http://www.kgw.com/print-ready/story.html?StoryID=20869

Power Watch: BPA Hopeful it Can Keep Prices Down

June 5, 2001, 08:30 AM

By AP Staff

With utilities promising to curtail power purchases and aluminum smelters shut down for two years, the Bonneville Power Administration may be able to keep its wholesale price increases below 100 percent when rates go up Oct. 1.

The BPA had warned utilities that wholesale rates could soar by 250 percent to 300 percent when the five-year electricity rates goes into effect, but CEO Steve Hickok says the fall rate hike "will be substantially less than triple digits."

The final figure depends on ongoing negotiations with the aluminum companies and local utilities, he said. Local utilities have been asked to cut their BPA power purchases by 10 percent.

A 70 percent wholesale rate increase would translate to about a 35 percent increase for most residential and business customers.

Bonneville sells electricity produced at 29 dams and one nuclear power plant to six private, investor-owned utilities. It markets nearly half of the power consumed in the Northwest.

Hickok said he expects all but one aluminum company to sign two-year deals in which the BPA would pay the companies to shut down so the agency can avoid having to buy expensive electricity on the open market.

Bonneville spokesman Ed Mosey said a rate forecast to be announced Wednesday will likely be higher than the increase this fall.

"The number you hear Wednesday still might make the hair stand up on the back of your head, but we think we'll get quite a bit more" in demand-reduction agreements by the end of June, when the BPA must officially set its Oct. 1 rates, he said.

The BPA is contractually obligated to provide utilities, aluminum companies and other users about 11,000 megawatts of electricity 3,000 megawatts more than it can generate at the 29 federal dams and one nuclear power plant.

That power is produced at a cost of $24 per megawatt.

Unless it can close the megawatt gap, the BPA will be forced to buy the other 3,000 megawatts on the open market at $300 to $500 per megawatt.

(Copyright 2001 by The Associated Press. All Rights Reserved.)

-- (in@energy.news), June 06, 2001