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Close Call On Power for Region by Bill Virgin Seattle Post-Intelligencer, February 6, 2001

Barely enough through March, but other sources are available

The Pacific Northwest will have barely enough power to meet demand in February and March, a new report says, and that's if there's no cold snap and generating plant outages are no worse than usual.

Because utilities can buy power from elsewhere or send more water through hydroelectric generators, it's not likely to mean blackouts here as shortages have done in California, the report says.

But using water for more hydropower could spell trouble for fish on the Columbia River and its tributaries. That would set the stage for battles over protection of endangered species of salmon.

The Northwest Power Pool, which helps coordinate electricity transmission in seven states and two Canadian provinces, said it estimates supply will actually fall slightly short of demand in February, at 99.7 percent of demand. In March the adequacy ratio should be 100.8 percent, the power pool said.

"It just means we have to continue to watch it and continue to conserve," said Jerry Rust, president and director of the Portland-based power pool.

The forecasts presume that temperatures remain normal, and that the region loses no more than 15 percent of its generating capacity at any one time due to unplanned outages.

Either way, that doesn't leave more cushion, and the continuing expectations of low or no reserves are one reason why a Canadian energy company said yesterday it wants to build a gas-fired generator at Centralia.

TransAlta Corp., which owns and operates the coal-fired generating plant in Centralia that is one of the biggest sources of electricity in the region, said it hopes to have the 248-megawatt generating unit on line in July 2002.

While TransAlta and other utilities and energy companies have proposed a flurry of new projects, none will come on fast enough to ease in the next few months a crunch brought on by economic growth, a lack of additional generating capacity to match the growth and a low-water year on the hydroelectric system that supplies the Northwest and California.

The power pool bases its forecasts on reports from 16 control areas, including major utilities and the Bonneville Power Administration, which estimate demand from businesses and households. Rust said the forecasts take into account conservation measures and curtailments. The power pool just began compiling adequacy data, so year-ago comparisons aren't available; in January, Rust said, the region's supply was at about 102 percent of demand.

If the region falls short, the power pool said, utilities have alternatives.

They can buy electricity on the open market.

Too, the Bonneville Power Administration could elect to send more water through turbines at Columbia River system dams to produce more electricity, as it did in January when prices in the open market were so high that the power marketing agency worried about its financial health if it continued those purchases.

Generating more electricity from the hydroelectric service has an economic advantage, but it runs the risk of draining further already depleted reservoirs of water needed for salmon migrating downstream this spring, which in turn could escalate already pitched environmental battles over the operation of the river and the Endangered Species Act.

"Clearly it will be a really tough migration this spring," said Mark Glyde, communications director for NW Energy Coalition, a group with interests in both conservation and salmon restoration. While barging fish around dams may help, that's not an ideal solution, Glyde said, adding "One of the issues we're going to be looking at is whether there is anything we can do to leave more water behind the dams."

That might include working with the federal government to reschedule BPA's debt payments to the Treasury or "otherwise doing better by the fish."

Aside from the environmental issue, running water through turbines in winter is a gamble that "the water is worth more now than later," Glyde added, which might prove to be a bad bet later in the year if wholesale power prices rise.

The power pool said the latest forecast for water flows at The Dalles Dam for the first seven months of this year will be 63 percent of average. Unless there's significant rain and snow in the coming months it could also mean BPA will be back to market buying power in late summer, at a time when California too will be looking for electricity.

BPA spokesman Ed Mosey said Bonneville ran the river above normal levels for four days in January; the impact, he said, was to reduce expected May-June flows at McNary Dam (near Umatilla, Ore.) by half a percent. "The impact was very minimal," he said.

Glyde said groups such as his will also expect BPA to revitalize efficiency and conservation programs. "It's one of the few things we can do between now and next winter to be in better shape," for next winter and spring 2002, he said.

Mosey said BPA has already freed up some electricity through deals with aluminum plants that will reduce their load on the system from 2,000 megawatts (about double the residential load of the city of Seattle) to 400 megawatts in the next 30 days. Still more could be available, he said, depending on the outcome of the sale of the former Reynolds aluminum smelter at Longview, now operated by Alcoa and one of the last still operating at full capacity.

The region could also get a break if temperatures are warmer than normal, so there's less demand for electricity for home heating.

TransAlta needs the approval of federal and state environmental regulators and BPA for its gas-fired project. Rich Woolley, vice president of the company's Centralia operation, said TransAlta believes it can get the $210 million generator operating quickly because it already has the turbines.

"This is a perfect site for a facility such as this," Woolley said, since much of the infrastructure is in place and a gas pipeline extension can be built within the company's property.

He said TransAlta will likely sell some of the power under long-term contracts and the balance on the open markets; no contracts have been signed to date.

In other developments in the West Coast power mess, Bellevue-based Puget Sound Energy yesterday said it has filed suit against six industrial customers and their association in a continuing dispute over large customers who had elected to buy power at market-based rates.

When those rates soared, the companies went to the Utilities and Transportation Commission, which last month ordered a price cap on the rates charged to those customers. Puget Sound Energy's suit charges the industrial customers, which include Boeing, Georgia-Pacific, two oil refiners and two industrial gas producers, with violating the terms of their agreement with the utility.

In addition, California Gov. Gray Davis used his emergency authority yesterday to seize long-term power contracts held by one of the state's financially strapped utilities just before the assets could have been seized by creditors, The Associated Press reported.

The Pacific Gas and Electric Co. options to buy long-term power were held as collateral by the California Power Exchange, the state's electricity marketplace. PG&E defaulted on payments to the exchange, and the exchange wanted to sell the contracts.