BPA cuts power deal with PacifiCorp

Power agency will pay utility to buy elsewhere for five years Related stories

John Stucke - Staff writer

PacifiCorp has relinquished its allocation of Bonneville Power Administration electricity for the next five years in exchange for an undisclosed amount of money.

The contract is the first such deal between BPA and its six investor-owned utility customers in the Northwest. It is expected to help BPA ease pending wholesale power-rate increases that could climb 250 percent to 300 percent starting in October.

Acting BPA Administrator Steve Wright called the PacifiCorp agreement to reduce load by 251 megawatts each year an important achievement, and said the agency continues to work with other utilities for comparable commitments.

Wright has been searching for ways to reduce the demand for power generated by 29 dams and one nuclear power plant. The agency's generation capacity has been hit by drought conditions -- low snowpack equals low runoff to churn through the massive power-producing dams.

The situation has already forced BPA to rework salmon conservation measures mandated by federal law.

Already, two aluminum companies have agreed to close for two years.

Alcoa Inc. will unplug its Ferndale smelter through 2003, saving BPA megawatts. And the Columbia Falls (Mont.) Aluminum Co. will stay down for a year, then reopen just one pot line.

Together, the two companies going halting work will save BPA about 570 megawatts.

BPA is negotiating power cutbacks with other aluminum companies, including Kaiser Aluminum Corp. But the expected higher rates, due to be released within a month, will likely be too expensive for smelters to run.

The aluminum companies are upset with BPA's load-reduction plans and urge a different strategy called tiered rates.

The proposal has some support in aluminum-dependent communities, but BPA and its other customers reject the idea.

The federal agency has forged ahead, signing key companies and organizations to load-reduction deals as it prepares to whether the next two years of energy problems brought on by a supply and demand imbalance: a failed California electricity deregulation scheme and the lingering Northwest drought.

On Friday, BPA struck its first agreement with a public utility company.

In a separate announcement, Clark Public Utilities will reduce its BPA allocation by 29.5 megawatts next year for an undisclosed sum. It's the only PUD of about 130 that has made a commitment to ease its take of BPA electricity. Eventually, BPA hopes to find about 600 additional megawatts of load reduction from its PUD customers.

"It is very important that all of BPA's customers come together to help solve this problem," said Wayne Nelson, Clark's general manager and CEO.

Beginning in October, about 295 of Clark's 530 average megawatt load will be served by BPA.

The public utility serves about 150,000 customers in Vancouver, Wash., and surrounding Clark County.

The Portland-based PacifiCorp serves about 1.5 million customers in Oregon, Idaho, Utah, Washington and Wyoming.

It plans to credit 550,000 customers in Oregon, Idaho and Washington on their monthly bills.

"This is good news for our customers, for BPA and the region," said Matthew Wright, senior vice president of PacifiCorp.

The agreements, BPA's Wright said, will help keep energy prices affordable.

http://www.spokesmanreview.com/news-story.asp?date=052601&ID=s969288&cat=section.business

-- Martin Thompson (mthom1927@aol.com), May 26, 2001