BPA action averted blackouts, chief says

Columbia River spillage restricted, power repurchased from smelters

Bert Caldwell - Staff writer

Restricting spillage at Columbia River dams and repurchasing electricity from Northwest aluminum smelters spared the region from rolling blackouts this winter, the Bonneville Power Administration's acting director said Wednesday.

Steve Wright said Bonneville bought back 1,800 of the 2,100 megawatts consumed by the Northwest's 10 smelters when at full production.

That electricity replaced much of the 5,000 megawatts in generating capacity sapped by the lowest streamflows measured in 70 years, he said.

Some of the rest was generated with water normally used to help young salmon move downstream, Wright said.

He said future spills for assisting fish passage will depend on whether the volume of water in the Columbia and its tributaries exceeds levels needed for hydrogeneration.

Environmentalists and Northwest tribes have criticized the limits on spills, which could drastically increase the death toll on fish headed for the Pacific Ocean.

Assuring adequate power supplies and nurturing Bonneville's cash flows are his highest priorities, Wright said.

Federal dams in the Columbia Basin can generate 8,000 megawatts. Bonneville needs another 3,000 megawatts to meet all of its customer requirements, he said.

Wright said buying that additional electricity in the wholesale power market could cost as much as $5 billion, more than twice the agency's budget.

And Bonneville will pass on to its customers whatever it spends to get the electricity the Northwest needs, he said.

California officials tried for too long to finesse the cost of ballooning power purchases by state utilities, Wright said, adding that a 40 percent rate increase order last week may not be enough to cover $13 billion in debt accumulated by the state's two largest utilities.

"Somebody is going to have to pay," he said.

Wright noted California officials expect rolling blackouts on as many as 34 days this summer.

In a report issued March 22, the California Independent System Operator projected electricity shortages a peak hours as high as 3,700 megawatts, three times the amount consumed by a city the size of Seattle.

Wright, in Spokane for an energy roundtable sponsored by Sen. Patty Murray, D-Wash., last week said Bonneville will have to more than triple its rates if the Northwest does not reduce electricity consumption.

The size of the increase will depend on commitments customers make by the end of June to reduce electricity use, he said.

Notably, he said, most smelter operators must decide whether to resume operations when new contracts take effect Oct. 1.

Bonneville has asked every company but Kaiser Aluminum Corp. to keep smelters shut down for another two years in return for continued agency payment of worker wages.

"I reject the notion what we are attempting to do is execute the industry," Wright said.

If Bonneville has to buy the power needed to restart the smelters, he said, the price will be triple what they have paid in the past.

No smelter can operate profitably with such costly electricity, he said.

Most market analysts predict electricity prices will drop substantially in two years, when new generating plants will be on line.

Wright said Kaiser has not been offered the same deal because the company, owner of smelters in Tacoma and Mead, has refused to accept the same power buyback terms other operators have.

Bonneville split the proceeds from the resale of smelter power with owners.

"I have a moral responsibility to those companies who in January stepped up to the plate," he said. "Kaiser walked away with a half-billion dollars."

Based on Kaiser reports, the figure is closer to $400 million. Company officials have said the deal is not in the company's best interest.

Wright acknowledged that Kaiser has major debt problems and said the two sides continue to talk.

But he added that even if Kaiser walks away from its smelters, someone else may purchase and restart them.

"They have said they have some assets for sale," Wright said.

He said the region must do four things to escape the current energy bind: add generating plants, conserve all it can, build new natural gas pipelines and storage facilities, and beef up transmission capacity.

Siting lines will be the toughest task, he said. "You've got not-in-my-backyard problems that stretch for a lot of miles."

To highlight the need for conservation, Wright and Murray distributed energy-saving fluorescent light bulbs on a downtown Spokane sidewalk Wednesday afternoon.

The bulbs, designed to screw into a standard lamp fixture, can pay for themselves with energy savings in two years, Murray said. A line of people that stretched a half block snapped up 100 free bulbs in about 15 minutes, and BPA staff handed out coupons for dozens more.

She urged residents to use the bulbs, turn down their thermostats and turn off computers when not in use as short-term solutions to the region's energy supply problems. She also repeated her call for a temporary price cap on wholesale power sales.

Murray called energy "the number one issue in our region" before she and Wright went into the closed-door roundtable with utility executives, businesses that use large amounts of power, farm and conservation representatives.

The session was closed to the public so participants could express their views "without worrying about their words being used out of context," she said.

Bonneville and about 30 Northwest utilities will soon distribute three million coupons good for a $6 discount on the bulbs.