Pacific Northwest Still Dry, But Coping Better

Although the prospect for new rains and a renewed snowpack are not that many weeks off, the Pacific Northwest last week continued to grapple with the second worst drought in the region's history of water level recordings.

"It is still the second worst water year on record," said Terry Morlan, demand forecasting manager for the Portland, OR-based Northwest Power Planning Council, noting that the advent of increased emergency generation and shutting down of significant major industrial load has allowed the region to cope this summer.

June demand was about 4,000 MW lower than it was in 2000, and most of that is because a number of major aluminum plants in the state of Washington were paid to shut down, he said. "Some of it also is just a response to price and awareness of the energy problem," Morlan said. "Most of the aluminum plants have been bought out through next spring, and they have the ability to renegotiate every six months." (Bonneville Power Administration said the time limit varies with each customer.)

"If we ended up getting a ton of rain and the market prices stay down at more normal ranges, it may become feasible for those plants to reopen and the Bonneville Power Administration (BPA) deal might be renegotiated."

BPA has a rate increase of 46% set to take effect Oct. 1 for its 150 wholesale customers, and investor-owned utilities also are set to increase their power rates about the same time. "Those increases will probably tend to further depress demand into the winter," Morlan said.

A BPA spokesperson said a portion of the rate increase is due to the added costs the power supplier had to incur to buy out the contracts of its nine large industrial customers, such as the aluminum plants to free up megawatts to replace what has been lost in the dire hydro situation.

As an offshoot of the rate hikes, which over the next five years will be adjusted up or down every six months at the customers' request to better track market changes, BPA is offering incentive programs of a half-cent/kWh discount for conservation and renewable energy initiatives by its customers, the vast majority of which are government-run local utilities.

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