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NW Power Plant Plans on Hold or Dropped by Chris Mulick, Herald staff writer Tri-City Herald, May 6, 2002

OLYMPIA -- Proposed power plants that would have provided the Northwest with thousands of megawatts of new generation are predictably sinking in an ocean of cheap wholesale electricity.

Some of them have been kicking around for a couple of years, others came and went before anyone knew they were there.

"There are a bunch of them," said Bonneville Power Administration spokesman Bill Murlin, reading from a list of projects whose promoters have withdrawn requests to connect to the agency's regional transmission grid.

As of a week ago, BPA was aware of 94 projects proposed for the Northwest - all but two were gas-fired generators or wind farms - that would have generated 36,000 megawatts of juice.

That's gobs more than the region needs for the foreseeable future, about enough to supply 35 Seattles. Already, 33 plants generating 11,700 megawatts have been delayed or canceled, and more figure to follow.

Among the casualties are projects once planned for Paterson, Starbuck and Hermiston. Other canceled or delayed plants in Washington were considered for Wenatchee, Creston, Everett, Longview, Mt. Vernon, Vancouver and Wenatchee.

Still surviving are a 1,300-megawatt, two-plant project at Wallula and a 306-megawatt plant near Plymouth.

Developers began flooding the market with proposed power projects when wholesale power prices went through the ceiling two years ago.

Fax machines began spewing out announcements touting thousands of megawatts of new generation - far more than the Northwest needed. "Release-a-watts" they were called because it was cheap to put out a news release to gauge interest among potential customers.

Most regional power officials believed some plants would get built while other boastful hopefuls would quietly disappear. Plunging wholesale prices, now 10 times lower than they were a year ago, spurred that exodus and the enthusiasm for building has vanished.

"Last year it was a whole different story," said Michelle Elling, siting manager for the state's Energy Facility Siting Evaluation Council. "This year it's been very quiet."

There's not much hope projects that have been delayed will return to active status anytime soon.

In February, backers of a proposed 1,200-megawatt plant in Starbuck asked the council to suspend its review of the project for six months. Starbuck Power Co., owned by PPL Global, wrote that it will use the six months to consider "potential sale, prolonged suspension or termination" of the project.

It cited problems getting adequate transmission lines built, changing market conditions and implementation of federal price caps on wholesale electricity prices - a mechanism that many analysts agreed would discourage power plant construction.

In April, Cogentrix Energy asked the siting council to indefinitely suspend review of its proposed 800-megawatt Mercer Ranch Power Project 12 miles west of Paterson, a plant that had been on the rocks for a year.

Some projects aren't slipping away as quietly as might have been expected. Some companies have been eager to publicize the taming of their ambitions.

"It's kind of unusual a developer will announce they're canceling a project," said Jeff King, a resource analyst for the Northwest Power Planning Council, which tracks the region's energy needs. "Normally, this would be a real quiet deal."

He suspects some developers are eager to send a message to Wall Street, where there have been concerns developers have stretched themselves too thin by trying to build too many plants.

"Some of these outfits were getting significantly overextended," King said.

Calpine Corp., an industry giant that is building one plant in Hermiston and canceled another, announced in March that it was canceling orders for 35 turbines and delaying purchases for 81 others.

"We are doing what it takes to increase liquidity and enhance creditworthiness while bringing new power generation capacity online when - and only when - power and capital market conditions warrant," company Chairman Pete Cartwright said in a news release.

The Northwest has all the power it needs for the near term, thanks in part to construction of new generating stations but mostly because of economic conditions that have forced the closure of energy-guzzling aluminum plants and other factories.

Should the economy and energy demands fully rebound by next year, the Northwest still would have enough surplus to satisfy typical power demand growth for the following two to three years, King said.

But over the long haul, analysts say, new generators will be needed. The BPA recently produced an analysis suggesting that, even with the new power plants under construction, the region would be short if last year's drought were to repeat itself.

"If we have another cold winter in Seattle, there are going to be blackouts," Murlin said.