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Power Squeeze Robert Gavin, Staff Reporter The Wall Street Journal, February 27, 2002

The Bonneville Power Administration is getting squeezed on both sides by the unsettled Western power markets.

The federal agency, which markets about half the power in the Northwest, primarily from federal hydroelectric dams, recently reported it lost $337 million last fiscal year, which ended Sept. 30. BPA officials blamed the skyrocketing wholesale prices it had to pay during last year's California-driven western energy crisis. With a drought significantly reducing hydroelectric generation, BPA had to buy power on the volatile spot market to meet its contracts.

BPA now says it might see more red ink this year because, with plenty of rain kicking up hydroelectric production and the slow economy retarding demand, prices have come down. The low prices -- about $20 per megawatt hour compared with prices sometimes topping $300 a year ago -- are cutting into revenues BPA generates from selling excess power.

In the first quarter of fiscal 2002, BPA reported a loss of about $76 million. While an improvement over the $642 million loss reported in the first quarter of 2001, continued red ink could mean another rate increase next year for BPA's wholesale customers. But any rate increase would certainly be far less than the 46% wholesale increase imposed this year, BPA officials say.