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Power Situation Topsy-Turvy, and Here's Why by Andrea Otanez, Seattle Times assistant metro editor Seattle Times, December 17, 2000

Cold, dry weather last weekend brought warnings of power shortages in the Northwest. This week the region is under federal orders to sell surplus wattage to California.

How can that be?

The symbiotic relationship that normally means California power for Northwest winters and Northwest power for California summers is under siege. And winter in Washington is barely under way.

Why are things so different this year, and are power supplies going to improve anytime soon?

This may shed some light:

Question: Why is California in such dire straits?

Answer: Part of the reason is deregulation and growth.

Deregulation approved in 1996 by the California legislature separated power plants from power providers in parts of the state, sending utilities to the open market to find power for their customers. Meanwhile, an economic expansion in California driven by high-tech industry increased the demand for electricity. But investors have been reluctant to build new sources of power in such an uncertain atmosphere.

Key California utilities racked up massive debt this summer buying power. By law they cannot pass those costs on to customers.

Q: Why is the Northwest affected by what happens in California?

A. The Pacific Northwest is connected to California by the western power grid, a system that serves 14 states and stretches into southern British Columbia and northern Mexico. On that grid is a finite number of power sources and transmission lines.

While the Northwest historically has had plenty of cheap hydropower, it also needs more power in winter, which California usually helps supply when temperatures cool there. But scant California surplus and low water levels this year mean an equally power-hungry Northwest has had to do more shopping in the open market to meet its needs. This in turn has lead to power surcharges.

Q: Why deregulate power?

A: The driving principle behind deregulation is competition, which is supposed to make electricity cheaper for consumers. Some say deregulation was made additionally attractive to California consumers through a legislatively mandated rate reduction and a rate freeze for some customers until March 2002.

But instead of getting cheaper, power prices have skyrocketed.

On Friday, Federal Energy Regulatory commission set a "soft" price cap on wholesale rates in California only. Gov. Gary Locke, Seattle Mayor Paul Schell, Sen. Patty Murray, D-Wash., and others have been demanding a price cap on the regional wholesale market.

This week the price for a megawatt hour has been as high as $1,400, up from an average a year ago of about $35.

Q: What drives and sustains high electricity prices?

A: Shortages. Some say those shortages occur because suppliers withhold power until buyers get desperate and have to buy regardless the cost. Others say prices have increased so much because the cost of natural gas - which fuels many power plants - has shot up.

And while demand for power has increased because of booming high-tech economies, the investment and construction of power sources have not kept up. At the same time, conservation efforts have dropped off.

Q: How could the Northwest be under federal orders to sell surplus power to California this week, when last weekend it was on the verge of its own power shortage?

A: Power can't be stored and to a great degree is dependent on the weather. Last weekend's cold, dry weather; lack of power surplus from California; and low snow pack led to the regional warning. Officials breathed easier once milder, wetter weather returned. And by Thursday, when Energy Secretary Bill Richardson ordered about 70 power suppliers to sell surplus power to California, Northwest organizations said they had enough to comply.

Q: How does the need for power bear on discussions to breach four dams on the Lower Snake River?

A: The four Lower Snake River dams together have maximum generating capacity of 3,033 megawatts, according to the Corps of Engineers. They are used for "peaking power" - high load times between the hours of 6 and 8 a.m. and 6 and 8 p.m. Planners say the four dams were crucial last weekend when the Northwest was attempting to inventory every last shred of power.

But many say power from the four dams doesn't outweigh the harm the dams cause to endangered and threatened fish. They also point out it could be another seven years or more before the dams are ever breached and by then other power sources will be available.

Q: What can be done about the power crunch in the Northwest and on the West Coast?

A: Most experts concur that the power squeeze will continue for the next two to three years. Ed Mosey, spokesman for the Bonneville Power Administration, says 8,000 megawatts worth of gas-fired power plants are in the planning, permitting or construction stage throughout the Northwest. (For comparison, Seattle City Light's power load is about 1,200 megawatts.)

But will that lead to cheaper power in five years? That depends, in part, on what happens to the price of natural gas. The demand for natural gas has increased with the demand for electricity while infrastructure and exploration for it, some say, has lagged behind.

Other solutions include fuel-cell technology, wind and solar power and renewed conservation efforts.