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Northwest Energy Mix Upset by Excess Hydro Supplies

While natural gas demand already is poised to take a hit, ever-growing regional wind power supplies may be the next domino to fall in the face of excess hydroelectric supplies in the Pacific Northwest. The region's key power marketer/transporter, the Bonneville Power Administration (BPA), however, is going to delay as long as it can a proposal to begin curtailing large chunks of wind power, officials said Wednesday.

Recent news reports have indicated that BPA Administrator Steve Wright is close to calling for cutbacks in wind power, but a spokesperson for the regional wholesale electricity provider told NGI that no such decision has been made.

"We are still working with stakeholders and utilities in the region to see what kind of solutions we can come up with that might help us avoid making that draft decision we released in February, so the administrator has not made a decision yet," a BPA spokesperson said. "We've been asked by lots of folks to keep working on this to see what options we have, and we'll keeping working on this until we're absolutely forced to do something."

However, he conceded that if they ultimately are confronted with the circumstances outlined in the draft proposed decision, then BPA would likely have to begin curtailing wind power.

Earlier this month energy consultant Bentek Energy LLC released a report saying excess hydroelectric supplies in the West should cut natural gas demand by one-third through August, and forward gas prices in the western United States and Canada are overvalued as a result of demand loss that Bentek calculates to be 295 Bcf (see Daily GPI, April 15).

"If we continue to have wet springs with high-volume runoff, and a lot of wind because of the storms, we have the potential for more excess generation events," said John Harrison, a spokesperson with the Northwest Power and Conservation Council (NPCC), which published a draft white paper, "Effects of an Increasing Surplus of Energy Generating Capability in the Pacific Northwest" that is just completing a public comment stage.

"[BPA] really doesn't want to force the electric utility ratepayers to make up the difference if the wind power producers lose their federal production tax credits, so the wind producers don't want BPA to shut them down. No one has come to a happy conclusion on any of this yet."

Both Harrison and the BPA spokesperson indicated that the federal agency is not likely to make a decision soon on the still evolving issue.

The four-state NPCC meets in mid-May and will take up the draft, which was developed as part of a regional wind integration collaborative effort and as part of the development of the council's Sixth Power Plan, which is now under development for the region.

In the meantime, the Bentek analysis has concluded that oversupply conditions in the natural gas sector will be exacerbated beyond the West in upstream markets. T report cited lower western gas demand for power generation reverberating back to the national gas supply-demand balance this spring and summer.

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