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BPA Says Demand Too Strong

BPA Says Demand Too Strong

The Bonneville Power Administration says that customer demand under new 10-year wholesale power contracts is so strong that it will have to purchase power on the open market to augment its supply. To recover its costs, BPA also proposes to add a 15% charge onto its wholesale rates going into effect Oct. 1, 2001.

BPA said that even with the new charges, its wholesale rates still will be "well below" wholesale market prices currently forecast for the next five years along the West Coast.

BPA signed new 10-year wholesale contracts two weeks ago with Northwest utilities and industries, pushing the agency's total firm energy load to 11,000 MW. The amount was higher than earlier BPA predictions and nearly 3,000 MW more than the federal Columbia River Power System can generate on a firm basis. BPA said 135 public customers signed up for 6,600 MW, including 2,000 MW of slice and about 1,200 MW of block sales. Of 135 customers, 127 signed 10-year contracts and eight signed five-year contracts. Six investor-owned utilities signed contracts for 1,000 MW, five for 10 years and one for five years.

"Costs in the deregulated wholesale power market have become very volatile," said Paul Norman, BPA senior vice president. "Recent steep increases and an apparent upward trend in market prices have prompted utilities formerly purchasing power in the market to bring their business back to BPA." BPA will have to augment its supply in that same market, officials said. The proposed 15% charge is because of higher prices for purchased power; other utilities in the Northwest already have announced rate hikes.

Earlier this year, BPA filed proposed power rates with the Federal Energy Regulatory Commission for the Oct. 2001 to Oct. 2006 period. The rate for public agency customers and the residential and farm customers of investor owned utilities was set at 2.2 cents a kWr, nearly unchanged from rates in effect since 1996, BPA said. The proposed 15% wholesale increase would affect each customer's retail rates differently, depending on that entity's other costs.

BPA also announced that its administrator, Judi Johansen is leaving to become executive vice president for government affairs and regulation at PacifiCorp. Steve Wright, currently BPA's deputy administrator, was named acting administrator.

Carolyn Davis, Houston

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