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Drop in Southland Power Sales Is Felt in Northwest

November 06, 1986|Associated Press

SEATTLE — The price of the Pacific Northwest's traditionally low-cost electricity, produced by huge federal hydroelectric dams on the Columbia River, is on the rise because Southern California power markets are threatening to dry up.

While Californians enjoy lower priced oil and gas that compete with imported electricity, planners in the Northwest, whose economy has been fueled by the cheap power since World War II, are left trying to make up the revenue gap created by the drop in energy sales.

"The thing we have out here is that while we have some low electricity rates, our economy is based on that," said Al Wright, executive director of the Pacific Northwest Utilities Conference Committee.

Buy Surplus Electricity

The Bonneville Power Administration, with 30 dams and a half-dozen thermal power plants, has for years relied on the California market, plus Arizona and some other points, to buy its surplus electricity, about one-fourth of BPA's approximately 15,000 megawatts.

At 3 cents a kilowatt hour, it was a bargain to California utilities, which were able to shut down oil- and gas-fired plants that cost 6 cents per kwh to operate.

And it also helped to pay Bonneville's bills for bad investments in nuclear power plants during the 1970s while keeping its wholesale rates to Northwest utilities at about 2.2 cents per kwh.

Electricity rates for consumers at the household level range from 3.5 to 5 cents per kwh in the Northwest, compared to as much as 14 cents per kwh in other parts of the country.

Competition From Oil, Gas

But a year ago, oil prices started tumbling to about $10 a barrel from $29.

Bonneville was forced to cut its price for electricity in half to compete with California's oil- and gas-fired power plants.

The result is a price hike in the works for some customers, on top of four- and fivefold increases in rates since 1980 because of investments in nuclear power plants that were never needed.

The changing market has forced Bonneville, the largest federal marketing agency, to cut several hundred million dollars from its $3-billion budget.

Especially hard-hit were energy conservation projects, which have been popular in helping homeowners weatherize their houses, and for efforts to expand and maintain BPA's huge system of transmission lines.

Off-limits are BPA's annual payment of more than $600 million to the federal treasury and about the same amount on mortgages for three nuclear power plants, two of which have not been completed.

Jim Jura, administrator for Bonneville, has said a 13% increase in electric rates for "priority firm" customers--public and private utilities and government agencies--is tentatively planned for next year. He has said he will try to cut that figure.

The priority firm customers represent only one-half of BPA's power load. Besides the one-quarter exported, one-quarter is dedicated to the aluminum industry.

But that industry also has fallen on hard times due to low prices, and the BPA recently began a pricing structure that links the rates that it charges aluminum companies to the price of aluminum.

The aluminum companies are paying less than 2 cents per kwh, and that rate is destined to stay there unless the metals market picks up.

Bonneville was a dream started in the Depression years. Construction of the first huge dams in the 1930s was heralded in newsreels and in Woody Guthrie's song "Roll On, Columbia," which promised electricity would "turn the darkness to dawn."

Now, Wright said, the Northwest must go back to the planning board.

"The uncertainty is what bothers everybody," he said.

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