Although some local forecasters are still on the fence, the National Weather Service (NWS) is calling for above-normal rainfall in the spring and summer in the Pacific Northwest, and that should boost hydroelectric production. More hydro brings with it the promise of continued shrinking prices and use of coal and natural gas in the region, according to industry sources in the Northwest.

In addition, for a two-month window covering May and June, the federal power marketer/transporter Bonneville Power Administration (BPA) is targeting large thermal generators to back out additional coal-fired and natural gas generation. BPA is prepared to offer super-low prices for the federal hydroelectric supplies.

The NWS water forecast, however, is still a little premature with March and April still to play out. BPA and the Northwest River Forecast Center see water levels at about 100% of normal currently, and they expect them to be perhaps a little below normal by the end of the rainy season, a BPA spokesperson told NGI.

"About 100% or little above normal actually is where we are at right now, but we think that will change downward," the spokesperson said.

A combination of high water levels and high volumes of power supplies from an increasing number of wind projects gave BPA a temporary oversupply of generation in the federal Columbia River Power System last June, the BPA said in a letter to stakeholders last month. As a result, BPA proposes to try to avoid the oversupply by paying thermal-fired generation in the region to be on standby -- but not running -- in May and June.

"BPA is developing a list of action items it could use if faced with overgeneration events that threaten fish in the future," said Alex Spain, BPA trading floor manager, in a Feb. 15 letter to thermal generators including Avista Corp., Idaho Power Co., PacifiCorp and Puget Sound Energy. "One of these actions involves an aggressive outreach program...to discuss unique marketing transactions that help maximize the Columbia River Power System generation with the focus to minimize the level of dissolved gases [in the river water]."

Spain said the goal is to achieve what he called "greater thermal flexibility" than was in place last June. BPA also is obtaining public comments through Friday on a proposed policy to establish an environmental protocol that keeps the federal agency from selling negative-priced surplus power out of the Columbia River system. The policy is designed to better deal with an oversupply situation like the one last June, a Portland-based BPA spokesperson said.

©Copyright 2011 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.