Associated Press
TACOMA — Power purchases during the West Coast energy crunch have cost Tacoma and Seattle utilities hundreds of millions of dollars.
In the 15 months since prices began to climb, Tacoma spent more than $180 million to buy power on the volatile wholesale market, while Seattle’s purchases totaled more than $570 million.
But they’re finally starting to feel some relief: the wholesale markets have returned to normal and utilities are spending much less now for power.
"More plants are up, and natural gas prices are down. That’s a big driver," said George Whitener, power manager for Tacoma Power.
Together, Tacoma Power and Seattle City Light had been spending as much as $100 million per month last winter to buy power in wholesale markets.
Before prices spiked, Seattle City Light had gross annual revenues from electricity sales of $400 million, said Jim Ritch, chief financial officer.
"I think everybody got caught in a cash crunch," he said.
Recent lower prices have resulted from mild weather, a demand that has dropped by more than 10 percent in the Northwest and an increased supply of available energy.
Records show that in June, Tacoma and Seattle utilities paid about one-fifth to one-tenth of what they had been spending.
Tacoma had been paying more than $20 million in some recent months. Its bill this June: $4.5 million.
Seattle paid less than $8 million in June, a huge drop from monthly bills that had approached $80 million.
Prices that six months ago averaged as much as several hundred dollars per megawatt-hour now are between $20 and $30.
"I can tell you, six months ago I wouldn’t have believed the price could go back so low," Ritch said.
Tacoma Power rates in October will rise by about 33 percent over what they were before the utility imposed a surcharge last year, but most of that will reflect an increase in the cost of energy from the Bonneville Power Administration.
Seattle City Light, meanwhile, will impose its fourth fee increase this year on Oct. 1, bringing the jump in rates to 57.8 percent.
"I think this has been one of the biggest wealth transfers ever," Ritch said.
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