Region feeling pain of higher-priced power- BPA price hikes causing economic hardship, speakers contend

Electricity prices that soared and swooped repeatedly two years ago have ushered in a new risk of doing business in the Pacific Northwest.

John Stucke
Staff writer The Spokesman-Review

Unfortunately, cheap and stable electricity supplies that had been central to building the regional economy have been replaced by a market that can double in days and retreat just as quickly.

Speaking to about 60 people attending the Northwest Energy Conference on Monday, Steve Wright, the Bonneville Power Administration’s top official, said those price swings may be permanent.

And that makes regaining the region’s electricity entitlement more difficult. It was stripped by failed deregulation experiments in states like California and Montana, and by now-unfolding market manipulations by the likes of Enron Corp. Untimely drought and poor power-planning strategies also played a role.

Bonneville is trying to survive high-priced contracts it signed during the crisis, and eventually help return the region’s competitive advantage, Wright said.

The plan is painful. Already, a 46 percent rate hike was passed along in October 2001. That was credited by many for putting the region’s power-intensive aluminum industry out of business.

Now the agency is pursuing another 15 percent increase this year as it seeks to stay solvent and deal with the continuing aftermath of the 2001 energy crisis.

Wright’s "passing the pig through the python" approach prompted one person to recommend finding a laxative.

Plenty of people are peeved with Bonneville’s rate increases.

Ken Canon, managing director of the Association of Public Agency Customers based in Portland, said his members are struggling to cope with Bonneville’s rate hikes.

The APAC represents 36 major companies in activities such as pulp and paper, chemicals, aerospace and lumber.

Utilities across the region handled the energy crisis in different ways. Some ended with increases of 4 percent. Others initiated rate hikes in the double digits.

Canon said Bonneville is in need of fundamental change and needs stronger oversight than that of the Federal Energy Regulatory Commission, which only asks: "Is Bonneville getting enough money?"

Echoing a common complaint of business, Canon said higher rates don’t necessarily mean higher revenues. A better approach, he said, is more customers paying less to reach equal or better sales.

Kris Mikkelsen, CEO of Inland Power and Light, said during a panel discussion that Bonneville needed to be run more like a business.

She said the agency has squandered money on unproven programs to resuscitate salmon runs and allowed environmentalists to degrade the generation capabilities of the massive Columbia and Snake River dams.

Bonneville markets about 45 percent of the power in the Northwest. What it says and does as an agency has tremendous implications for families and businesses from the suburbs of Portland to irrigators in Central Washington and manufacturers in Montana.

The rest of the power in the region is generated and sold from public utility districts and investor-owned utilities such as Avista Corp. in Spokane.

The conference continues today with speeches expected by Sens. Patty Murray and Maria Cantwell.

•Business writer John Stucke can be reached at (509) 459-5419 or by e-mail at [email protected]

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