Power pact countdown hits midnight

BPA works late to try to get companies to cut electricity demands

Bert Caldwell - Staff writer

Bonneville Power Administration officials expected to work late Friday as Northwest utilities signed last-minute agreements to reduce electricity purchases from the agency.

Spokesman Mike Hansen said negotiators were frantically working with utility representatives as well as those from the two aluminum smelter operators who had not yet cut a deal.

All agreements had to be signed by midnight.

"We're feeling pretty good about what we've been able to do so far," Hansen said Friday morning.

Bonneville, strapped for power because low streamflows have sapped hydrogenerating capacity in the Columbia River basin, in April asked customers to cut demand by 10 percent, or 2,400 megawatts.

A city the size of Seattle consumes about 1,000 megawatts.

In a report made two weeks ago, acting Administrator Steve Wright said Bonneville was only halfway to its target.

If more utilities did not sign on, he said, Bonneville might have to raise rates 150 percent.

Reaching the full 2,400-megawatt target could keep the increase below 75 percent, he said.

Power expenditures typically represent about half a utility's total costs, so consumers could expect rate increases of more than 30 percent if wholesale prices climb 75 percent.

Bonneville supplies about 46 percent of the electricity consumed in the Northwest.

Public utilities, Bonneville's biggest customers, had been slow to enlist in the conservation campaign, but Hansen said many were among those rushing to sign deals Friday.

He said preliminary results will be available Tuesday.

Although electricity prices have eased considerably in recent weeks -- by about one-third in the latest month on spot markets -- Hansen said utility representatives understood that reduction was due in part to previously announced conservation agreements.

"The decrease in demand is having an impact on the market," he said, adding that the addition of about 2,000 megawatts of generating capacity was helping as well.

Hansen said talks with Kaiser Aluminum Corp. and Golden Northwest Aluminum were particularly intense, "with a positive spin."

"We're hoping we can get something nailed down by midnight," he said.

Aaron Jones, manager of the Washington Rural Electric Cooperative Association, said he was pleased by member efforts to meet Bonneville's requirements.

`A week ago, I would not have told you that," he said.

Jones said many cooperatives waited to see what others would do before deciding to participate.

Inland Power & Light Co. General Manager Kris Mikkelsen said the Spokane cooperative had signed on even though its contract with Bonneville protected members from any rate increase for five years.

She said Inland will offer a variety of incentives to irrigation customers to reduce electricity use and will adopt a buyback program like that launched a month ago by Avista Utilities.

Members will get 5 cents for every kilowatt-hour saved once they cut consumption by 5 percent compared with the same time period last year, Mikkelsen said.

She said the programs will go into effect this fall.

Sara Driggs at the Washington PUD Association was equally upbeat.

About half of the 21 members who buy significant amounts of power from Bonneville had signed agreements by the middle of the day Friday, she said.

Those pacts will cut consumption by 220 megawatts, Driggs said.

"It seems like our members are stepping up," she said, adding, "It's been hard for them."

Hansen said Wright will announce final totals and the rate increase Bonneville files for Federal Energy Regulatory Commission approval.

The rates will take effect Oct. 1.

http://www.spokesmanreview.com/news-story.asp?date=062301&ID=s982028&cat=section.regional

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