PUD signs power contract

By KATHY DAY

Herald Writer

EVERETT — With their signatures drying Thursday on a contract with the Bonneville Power Administration, Snohomish County PUD officials said that at least they know where they’ll be getting nearly 85 percent of their electricity when the current contract expires next year.

The contract is good news because it assures the district of "a resource that provides continued predictability in terms of costs and minimizes risk," PUD general manager Paul Elias said.

The district now gets about 50 percent of its power from the federal agency. The remainder comes from the open market, the Centralia steam plant, and power generated at the district’s Jackson Hydroelectric Project and the Kimberly Clark co-generation facility.

Assistant general manager John White said he expects wholesale power under the new contract to cost between 2.7 cents and 2.9 cents per kilowatt hour — more than the current 2.5 cents the PUD pays now. The number does not reflect the actual price customers will pay because distribution costs have not been considered.

Several factors could play into the final number, including a pending BPA rate hike.

Politics could also be a factor, since several delegations in Congress are seeking changes in how BPA power is priced and allocated. Northwest utilities get first dibs on BPA power, and get it at rates well below those paid by California utilities.

California’s delegation, as well as a coalition of Midwest and Northeast legislators, have asked for changes, and while it appears the matter is dead this session of Congress, it’s likely to become heated next term, said BPA spokesman Ed Mosey.

While Congress can’t alter contracts, he said, it could change the rules on how BPA power is priced.

The matter has PUD officials on "yellow alert," White said.

In fact, they sent a letter to the Northwest delegation a couple of weeks ago reminding them of the importance of low-cost power to the state’s economy.

Under the new PUD-BPA contract, a block of power will be bought at a fixed rate for five years, with allowances for adjustments if BPA costs change. Remaining power is priced at an adjustable rate called a "slice," which depends on when and how much water flows down the Columbia and Snake rivers.

The district’s budget process kicks into high gear Nov. 7 with the first public hearing, so a decision on rates still is down the road. When projecting costs a year ago, the PUD anticipated 3 percent rate hikes would be implemented in 2000, 2001 and 2002. There was no rate hike this year.

A decision on future rates is up to the commissioners.