By Cynthia First
Californians were the first to experience the results of shortsighted planning for electrical power resources, but they will not be the last.
According to the Northwest Power Planning Council, the entire Northwest region faces up to a 17 percent chance of rolling blackouts during the fall/winter seasons. We expect we will continue to have enough power to meet our local needs, but our customers will experience the effects of the power shortage in the higher cost of the electricity they use.
We understand how challenging those higher costs have been for most of our customers and want to express our appreciation for all you have been doing to help make a difference through your conservation efforts. Thanks to wonderful cooperation from our customer/owners, and with 20 years of aggressive conservation already in place, our utility has been able to realize considerable savings from recent conservation measures. Coupled with internal cost cutting, these measures have helped our rate increases to be kept lower than most other local utilities.
Snohomish PUD will continue to rely, most heavily, on power purchased through the Bonneville Power Administration (BPA). We have signed a contract, effective October 1, 2001, that will provide up to 80 percent of our electricity needs for the next five years with an additional five-year option. Unfortunately, the price of this power will increase dramatically — by 46 percent — and the retail rates to the PUD’s customers are expected to rise this fall because of this increased cost. As bad as this sounds, it is still the lowest price available for a stable supply of electricity.
Furthermore, you should also know that your PUD played an instrumental part in getting the rates down this low, thanks to our unrelenting negotiations with BPA and support of their requests for decreased loads by utilities and aluminum companies alike.
Since we are almost completely dependent on power generated by others, our challenge is to make sure we react intelligently to a power supply market that has changed to being highly volatile in the short run and unpredictable in the long run. This position is intolerable. Your PUD must gain greater control over its own destiny. We must think ahead and plan for the realities of the next several decades rather than passively accept the consequences of our near total dependence on others to generate the power our customers need.
As we look forward to 2006 and beyond, the PUD will continue to face challenging resource issues. In 2006, we will have only 50 percent of our energy needs set. We have repeatedly heard from our customers that price predictability is important to you. Clearly, if we are to supply our customers with stable, low electricity rates, we will need to make some changes.
In recognition of this situation, the Snohomish PUD Board of Commissioners has directed its general manager and staff to develop new power resources that will give the utility more flexibility in meeting future needs. The Board has adopted clear policies for the development of a future energy portfolio. We will continue to focus on BPA power purchases. At the same time, our managers will pursue options to cover the portion of our load that we cannot obtain from BPA. Those options include looking at new generating facilities that will increase our flexibility by 2006 when the next BPA contract option is due.
New generating options to be explored include renewable resources such as wind turbines and solar power, as well as resources such as combustion gas turbines. Managers are also expected to continue to pursue aggressive conservation options. Getting better control over our own destiny will require diligence and care as the Board and the PUD executive team carry out their appropriate roles.
The Board must provide clear-sighted, visionary policies to guide our excellent management staff. Our general manager must make the best business decisions he can within these policy boundaries. Our employees must keep up their outstanding efforts at cutting costs and looking for efficiencies. The Board, management and employees must all do their part to achieve the common end goal: supplying our customers with power at the lowest possible cost consistent with sound business principles.
All of us at the PUD are grateful for the expressions of understanding and support we have received over the difficult recent months. We are confident that our policies for the utility’s future direction are leading in the right direction and that we will continue to merit the confidence we have enjoyed in the recent past.
Cynthia First is the President of the Board of Commissioners from the Snohomish County PUD.
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