PUD agrees to buy less BPA power

By Kathy Day

Herald Writer

EVERETT — Snohomish County PUD officials said Wednesday they have settled on a deal with the Bonneville Power Administration that should hold down the next rate increase to about 40 percent.

John White, the PUD’s assistant general manager for power business, said that may not seem like good news, but it could have been much worse.

He has spent much of the past two weeks trying to find a middle ground in BPA’s request to cut the amount of power the PUD buys in the coming year by 10 percent.

"Through it all, we’ve maintained a good relationship and arrived at a positive outcome that will meet our needs," White said. "Maybe it’s not all we wanted, but it provides a benefit to our customers and reduces the amount of power they have to buy."

White said PUD officials informed BPA it had accepted the deal late Wednesday, but the contract had not been signed. By agreeing to buy less power from BPA, the PUD reduces the likelihood that the federal agency will have to buy expensive power on the open market to meet its obligations.

"It’s super that Snohomish has agreed to step up in a big way," BPA spokesman Ed Mosey said. "It goes a long way to helping the economy."

He added that "there’s a high probability" that the federal agency’s October increase in wholesale power rates will be under 100 percent.

For every 10 percent that the PUD pays in higher wholesale rates, local rates are expected to rise 3 to 4 percent.

White said he anticipates the BPA rate will be less than 87 percent and "hopefully will get to 75 percent."

Customers have until Friday to tell BPA their plans. An announcement on the wholesale rate is due Friday because the agency must submit its rate request to the Federal Energy Regulatory Commission on June 29.

PUD commissioners will set local rates in August and will decide whether they take effect on Oct. 1, when the new BPA contract takes effect, or Jan. 1, White said.

Many of the previous agreements BPA has reached have been contingent on getting its major customers to agree to buy less power. Now, with the PUD — the largest public utility customer in terms of the amount of power it is buying — coming into the fold with a 70-megawatt reduction, the prospects for full participation are dramatically improved.

Although he did not have a tally on how many customers have agreed to cut back, Mosey said deals have been coming in all week.

Earlier this month, Seattle City Light, which has more customers but buys less BPA power than the PUD, agreed to reduce its purchases. All but two of the aluminum companies have agreed to close plants in exchange for payments so they can continue to pay workers.

Low water supplies, problems with California’s deregulation process and a dearth of new power plants and increased demand put the agency in a predicament where it would have to supplement its power with purchases on the volatile, and until the last few weeks, very pricey wholesale market.

To avoid entering that market more than necessary, the PUD is emphasizing conservation by its customers.

"Conservation will continue to be extraordinarily important," White said. "Conservation means less buying."

In the first quarter of this year, the district’s power demand dropped by about 5 percent. That’s probably due to a combination of conservation, people cutting back because their cost has increased, and a mild winter, said spokeswoman Julee Cunningham.

You can call Herald Writer Kathy Day at 425-339-3453 or send e-mail to kday@heraldnet.com.