Plentiful Water Supply Sends Power Price Plunging

Published in the Herald-Republic on Saturday, July 20, 2002

Grand Coulee Dam's reservoir is just about full, and the snowpack is still 110 percent of average for parts of the Columbia River Basin.

Here in the hydropower-dependent Northwest that means the electricity supply is plentiful. Maybe even a little too plentiful if you've got power to sell.

"The good news is, we've got real good water," said Ed Mosey, spokesman for the Bonneville Power Administration, the federal power marketing agency in Portland. "The bad news is, the price is in the basement. You can't sell it for enough money to pay your debts."

Wholesale electricity rates for this weekend were running about $7 per megawatt-hour. More typical would be $21 to $28 a megawatt-hour, and during last year's drought the price was more than $200 a megawatt-hour.

Wildfires in Oregon also have interfered with the transmission of Northwest-generated electricity to California, where prices have been a relatively low $30 per megawatt-hour.

"When the price is high like last year, you pay more for the power you need. When the price is low because you have a big supply and a recession, which has reduced demand, that drops the price down and you can't get the revenue you need," Mosey said.

"You're frustrated at the high end and equally frustrated at the low end."

And that raises the specter of rate increases. BPA sells electricity from 31 federal hydro projects in the Columbia River system along with the power from the Columbia Generating Station nuclear power plant near Richland.

Its customers are publicly owned and investor-owned utilities.

A small rate increase is possible in October, perhaps 1 percent to 2 percent, and then another higher one, perhaps around 5 percent or 6 percent after the first of the year -- unless BPA's customers agree to significant program cuts to save money, Mosey said.

"Everything we spend money on is on the table," he said, from renewable energy to fish and wildlife programs to conservation programs.

"Everyone who benefits from the federal cash flow from hydropower sales is going to be thinking about how to tighten their belts."

With all the water that's available, BPA's electricity producers would typically be generating electricity to sell right now.

"We can't sell it," Mosey said.

Instead, for example, Energy Northwest on Friday reduced power at the 1,200-megawatt nuclear plant to 85 percent of capacity at BPA request.

"This plant has been going up and down, almost on a weekly basis, since May -- like a yo-yo," said Don McManman, a spokesman for Energy Northwest, the public power consortium that owns the nuclear plant.

It's an unusual level of flexibility for a nuclear operation, but as a nuclear power provider among BPA's hydropower operations, Energy Northwest is in a unique position.

"We have to complement the river," McManman said.

A more typical operation is Grand Coulee, the 6,800-megawatt behemoth dam on the Columbia River. On Friday, the reservoir was at elevation 1,288.7 feet. Full is 1,290 feet.

"We're up in the top there pretty close," said Craig Sprankle, a public affairs officer for the dam, which is operated by the U.S. Bureau of Reclamation.

The dam has been operating within the top two feet of capacity for the last several weeks because of the volume of snowmelt from the mountains.

"We expect to continue doing that in the near future," he said.

The goal is usually to get to the summer range of 1,280 feet or above by July 1 -- and that's not been a problem this year.

The water coming down the Columbia River system since January is about double the volume when compared with last year. But no excess water has been spilled over the dam since Monday.

"There's always a possibility we may have to," Sprankle said. "It's almost an hour-by-hour thing."


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