Everett, Wash.
Published: Monday, December 15, 2008

PUD locks in electricity contract with Bonneville

A utility commissioner figures the deal with Bonneville with save customers $3 billion over 17 years

David Chircop
Herald Writer

 EVERETT -- Snohomish County PUD has signed a new contract with the Bonneville Power Administration for electricity supply for 17 years, starting in late 2011 when its current agreement expires.

Bonneville, a Portland, Ore.-based federal electricity marketing agency, sells electricity to public and investor-owned utilities throughout the Pacific Northwest. The energy it sells is produced at a network of dams along the Columbia and Snake rivers and one nuclear power plant.

Snohomish County PUD is the federal electricity wholesaler's single largest customer.

PUD officials say the new long-term contract ensures that the utility and its 300,000 customers will continue to benefit from the region's bounty of relatively cheap, stable and clean hydropower.

Bonneville said all of its 135 ­consumer-owned customers have signed new power sales contracts this month. Agreements with private utilities are still being worked out.

"Most of the region saw that it is a very good deal for their customers," PUD Commissioner Toni Olson said.

The contract, which will run until 2028, follows more than six years of talks with Bonneville, its customers and other stakeholders.

In Olson's estimation, buying electricity from Bonneville will save PUD customers $3 billion over the life of the contract, compared with what they would spend if the utility purchased electricity on the open market.

The PUD, which supplies electricity to Snohomish County and Camano Island, already gets 80 percent to 85 percent of its electricity from Bonneville. It expects to receive about 85 percent of its power from the energy supplier under the new contract.

Bonneville's current wholesale rate is 2.73 cents per kilowatt hour.

The price for electricity over the life of the contract will be determined in a rate-setting process every two years, as it is now.

Rates are adjusted to reflect the government agency's cost to supply electricity. It also accounts for required spending on salmon and wildlife programs.

With the new BPA contract, the bulk of the PUD's energy will continue to come from hydroelectric sources.

Other PUD sources include energy bought on the open market and from Northwest wind projects, the burning of wood-waste, landfill biogas and a PUD-owned hydroelectric dam northeast of Sultan.

The utility is also exploring other green energy resources, including tidal, geothermal and solar energy.

The availability of low-cost electricity has long been a cornerstone of the region's economy.

Utilities will not lose any access to inexpensive federal power if they invest in conservation resources, under the agreement.

"The Regional Dialogue contracts provide long-term stability to our region at a time when it is sorely needed," Steve Wright, BPA's administrator, said in a written statement. "The Northwest's electricity utilities and their consumers will benefit from certainty about their long-term access to low-cost federal power."

The new contracts will help the region meet two key national goals -- energy independence and reduction of greenhouse gases.

While the Pacific Northwest, with its hydropower base, already has the cleanest electricity in the nation, the new contracts have been designed to spur even more energy-­efficiency and renewable power projects.

Under the contract, the PUD will receive energy from Bonneville in two ways.

First, it will receive "block" electricity, a consistent, predictable amount of energy each month. Second, it will also buy from Bonneville what is called a "slice" product, which represents a percentage of output from the Columbia River power system that varies by month, depending on water and snowpack.

The PUD has purchased electricity using both methods for several years.

Neil Neroutsos, PUD's spokesman, said the utility is working on a new computer system to receive more accurate real-time data from Bonneville, so that it can schedule when it buys electricity and how it operates its system more efficiently.

The PUD's 2009 budget was approved this month without a rate increase. However, a rate increase could be enacted if needed next year. That would require public meetings and commission review.



Reporter David Chircop: 425-339-3429 or dchircop@heraldnet.com.
© 2009The Daily Herald Co., Everett, WA