Longview Fibre accused by BPA of profiteering by selling power
The paper mill is selling the electricity it generates while getting power from Bonneville
Friday, January 26, 2001
By Erin Middlewood, Correspondent, The Oregonian
LONGVIEW, Wash. -- Bonneville Power Administration is accusing Longview Fibre of profiteering by selling electricity generated at its Longview plant while continuing to rely on BPA for power to run the paper mill.
In ongoing negotiations, BPA officials are trying to persuade Longview Fibre to stop. But Fibre and the local public utility district say the company is acting within its rights.
"What you have is an industry with large load profiteering and then coming to us to serve their need," BPA spokesman Ed Mosey said. "It's essentially pushing the cost onto other ratepayers."
Fibre has a contract with Cowlitz PUD -- which gets most of its power from BPA -- to buy 103 megawatts at about $22 a megawatt. That contract also allows the company to sell electricity generated by its own steam and natural gas turbines, which have a combined capacity of 130 megawatts.
The amount of power consumed by Fibre's Longview plant varies, company spokesman Curt Copenhagen said. Typically, it uses slightly more than the 103 megawatts provided by its contract with the PUD and has electricity to spare from its own cogeneration facilities, he said.
Fibre has sold power to the Western grid for 30 years, Copenhagen said. Rising electricity prices have prompted the company to sell as much as 100 megawatts in recent months, which is double the usual 40 to 50 megawatts, he said. Wholesale prices for power fluctuate but have been running as much as 10 times what Fibre pays for public power.
BPA, which markets hydroelectricity from federal dams in the Northwest, anticipates that it will have to turn to the wholesale market to get enough power to meet the demands of customers renewing their contracts this fall. Longview Fibre sells the electricity from its cogeneration plants that it doesn't need because it's using BPA power on the wholesale market.
That sets up a theoretical scenario in which BPA can sell power to Longview Fibre and then buy higher-priced power from a pool that includes electricity Fibre sold at a profit.
"We can't allow that," BPA's Mosey said.
Copenhagen countered, "We have every right to sell this power." He would not say how much Fibre is making on its electricity sales, but he pointed out profits have been reduced because of higher generating costs. The price of natural gas, which is used to power the turbines, has jumped more than 200 percent the past year.
"When other companies just talked about cogeneration facilities, we had the fortitude and foresight to take the risk and build one," Copenhagen said. The steam turbines date to 1928, the year after the Longview mill opened. Fibre spent $32 million to build a natural gas-fired cogeneration plant in 1995.
"We built it to give us options in a very volatile energy market," Copenhagen said. Fibre's continued purchase of public power through Cowlitz PUD provides local benefits, both he and PUD spokesman Dave Andrew said.
"Having a customer that size helps our business be stronger," Andrew said. Fibre's high-volume purchases help pay for administrative costs, facilities and infrastructure, he said.
Andrew said Fibre's 20-year contract with Cowlitz PUD expires Sept. 30, but the company has already negotiated and signed a 10-year contract that begins Oct. 1. The new contract, similar to the expiring one, also affords Fibre the right to sell power it generates