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No Manipulation Behind Energy Costs by John K. Wiley, Associated Press The Spokesman Review, September 21, 2000

Tight supplies, heat waves caused price spikes, study finds

A study of high wholesale electricity prices found no "smoking gun" indicating market manipulation, a Northwest Power Planning Council official said Wednesday in recommending a summit meeting to ensure the price spikes won't happen again.

Wholesale prices that had been between $20 and $30 per megawatt hour spiked to more than $200 per megawatt hour in late June, causing some of the region's power-dependent industries to curtail production and lay off workers.

Wholesale power was trading for about $90-$100 per megawatt on Wednesday.

A report to be released next month indicates the surge in market prices was the result of tight electricity supplies in the region aggravated by a combination of unusual circumstances, Dick Watson, the four-state planning council's power generation expert, said Wednesday.

The governors of Washington and Montana asked for the study and Sen. Slade Gorton, R-Wash., asked the Federal Energy Regulatory Commission to look into the price spike.

After reviewing power generation data from May and June for evidence that someone was manipulating the wholesale power market, "nothing leaps out. There was no smoking gun," Watson told the council.

"The kinds of patterns you see ... look very much like what you would expect to see," he said.

A heat wave in California and the Northwest raised demand, while supplies were reduced by an unusual drop in hydropower production and both planned and unexpected outages of thermal generating plants, Watson said.

At the same time, changes brought by deregulation of the California energy market contributed to increasing prices, he said.

The final study will recommend the power council convene a summit of representatives from utilities, large energy consumers and regulators to find ways to speed response to changing electricity demand.

The report also will recommend investigating the need for new generating capacity and to establish emergency procedures to respond to a similar situation that could occur as early as this winter.

"We need to be prepared in case this winter is a dry one and a cold one," Watson said.