An Urgent Call To Save Power Bpa Warns Of 250% Rate Boost, Crippled Economy Source: Seattle Post - Intelligencer Publication date: 2001-04-10 Arrival time: 2001-04-11

Warning that consumers could see power bills double and the Northwest economy crippled, the Bonneville Power Administration yesterday called for a dramatic reduction in power use through conservation and by idling aluminum plants for two years. Stephen Wright, BPA's acting administrator, said his agency must work out new deals with aluminum plants, public utilities and investor-owned power companies in the next 60 days as it prepares its new rates.

"It requires significant, and I mean significant, contributions from all our customers," Wright said. "We're not going to say `do this or we are going to beat you over the head.' We are saying `do this or we're all going to be in trouble here.'"

Unless Bonneville can find ways to save power, it will be forced to buy more electricity on the open market. Those high prices could force a tripling or quadrupling of the prices BPA will begin charging Oct. 1.

"We are on a path toward a 250 percent rates increase unless there is dramatic action," Wright said. BPA estimates a rate increase of that size would often mean doubling the rates consumers pay.

Such high rates could force businesses to close, increase unemployment and diminish the region's support for environmental projects such as protecting dwindling salmon runs, BPA said.

In Seattle, a 250 percent BPA rate increase would mean a 65 percent rate boost at City Light. Tacoma Power would have to raise rates 125 percent. The Snohomish County Public Utility District, the increase could vary from 15 to more than 80 percent. All of the utilities have already had significant rate increases this year.

"It's an ugly picture. It gets ugly real fast," said Julee Cunningham, a Snohomish County PUD spokeswoman.

Those and other public utilities already were bracing for a financial blow in October. Earlier this year, BPA warned of an increase of as much as 90 percent.

But the situation, Wright said, "has worsened dramatically."

The drought has hampered hydroelectric generation because there is less water to turn the agency's hydroelectric turbines. But BPA's purchases of power on the open market is the main culprit for higher rates. Deregulation of electric companies in California in recent years forced many private utilities to sell generation facilities and to buy power on the spot market instead.

That competition for power, coming after a decade when no new generation facilities came on line, has driven up electricity prices several times over.

BPA generates about 8,000 megawatts, but growth in the region and contracts with customers means it must supply 11,000 megawatts. Bonneville now buys those 3,000 megawatts at "sky-high prices," Wright said.

"The drought has some impact, but what is fundamentally driving it at this point is the power purchases," he said.

BPA will try to get customers to cut power use. It wants public utilities to buy 5 to 10 percent less over the two years beginning Oct. 1.

BPA wants private power companies to provide a comparable savings. Bonneville sells investor-owned utilities 1,000 megawatts and helps them buy 900 megawatts on the open market. That 900 megawatts has become far more expensive than Bonneville ever intended, BPA spokesman Ed Mosey said.

BPA is proposing that aluminum smelters, which buy electricity directly from the agency, stop those purchases for up to two years beginning in October.

Many of the plants are now closed because of high electrical prices, and will likely stay closed after Oct. 1, Wright said. BPA wants assurances that the plants would remain closed up to two years.

In return, BPA would provide compensation so that companies could pay their employees and remain able to restart the plants after power is restored, Mosey said.

The deal BPA will offer will be less generous than the compensation it now offers the plants.

"It is not our intention to drive the aluminum industry out of our region," Wright said. "But we are encouraging them not to use BPA."

BPA wants the plants to use other power sources after 2006.

Bonneville also wants consumers to do their part by reducing consumption by 10 percent.

"Any individual can make a huge difference," Wright said. "The biggest problem is that people think, `Well, my piece is small.'"

BPA's warning comes as many public utilities plan to increase purchases from Bonneville in the new contracts that begin Oct. 1

City Light will get 35 percent of its electricity from BPA, compared with 15 percent now. Tacoma Power will go from 12 to 55 percent, and the Snohomish County PUD will buy 80 percent of its power BPA, up from 40 percent.

Even though BPA's rates are rising, they are still cheaper than the open market.

City Light, like other utilities, has launched a conservation campaign. In January, it saved 2 percent of its electrical load. Now that figure is 7 percent, said spokesman Bob Royer.

"Essentially, BPA is asking for 50 megawatts from us, and we're saying we can give it to them," Royer said. "We need Bonneville to succeed. The region needs Bonneville to succeed."

Tacoma Power has been more successful, conserving 12 percent, said Steve Klein, Tacoma Power's superintendent.

Snohomish County PUD officials are studying ways to meet BPA's request, Cunningham said.

Utilities also can try to reduce power purchases by offering financial incentives to change the way large industrial customers use electricity.

Utilities also can try to get additional generating capacity, though there may be little chance of that in the short run.

That makes conservation crucial, Cunningham said. "It comes down to all of us. We've got to reduce our use," she said.

BPA may find far less cooperation from investor-owned utilities when it comes to cutting back 5 to 10 percent.

"It would further cut back the benefit for our customers and their bills," said Dorothy Bracken, a spokeswoman for Puget Sound Energy. "We oppose any reduction in federal power benefits to our customers."

The Western Washington utility gets BPA help buying power on the open market. Bracken defended the plan, noting that most Northwest consumers get power from investor-owned utilities but benefit little from power produced at publicly owned hydro plants.

Still, Puget Sound Energy is forging ahead with its own plans to save power. It has asked the state's Utilities and Transportation Commission to allow it to charge different rates to customers depending on the time of day they use electricity.

The UTC's staff called for a delay in considering those rates yesterday, saying consumers have not be adequately informed. Bracken said Puget Sound Energy will ask the commission for approval tomorrow.

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-- Carl Jenkins (somewherepress@aol.com), April 11, 2001