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The drain on area's power - and money
ECONOMIC IMPACT: It's not just the high energy bills, it's fact they're being paid to faraway suppliers
Al Gibbs; The News Tribune
The West Coast's energy crisis has sucked a quarter-billion dollars out of the Puget Sound economy, and much more will be lost before fall.
The area's two largest public utilities, Tacoma Power and Seattle City Light, have spent that much money buying electricity to serve customers in just seven months. The cash has gone to generating utilities and energy marketers located outside the area.
"This is the thing that's really irritating," said Tacoma utilities director Mark Crisson. "You're exporting (money). It's going right out of the region."
Between June 1, when electric supplies dwindled and prices rose dramatically, and Dec. 31, Tacoma Power has had to buy $70 million worth of electricity on the energy market. Seattle has purchased even more, a whopping $185 million worth, a News Tribune survey of the two utilities' records revealed.
Because that total, $255 million, was purchased from companies outside of the Puget Sound area, consumers here were, in essence, padding the pocketbooks of companies from Canada to Texas to North Carolina.
Puget Sound-area ratepayers will feel the effects for two or three years to come as the utilities impose rate hikes and surcharges to rebuild their reserve funds and pay off the hundreds of millions of dollars they expect to have to borrow in coming months to keep the lights on.
"It's a pretty big shot, no doubt about it," said Jim Ritch, chief financial officer for the Seattle utility.
Neither he nor Crisson could estimate the economic impact of the energy crunch.
Tip: Take shorter showers Q: I know hot water heaters use lots of energy. Any tips on conserving hot water?
- News Tribune reader
A: Take showers, not baths, because showers use less hot water, Peninsula Light Co. officials say. Even better: Low-flow showerheads save about 50 percent of hot water compared to baths.
More tips: Set your water heater no higher than 120 degrees Fahrenheit. And turn off your water heater when you go on vacation.
- Jack Keith, The News Tribune
* If you have questions, call The News Tribune's TRIBline at 253-596-6500 and enter the TRIB*Code PLUG (Ext. 7584). Record your question, and we'll get the answers from energy experts.
"People have been so focused of pricing we haven't looked at the impacts," Ritch said.
And although economists don't have models that accurately measure the effects of electric rate hikes, the pain is real just the same. If a family's electric bill goes up $50 or $100 a month, that's money that isn't available to go to a movie or buy clothes for school or work.
If a business is hit with higher energy prices, it may delay spending on, say, a planned remodeling, effectively removing jobs for construction workers.
Kaiser Aluminum Corp.'s Tideflats plant has been shut down since summer, idling around 300 workers and keeping their $35,000 average annual salaries out of the local economy.
Birmingham Steel in South Seattle is "hanging in there," said Ray Lepp, the company's vice president and general manager.
No employees have been laid off.
"I can't see making the work force bear the brunt of this problem," Lepp said.
The company's bottom line is another matter.
"Certainly, it's a lot of our profit," he said. "It's a significant hit."
Smaller utilities around the Sound haven't yet had to raise their rates because they buy all their power from the Bonneville Power Administration. But they'll have to before October, when the federal power marketing agency's rates will nearly double.
Puget Sound Energy has long-term contracts that cover its supplies. Its costs haven't increased much, and its rates, which are set by the state, are frozen at least until the end of this year.
Even though Tacoma Power tacked on a 43 percent surcharge to residential customers on Dec. 20, most of the utility's customers haven't yet felt the sting in their pocketbooks. Because of Tacoma's two-month billing period, the impact won't really hit until this month and next.
An 18 percent rate hike in Seattle hasn't gone into effect yet.
Who's getting all that money Tacoma and Seattle have had to spend keeping the lights on?
Look to the north, east and south.
Powerex, the marketing arm of British Columbia's B.C. Hydro, sold $12 million worth of electricity to Seattle and another $6.3 million to Tacoma during the last seven months of 2000. The company will post profits of around $1 billion by the end of next month.
TransAlta, the Calgary-based company that bought the Centralia power station last year, sold $3 million to Seattle and a whopping $16.9 million to Tacoma.
TransAlta was Tacoma's largest single open-market supplier during the seven-month period, but it was followed closely by PP&L Montana LLC, the arm of Pennsylvania Power & Light that owns what had been Montana Power. Tacoma bought a bit more than $11 million of its energy.
Houston-based Enron sold the most to Seattle, $29.4 million. Tacoma bought $5.2 million worth from Enron, and it also spent just under $2 million buying power from Portland General Electric, which Enron owns.
Duke Energy, of Charlotte, N.C., sold $14.3 million in power to Seattle, which also bought $6.9 million worth from commodities giant Cargill, based in St. Paul, Minn.
Some of the money stayed on the West Coast.
Tacoma bought from public utilities in Oregon and California; Seattle did likewise.
And some of the cash remained in Washington, although mostly east of the Cascades.
Virtually all the purchases were from public utility districts that own dams on the Columbia River, but $14.2 million went to Avista Corp. and Avista Energy in Spokane.
What irks Seattle and Tacoma utility executives is that their purchases have come because they can't take advantage of their hydroelectric dams that generate some of the cheapest power anywhere.
An extremely dry winter has dropped reservoirs to record low levels, and the utilities have to store much of what water they have to comply with federal orders to save salmon next spring and summer.
"The way it is, unless we get more water we may have to buy more power," Seattle's Ritch said.
"So it's a mess."
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* Staff writer Al Gibbs covers regional energy issues. reach him at 253-597-8650 or firstname.lastname@example.org.
-- Martin Thompson (email@example.com), February 17, 2001