the film forum library tutorial contact

The BPA's Chief Warns Rates may Increase by 30% by Gail Kinsey Hill The Oregonian, January 16, 2001

Stephen Wright, head of the federal agency that markets almost half of the electric power in the Northwest, on Monday said new electricity rates set to kick in next fall could jump as much as 30 percent from current levels.

Just a month ago, Wright, acting administrator of the Portland-based Bonneville Power Administration, said the increases effective Oct. 1, the beginning of a new contract period, likely would be 15 percent. But an abnormally dry winter and sky-high prices for wholesale electricity have raised the possibility that the hike could double.

"We're looking at a substantial increase," Wright said. BPA markets wholesale power primarily to public utilities, which serve about half of the Northwest population. The agency also sells power to large industrial customers, such as aluminum smelters. It sells smaller amounts to investor-owned utilities, such as Portland General Electric and PacifiCorp.

BPA's influence is so widespread that any increase imposed by the agency is certain to ripple through to residential, commercial and industrial customers in the region. The precise effect on any customer's power bill would vary, depending on how much each utility buys from BPA and the costs associated with other types of generation.

Wright disclosed the possibility of the 30 percent rate increase during a meeting with other energy experts and Sen. Ron Wyden, D-Ore., at the senator's Portland office.

Wyden, a senior member of the Senate's Energy and Natural Resource Committee, reacted quickly to the threat of higher prices.

He said an increase of that size would be "devastating" to the people and businesses of the Northwest. He said he would use all of his political powers to bring electric power prices down, promote conservation and increase generation.

"We're going to pull out all the stops to prevent these kinds of things from happening," Wyden said.

Yet political action, if it comes, might do little to immediately ease a power crisis that has swept through the West and settled most dramatically over California. During the past decade, little generation has been added to handle steady increases in demand, creating a squeeze that could persist for at least another two to three years.

Wyden followed up Monday's discussion with a phone call to Spencer Abraham, President-elect Bush's choice to run the Energy Department. Wyden said he urged Abraham to carefully evaluate the West's energy crisis and to steer clear of policies that might endanger a Northwest dependent on BPA and low-cost hydropower.

In the past, Abraham, a Republican and former senator from Michigan, supported a bill that called for the sale of the BPA to a private company that would market the agency's electricity to the highest bidder.

Wyden said he plans to use Abraham's confirmation hearing Thursday to press him further. Sen. Gordon Smith, R-Ore., also a member of the energy committee, has said he also will ask Abraham to soften his tone regarding BPA.

"I said it was extraordinarily important to our region that he make a break with the past, . . . that he stipulate he doesn't want to sell off BPA," Wyden said.

Abraham comes to the Energy Department job with a reputation as an intelligent political player but with virtually no experience in the field. As he seeks Senate confirmation, he is expected to take a more conciliatory stance on Northwest power issues. He faces a panel dominated by Westerners whose states rely on federal power agencies.

BPA markets low-cost electric power generated by 29 federal dams on the Columbia-Snake River Basin. In five-year contracts scheduled to expire at the end of September, buyers locked in rates of $22.50 a megawatt hour.

Today, with wholesale prices sometimes at least 10 times that amount, BPA looks like a haven for low-cost power. But so many BPA customers have asked for contract renewals, along with increases in quantities, that BPA finds itself about 3,000 average megawatts short of what its system of dams and one nuclear plant can provide.

It is the purchase of these additional megawatts on the wholesale market that could drive up BPA's costs and force it to impose dramatic rate increases.

Aluminum smelters stand to be hardest hit because they buy much of their power directly from BPA. Several in Oregon and Washington already have shut down or significantly curtailed production. A rate increase from BPA could deepen their problems.

"It would be a huge problem," said Brett Wilcox, president of Golden Northwest Aluminum, parent company for aluminum smelters in Goldendale, Wash., and The Dalles.

Wilcox stressed that BPA has yet to settle on the new contract rates and that the final number could prove more to the industry's liking.

Wright said BPA has eight months to purchase the extra power. If markets stabilize and prices come down, pressures to increase rates may ease, he said. Also, if the weather changes, snow falls and a water-starved hydro system finds itself able to generate more electricity, BPA's position may improve. Early estimates have forecast water flows at 75 percent of normal.