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Economic and dam related articles

Close Call for BPA
Generates Questions

by Chris Mulick, Herald staff writer
Tri-City Herald, July 30, 2005

The Bonneville Power Administration narrowly avoided declaring a power emergency last week in an event that underscored new limitations placed on dam operations set by a federal judge.

The near miss also raises questions about what dam operators can do to avoid such emergencies when power demand spikes or when there are major plant outages.

No one believes the Northwest faces any serious threat of a shortage this summer, even while growing Southwest power demands have boosted wholesale energy prices. Those high prices actually are improving the bottom lines for some area utilities and Bonneville, which Friday said that it expects its fiscal year-end reserves to be $39 million higher than previously thought.

"There's an opportunity there for Franklin if you look at this selfishly," said Franklin PUD Manager Jean Ryckman of the near miss. "If I look at it from a regional standpoint, it causes some concerns."

The brush with a power shortage inspired the Northwest Power and Conservation Council -- which is charged with balancing fish and power priorities -- to revise an analysis it previously had conducted that said there was zero chance of a shortage this summer. A new analysis raised that probability to 4 percent, assuming no power would be available to import from the Southwest. That's still within the 5 percent threshold that is deemed acceptable.

The increase is due entirely to a federal judge's ruling requiring more water be spilled over the four lower Snake River dams and at McNary Dam on the Columbia, a ruling that largely was upheld by the 9th U.S. Circuit Court of Appeals this week.

John Fazio, a senior systems analyst for the power council, estimated that without the extra spills those dams could generate as much as 1,500 megawatts of additional power for a two-hour period to help meet peak demands on any given day.

"We don't have the flexibility from our system that we used to have," said Ed Mosey, a spokesman for Bonneville, which sells all the power generated by 31 federal dams and Energy Northwest's nuclear plant at Hanford.

That statement was proved the morning of July 18, when BPA found itself facing a sudden heat wave that likely was to push electricity demands higher that afternoon than had been expected.

BPA already had committed to sell some of what it thought was surplus power that day and, unable to ramp up generation at those five dams and with generators at other large dams already running full-bore, it suddenly found itself on the market looking for power.

"We got no responses," Mosey said. "That just put the fear of God in everybody."

While a committee of agencies and state representatives that makes decisions about running the federal hydroelectric system -- known as the Technical Management Team -- called an emergency meeting to address the situation, wholesale power prices began rising and new generating resources became available.

By noon, Bonneville was able to buy the 120 megawatts it needed, after having ramped up hydroelectric generators on dams in the Willamette Basin. But it wound up paying as much as $130 per megawatt-hour, more than twice the normal going rate.

"It was all about marketing," Mosey said. "It wasn't about megawatts of shortage."

The agency since has decided to be more conservative in determining how much surplus to commit to selling, he said.

"Nobody's going to put a blackout on the system," John Wellschlager, operations planning manager for Bonneville's Power Business Line, told the Technical Management Team this week. "A brownout or a blackout is not going to be good for anybody."

Generally, the Northwest is awash in surplus power because of the economic downturn that began curtailing energy demands in 2001. The power council believes that surplus to be about 1,200 megawatts on average, enough to power Seattle.

But that doesn't mean the region is guaranteed to have a surplus every day.

"I think it's important for the public to know that's not the case," the power council's Fazio said. "We have a lot of moving parts and sometimes they break, and sometimes at the same time."

But in the wake of the federal court ruling it's not clear what freedoms Bonneville's power schedulers have to make the kind of hour-by-hour decisions they'll face to operate the river system in a pinch without declaring a power emergency. An emergency declaration allows them to curtail the court-ordered spill and begin running water through turbines at the five dams.

Bonneville would like other federal fish agencies to provide power schedulers with suggestions about how they could relax certain restrictions on hydroelectric operations to help avoid that.

"I can't give my schedulers anything other than a list of actions," Wellschlager told BPA colleagues this week. "I don't want to place them in the position of making biological decisions."

But other federal fish agencies say they haven't reached consensus on what those actions might be.

While river operators are left to hash them out, the onset of higher wholesale power prices often associated with tightening supplies most certainly has an upside. Bonneville and utilities with surplus power to sell are counting on the surpluses to boost revenues this summer, which can help hold the line on electric rates or even reduce them.

Bonneville released figures Friday indicating that robust sales in April, May and June helped boost its expected revenues to $103 million more than its $3.2 billion in expenses, although that could change in the year's remaining quarter.

"Expense reductions and a very strong wholesale power market are offsetting the effects of dry weather and additional spill at dams to help salmon," BPA Administrator Steve Wright said in a written statement Friday afternoon.

And Benton and Franklin PUDs have agreements in place to sell at least part of their share of the output from a power plant at Frederickson near Tacoma through the end of September, helping to offset their annual losses on the project.

Benton PUD even ran its small-scale, 27-megawatt power plant in Finley on July 18, selling the power into the market at a profit for eight hours. It was only the second time the 3 1/2-year-old plant has been run to make money. Franklin PUD's small-scale Pasco plant still hasn't done the same.

Chris Mulick
Close Call for BPA Generates Questions
Tri-City Herald, July 30, 2005

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