Tacoma paid the price for energy crisis

Al Gibbs; The News Tribune

Tacoma and Seattle have spent more than three-quarters of a billion dollars buying electricity since the West Coast energy crisis struck 15 months ago.

Tacoma's bill for buying power on the volatile wholesale market was more than $180 million; Seattle's purchases topped $570 million.

"That would have been our budget in many past years," Tacoma Power superintendent Steve Klein said of his utility's spending. "That (total) amount would have lasted for decades in the past."

"I think everybody got caught in a cash crunch," added Seattle City Light chief financial officer Jim Ritch. "Before this happened, our gross (annual) revenues from electric sales were $400 million."

The good news for utility officials is that wholesale markets have returned to pre-crisis levels this summer, and the amount of money the utilities have paid to buy power has dropped dramatically since spring.

Tacoma and Seattle City Light, which together had been spending as much as $100 million a month to buy electricity on wholesale power markets last winter, paid about one-fifth to one-tenth of that in June, their latest records indicate.

Thank mild weather, demand that has dropped by at least 10 percent in the Northwest, and an increased supply of available energy for the lower prices.

"More (power) plants are up, and natural gas prices are down - that's a big driver" of lower prices, said George Whitener, the Tacoma utility's power manager.

Tacoma, which had been paying more than $20 million a month for purchased power since energy prices skyrocketed in June 2000, saw its bill drop to just $4.5 million this June.

Seattle, whose monthly bills approached $80 million during that time, paid less than $8 million in June.

Prices that six months ago averaged as much as several hundred dollars a megawatt-hour, lately have dropped to $20 or $30.

"I can tell you, six months ago I wouldn't have believed the price could go back so low," Ritch said.

"We might still be in the market," Whitener added, "but at this point that's not a dangerous thing."

Buying power at high prices will have only a moderate to small impact on the utilities' customers.

Tacoma Power rates in October will rise by about 33 percent over what they were before the utility imposed a surcharge last year, but most of that will reflect an increase in the cost of energy from the Bonneville Power Administration.

Seattle will have raised its rates by 57.8 percent by the time its latest fee increase - the fourth this year - kicks in Oct. 1.

A lot of the hundreds of millions of dollars Tacoma and Seattle spent on market power purchases has spun out of the Puget Sound economy, and even out of state.

Enron, the Houston-based energy marketer, sold Seattle some $23 million worth of power in April, May and June. Tacoma bought some $2.6 million from the company.

Idaho Power sold Tacoma some $9.7 million worth, while TransAlta, the Canadian company that owns the Centralia coal-fired power plant, sold Seattle $8.4 million of electricity.

Other sellers included Pennsylvania Power and Light's PPL Montana, $5.3 million to Tacoma, and Portland-based PacifiCorp, $7.1 million to Seattle.

"I think this has been one of the biggest wealth transfers ever," Ritch said.

http://www.tribnet.com/cgi-bin/makeframes.plx?/news/

-- Martin Thompson (mthom1927@aol.com), September 06, 2001