WA: Utility is told to cap rates

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Utility is told to cap rates

JOHN DODGE, THE OLYMPIAN

OLYMPIA -- State utility regulators Monday capped electric rates charged by Puget Sound Energy to 13 large industrial customers, including a Tumwater manufacturing plant.

The temporary measure allows PSE to recover the costs of serving the customers and make a profit, the Washington Utilities and Transportation Commission said.

But it should eliminate shockingly high prices tied to the wholesale energy market, prices that had created a financial disaster for the firms.

The commission set a Jan. 29 public hearing to hammer out the details of the plan.

CNC Containers Corp. in Tumwater is one of the companies on the ragged edge, paying $6.4 million for power in 2000 -- triple its 1999 rates. Projections for 2001 were roughly $18 million.

That's because the companies signed contracts with PSE that tied their power bills to the wholesale spot market, which leaped to $1,000 per megawatt-hour in December and were predicted at $267 per megawatt-hour for 2001.

If the price cap is set at $125 per megawatt-hour of power -- the price recommended by commission staff, CNC would still be paying four times what it was before wholesale prices shot out of control, company chief executive Mel White said.

But it would be slightly cheaper than the cost of running the nine diesel generators the company plugged into in December when it quit taking power from PSE and joined in the UTC case.

CNC and the other companies claimed PSE was making an exorbitant profit off the contracts that tied the companies' power bill to the wholesale market.

Puget denied the charge, noting that it was costing them money in years past to serve those customer because of low wholesale prices.

The commission did not rule on the merits of the price-gouging claim made by the companies, commission spokeswoman Marilyn Meehan said.

It's not yet clear if the commission will follow the staff lead, or set a different ceiling on prices, she noted. And it's not clear how long the temporary price cap would stay in place.

If it's set at $125 per megawatt-hour, CNC might unplug the diesel generators and return to the regional power grid, White said.

"A lot depends on what temporary means," he said.

The company is the largest manufacturer of plastic beverage bottles in the state.

Regardless of what happens with the commission order, the company still plans to move some equipment out of state and reduce its work force from 280 full-time employees, White said.

In its order, the commission opted for a "soft cap" which means PSE's charges could climb above it if the utility's costs to serve the customers exceed the cap.

PSE is still reviewing the decision.

John Dodge covers the environment for The Olympian. He can be reached at 754-5444.

The industries

The order to cap electric rates applies to various Boeing facilities around Puget Sound as well as Georgia-Pacific of Bellingham, Air Liquide America Corp. of Kent, CNC Containers of Tumwater, Equilon Enterprises of Anacortes, Air Products and Chemicals of Puyallup, Tesoro Northwest of Anacortes, Intel Corp. of Dupont, Olympic Pipe-Bayview of Mount Vernon, and telecommunications firms Qwest and MCI WorldCom.

http://news.theolympian.com/stories/20010123a/HomePageStories/176229.shtml

-- Martin Thompson (mthom1927@aol.com), January 23, 2001


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