longer term, an underlying energy shortage threatens high costs and difficulties in meeting demand for several years until new power plants, power lines and conservation can be brought on line. Wholesale market prices for power purchases next year have risen dramatically since January.

Wright said BPA is about 2,500 megawatts short of meeting all the demand of its customers on Oct. 1, when new power sales contracts take effect. So BPA must purchase power on the market, where prices have exploded from $25 per megawatt-hour to $300 in just over one year.

Wright went on to say BPA and the region have two choices. BPA can ask each of its customers for difficult but manageable load reductions, which would result in much lower rate increases and more stable rates. Or BPA can go into the market and attempt to buy the necessary power and raise rates to cover the costs. Wright said, “Asking for some load reduction from each customer, though difficult, looks like a better choice for the region than over- relying on the market.”

Wright described the following actions that BPA would ask from each of its customer groups:

Publicly owned utilities should cut their purchases from BPA by 5-10 percent. This can be done through retail rate incentives as well as, focused conservation and load-buyback programs. Investor-owned utilities should make a parallel commitment. Radical increases in market rates have vastly expanded the value obtained by these utilities under a formula in new contracts signed with BPA. As a result, the utilities are in a position to forgo or defer some of this value and thereby reduce economic impacts on the region. It is highly likely that most aluminum plants will find it uneconomical to resume operation for one to two years, until market prices for electricity stabilize. Wright urged those companies to agree now to stay offline for up to two years, so that BPA does not have to buy power to cover the possibility that they could resume operation in October. Wright said that it is not BPA’s intent to drive the aluminum industry out of the region. Rather, the plants should resume operations when the power situation stabilizes. During the downtime, BPA would provide funding for employee compensation to minimize impacts on local communities. Wright also joined with the Northwest governors and other regional utilities in a continuing plea for citizens to conserve energy. "This crisis is very real. Saving energy will not only help keep the lights on, but it also is the best way to save on power bills and help save the environment at the same time," he said. Wright cited the woes in California, noting that the crisis in that state has taught some very important lessons. "We can learn from California's problems and seek to avoid them. We need to do everything we can to avoid power purchases in this incredibly expensive market, and we also need to make sure we set our rates high enough so we can cover our costs to assure generators get paid when they deliver power so that we don't put our credit at risk.

“We must seize control of our destiny. If everyone in the region pulls together, we can keep the electricity flowing and our rates down. But if we don’t act now, very large rate increases are virtually unavoidable.”

He cautioned that BPA must raise rates enough to pay its obligations to the U.S. Treasury on money borrowed to build the federal power system.

“There are those in Congress who see our current weakness as an opportunity to deprive the region of the future benefits of Columbia River hydropower,” said Wright. “Failure to pay our debts would only further their cause, with potentially disastrous future consequences to the region.”

“It must be remembered that the core of the federal power system that serves the Northwest is very low-cost and reliable,” Wright said. “It is the cost of purchasing power on the open market that is driving the size of this rate increase. As the market price decreases, BPA’s need for additional revenue will also decrease.”

Commitments to take action to reduce the size of the rate increase are needed within the next 60 days. This will allow time for BPA to submit its new rates to the Federal Energy Regulatory Commission for approval and to purchase power necessary to serve load beginning October 1.

BPA’s proposed rates will go into effect beginning October 1. Those rates include an adjustment clause that will vary every six months, depending on the amount of power BPA has to buy and the market price. Forecasts of market prices anticipate lower costs in future years as the region’s supply and demand come into better balance.

Wright also called on the region to make infrastructure investments, such as upgrading power lines, which can more rapidly bring supply and demand into balance and thereby lead to lower wholesale power costs. Infrastructure investments are the long-term solution, Wright said

BPA is a not-for-profit federal agency. BPA is required by law to pass through all its power costs to its electric utility and direct service industrial customers.

For electronic version go to www.bpa.gov and click on the Media Center icon.

Source: Bonneville Power Administration

http://www.poweronline.com/content/news/article.asp?docid={EAC378EB- 2CC2-11D5-A770-00D0B7694F32}

-- Martin Thompson (mthom1927@aol.com), April 09, 2001.


Can U spell D-O-M-I-N-O?

-- NdewTyme (NdewTyme@NdewT.com), April 09, 2001.

Moderation questions? read the FAQ