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Hydropower Prices Hit Lowest Level Since 1999

by Steve Ernst
Puget Sound Business Journal, April 26, 2002

Northwest hydropower is on sale thanks to a melting snowpack, and the Bonneville Power Administration and other utilities in the region are practically giving the stuff away.

The spring runoff is spinning turbines on the Columbia and Snake rivers, flooding the market with low-cost hydropower.

Those low prices don't thrill local utilities with electricity to sell and huge debts to pay off.

"We are selling lots of power. Unfortunately, we are not realizing the revenue we had hoped," said Ed Mosey, spokesperson for the BPA.

Prices on the spot market this month reached their lowest level in nearly three years.

On April 18, prices at the mid-Columbia Trading Hub, the Northwest's main power index, were down to $5.75 a megawatt hour for spot market purchases. That's the lowest the index has been since June 1999.

That index spiked to $3,000 a megawatt hour in December 2000.

Last month electricity was trading for about $34 a megawatt hour. Since dipping to $5 levels in mid-April, prices have rebounded and are now hovering in the $20 range.

So much power hit the market last week that the main transmission lines feeding California became clogged - a sure sign of spring in the Northwest.

"The hydroelectric surplus is continuing, but there just aren't enough open transmission lines to move it," a power trader in California told Bloomberg News. "There may be plenty of generation available, but it doesn't do much good if you can't get it to where it's needed."

This is the time of year when many natural-gas-fired and nuclear power plants go off-line for routine maintenance, leaving much of California and the West to rely power from the Northwest.

Steve Ernst
Hydropower Prices Hit Lowest Level Since 1999
Puget Sound Business Journal, April 26, 2002

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