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Power Squeeze by Kathy Gray The Dalles Chronicle, December 17, 2006

Tight supplies have utilities pondering future

As the federal hydropower system in the Pacific Northwest soon approaches its capacity, local utilities are evaluating what they need to do to prepare for the times ahead.

The challenge: How to meet a growing community's electricity demands while maintaining affordable prices for all customers.

"Adequate supply of energy at affordable prices is what drives the economy and our quality of life," said Dwight Langer, general manager of Northern Wasco County People's Utility District (PUD). "If we have oodles of supply of electric energy, but at prices people couldn't afford, what good is it? That's why we say it's got to be adequate supply and affordable prices."

Driving growth

Cheap, reliable hydropower has historically driven growth through much of the Pacific Northwest. The Mid-Columbia region offers a particular example.

When The Dalles and other federal dams were constructed from the 1930s to the 1970s, large manufacturing industries like the aluminum plants in The Dalles and Goldendale bought the dams' excess power to fuel their manufacturing processes.

In turn, the manufacturing plants employed hundreds of local residents, fueling the economies of the region's towns and cities.

Now that power supplies have grown tighter, such big manufacturers have been largely squeezed out of the equation and have chosen either to close or find their electricity elsewhere.

But even without those companies, the federal hydropower system is rapidly approaching capacity.

Early next year, Bonneville Power Administration is set to present its tentative Record of Decision (ROD) to the public. The ROD is the culmination of several years of "regional dialogue" with utilities and others interested in the issue, and will spell out Bonneville's plans and expectations for its next set of contracts with utilities.

As currently proposed, instead of open-ended amounts of power at preferred rates, which public utilities enjoy under their current contracts, the ROD is expected to call for Bonneville to provide fixed amounts, or allocations, based on how much power the individual utility uses in 2011.

Feeding the need The change means any growth in power demand the PUD experiences after 2011 must be met from sources outside the federal hydropower system.

That's an issue Northern Wasco PUD was interested in years before the regional dialogue began. As a result, the utility already owns two power generation projects.

Power from its project at McNary Dam, which it shares equally with Klickitat County PUD, is already serving local power demands.

Power from its project at The Dalles Dam is sold to Seattle City Light under a long-standing contract set to expire in 2012.

Though the local PUD's power needs are still being served through Bonneville and its own generation projects, the utility continues to looking at other ways to generate power.

"We don't want to be dependent on the market; we think it's too expensive," Langer said.

The time to look at adding power generation is before it is needed, Langer noted, so that the power generated will be affordable when the need arrives. But the need may come sooner rather than later.

How quickly is power demand growing within the utility's boundaries? "Rapidly," Langer said. "With all the construction that's going on - industrial, commercial and residential - we've probably seen load growth of 30 percent [this year] system-wide."

Therein lies the challenge.

"We want to provide for our grandchildren like our parents and grandparents provided for us when they invested in those projects," Langer added

What kind of power?

How Northern Wasco will serve that growing demand is a question that depends, at least in part, on the governor and the 2007 Oregon Legislature. Gov. Ted Kulongoski has proposed an aggressive new plan to promote the use of renewable energy to meet statewide load growth in his Renewable Portfolio Standards (RPS).

"We think renewables are great, but we also think they're very expensive," Langer said. "Our question to our legislators, is that we're trying to better understand what's the goal of the governor."

At present, wind power is the darling of the renewable energy field and the Mid-Columbia is at its hub, but Langer is concerned about issues related to cost, availability and reliability.

"Our current generation costs about $30 a megawatt hour; currently wind power costs $90 to $100 a megawatt hour," Langer said. "And the wind blows 34 percent of the time here, the other 66 percent of the time, you've got to have backup."

Langer wants to see the PUD invest in "baseline resources," those that are continually available.

"If we get into baseline resources first, when the time comes that we invest in intermittent resources, which are only available when the wind blows, we'll be able to back that up with our own resources and not have to pay some other entity to do that."

A baseline option

Langer describes the Pacific Mountain Energy Center as the "most valuable" project the PUD is currently considering. Called PMEC for short, the project involves an a process called "integrated gasification combined cycle." In this process, plentiful coal is transformed into a gas for production of electricity. The project, which is undergoing siting and environmental permitting, would be located in Kalama, Wash.

Proponents tout the gassification method as much cleaner than standard coal power processes.

"It's a very environmentally responsible project," Langer said. Demand is high for the PMEC resources, which include 300 megawatts available for investor-owned utilities and 300 for public power utilities such as the PUD. Northern Wasco has signed a letter of intent with PMEC to obtain between 5 and 15 megawatts and is now working with a consultant investigate the viability of investing in the project.

Prospects that the PUD will pursue the project are high, Langer said, but a public process of meetings and presentations, and possibly a vote of the public.

Transmission issues

As regional demand for electrical power grows, constraints on transmission lines also increase. These constrained paths, as they are called, can inhibit a utility's ability to obtain power from its generation project.

"If more generation is needed, it kind of follows that there needs to be more transmission," Langer said.

Not only is transmission an issue relating to new power generation projects, it may be a chance for the PUD to make money, Langer told a recent meeting of the PUD board.

The PUD already gains revenue from its 69-kilovolt line through The Dalles. Bonneville sends power through that line, and pays Northern Wasco between $80,000 and $85,000 per year for the privilege. They also upgraded the poles recently - those tall, galvanized poles through town - to meet their larger transmission needs.

"They paid for that upgrade - $2.5 million," Langer said. Through the partnership, Bonneville was saved from having to build another line and the PUD continues to receive annual revenue.

Delivery issues The delivery system is the third leg of the power stool. It is how the PUD gets power the final distance to its customers. This local system may be the least controversial of all the power issues, but it is a system that occupies a great deal of the utility's time, energy and money.

The agency spends approximately $1 million per year on its capital improvement program.

"We believe the most important part of distribution is preventive maintenance ... at the end of the week if we have zero for outages, that's the number we want," Langer said.

Friday's wind storm threw those averages off for the year but, in general, the PUD's geographic location means its lines are not as vulnerable to some of the weather-caused outages the rest of the state sees.

"Beyond that, we still have to do our part," Langer said. "When we design something, we design it to meet current load with a reasonable amount of growth."

As the city looks at expansion through annexation, Northern Wasco is paying close attention to where growth is likely to occur and how it will affect the PUD's delivery system.

"What would our master plan look like to serve those new customers?" Langer pondered.

Part of that process means considering placement of new substations and critical system redundancy to maintain reliability.

All that work, planning and implementation comes down to the people, and Langer is quick to offer strong praise to those at Northern Wasco County PUD.

"The heart of any company, as you know, is its people," Langer said. "We work, plan and implement. We're a team - and that works. I feel that's what we are."