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Planners Predict Power Aplenty

by Philip S. Moore, for the Capital Press
Capital Press, January 24, 2003

Chances of an electrical power shortfall got dramatically more remote last week, as the Northwest Power Planning Council staff admitted miscalculating snowpack and power supply mix, and dramatically revised its supply predictions.

As a result, the council has gone from warning of an imminent shortage to forecasting ample supply for at least the next three years. In doing so, the NPPC highlighted the highly subjective nature of power supply predictions, especially in the Pacific Northwest, where available power is dependent on the volume of water behind hydroelectric dams.

That is the appraisal of spokesmen for the NPPC, Bonneville Power Administration, Pacific Northwest Generating Cooperative and public utilities, who also warned that even if there is ample supply, inflated energy rates are likely to keep rising, at least until BPA supply contracts expire in 2006.

In his comments to the council at their Jan. 15 meeting, senior power analyst John Fazio attributed the error to revised stream-flow numbers and the complexity of the forecasting models. "The computer programs we use are looked on as black boxes because they are complicated." He said if any of the assumptions included in it were inaccurate, the forecast would be inaccurate.

In spite of the risk, Fazio said, the NPPC needs forecasts to anticipate future energy requirements especially loss of load probabilities. In the case of the present forecast, the NPPC is forecasting a less than 5 percent chance of a loss of load situation, based on Pacific Northwest power production alone through 2005. Incorporating moderate energy purchases from California, the chance of a power shortage drops to less than 1 percent.

"The energy balance looks good for the next four years, if everything goes where it's headed," Fazio said. "Afterward, everything depends on creating additional capacity, and that's just one of the uncertainties."

It is especially difficult to forecast Pacific Northwest power because of the dependence on hydroelectric power, said Joe Nadal, chief operating officer for the Pacific Northwest Generating Cooperative, which serves 15 rural electric utilities. "When you model a hydro system, you have to depend on how you calculate (water) storage in the river system."

Although the PNGC doesn't produce its own energy forecasts, Nadal said, the cooperative's 15 members are satisfied with the NPPC's numbers. "A 1-in-20 chance is a pretty acceptable situation, and the best you could expect, based on the resources."

"In any case, a 5 percent chance doesn't mean you're 5 percent short. It means that there is a 1-in-20 chance that some time, for some number of hours, there could be a loss of load, but given the kind of system we have, we can always meet our peak load through creative drafting (of reservoirs)," Nadal said.

While weather accounts for some of the problems that continue to push power rates higher despite adequate supply, PNGC's vice president for public affairs Scott Corwin says the Bonneville Power Administration created most of them by oversubscribing the system. "They have a 7,000-megawatt base and took on subscribers for 10,000 megawatts," Corwin said. "They know they would have to make market purchases, but thought they could recoup. It didn't happen."

In spite of the fact that PNGC predicted the danger of depending on low-cost power from California electric utilities in the mid-1990s, Corwin said, the cooperative is not saying, "I told you so."

"Instead, we're saying that we are looking forward to how we can stabilize things. We are hoping that Bonneville simplifies their role (to distributing power)" he said.

Corporate communications manager Mick Shutt of Clark Public Utility District also lays a large part of the blame at the door of the BPA, which he said has announced plans to raise rates in April and again in October 2003. "Bonneville is struggling through high-price contracts to buy power while sales are down because the aluminum companies (are shut down).

"We get half our power supply from Bonneville, and that's the part that is causing us problems," he said.

Ed Mosey, chief press officer for the Bonneville Power Administration, rejects the blame for the current financial struggle of his agency and rising power rates. Instead, he points to much overall optimism by generators and public utilities, as well as previous forecasting errors. "We're suffering a hangover from the turmoil that hit the industry in 2000-2001.

"Many utilities decide in 1996 that, based on forecasts, they wanted to go elsewhere for power. Now, they've decided to come back, and BPA has would up serving 3,000 megawatts of additional load than we were serving before," Mosey said. "We are facing higher costs and lower revenue. The collision of these two is putting upward pressure on our rates."

For the future, he said, supply and rates depend on more forecasts. Existing contracts will be expiring in 2006. Before then, Bonneville Power Administration will be negotiating new contracts with power users, such as local utilities and major power consumers, such as aluminum smelters, most of which may resume production.

"How much will we have to sell and how much will it cost? How many aluminum companies will there be to serve? these are questions we will be trying to answer over the next few months," Mosey said.

Philip S. Moore, for the Capital Press
Planners Predict Power Aplenty
Capital Press, January 24, 2003

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