Investing in Our Energy Futureby Editors
The Oregonian, July 3, 2000
Northwest businesses that came for cheap power
are now faced with skyrocketing energy prices
Along with the recent heat wave, the Pacific Northwest is experiencing an unprecedented energy price crunch that threatens to do serious damage to our booming economy, resulting in job losses.
For the last several weeks, electricity sales on the wholesale spot market have reached levels that you wouldn't expect to pay in fossil-fueled Portland, Maine, let alone in hydro-rich Portland, Oregon.
Utilities here say a variety of factors, some of them unforeseen by power planners, created the scarcity of electric power this summer in the Northwest and California. The result is electricity prices that have shot up 50 fold in a very short period of time. Example: A megawatt of power that sold for $20 a year ago sold for $1,000 or more this past week.
Normally, sudden, short-term price shocks are no big deal, but when wholesale electricity prices soar well above the price of a company's products, you can expect industrial shutdowns.
Last week, for example, Alcoa announced that its Troutdale aluminum plant, which employs 525 workers, is shutting down Oct. 1, in large part because of the high price and uncertainty in the electricity market. Georgia-Pacific-West of Bellingham, Wash., meanwhile, shut down its paper mill and sent 600 workers home, citing power costs. And earlier this month, Vanalco, the Vancouver, Wash., aluminum smelter, shut down 80 percent of its production and laid off 450 workers, blaming the high kilowatt costs.
Here's a sample of the factors that are placing the region's energy-intensive industries in jeopardy:
Normally, California sends surplus power to the Northwest in winter months; in summer, the Northwest customarily sends cheap hydroelectric power south. This summer, though, Northwest utilities and the federal Bonneville Power Administration, which markets Northwest power, have been buying more power from California than they're selling to users there.
Many of these conditions, of course, will subside -- the thermal plants will go back into operation and the Northwest temperatures will cool. That should ease the crunch, but the fact that it exists at all tells us something:
We need to build more power plants to meet future growth demands.
It's been known for some time that Northwest power-generating and transmission capacity has not kept pace with growth. The Northwest Power Planning Council earlier this year warned that the region faces a 1-in-4 chance of blackouts or brownouts during the next four years unless new generation plants are added.
Some argue that the growing gap between supply and demand can be filled by improved conservation programs and renewable energy supplies, such as geothermal, solar and wind power.
That's an overly optimistic view. The region really needs a program to build new conventional energy facilities, supplemented by a more aggressive commitment to conservation and renewable energy alternatives.
The important thing is that the region not try to meet all of its needs through a single approach. The region needs a diversified energy portfolio for the future.
Power Crisis Shorts Out Expectations
Power Switch Flips Priorities in Northwest
Power Shortage Sparks Questions
Puget Sound Region on Brink of Blackouts
BPA puts squeeze on utilities
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