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Washington State Sounds Off on Power Prices

Washington State Sounds Off on Power Prices

Governors of nine western states announced last week an emergency energy conservation strategy to avert a California-type energy crisis and to mitigate future higher energy prices.

The governors vowed to work towards these goals, not only during the cold winters, but also during the summer and in the years to come. Governors from the states of Arizona, Colorado, Idaho, Nevada, Oregon, New Mexico, Utah, Washington, and Wyoming signed on to the strategy focusing on educating the public on energy conservation methods. The governors, members of the Western Governors' Association, will meet at an Energy Policy Roundtable Feb. 2 in Portland, OR, to review the implementation of state strategies, and examine short and long term solutions to the current power crisis.

In Washington state, one of the hardest hit by the decline in hydropower and power demands from California, municipal and investor-owned utilities have already initiated conservation drives. Last week Seattle Mayor Paul Schell and the Seattle City Council instituted a conservation plan as its municipal utility, Seattle City Light, proposed an 18% rate increase. At the same time, neighboring investor-owned utility Puget Sound Energy asked its consumers to switch whenever possible to off-peak power use.

In Seattle City Light's 18% increase, the utility cited soaring wholesale power costs and a drier than usual year as the primary reasons for the hike. Mayor Schell addressed the city council, repeating his request that the federal government step in and fix the situation. He lamented "California's sadly mistaken deregulation policies, which have opened the way for price-gouging market manipulation by power companies and power brokers," and asked for the Federal Energy Regulatory Commission (FERC) to step in and cap the price of market electricity throughout the West.

Schell also criticized the federal government for allowing the current situation to worsen. FERC "is too timid to step in and solve the problem, as they should, on behalf of all consumers in the West," Schell stated. "California's greed and timid regulators risk throwing the West and Washington state into recession."

City Light Superintendent Gary Zarker told the city council that he is proposing the rate increase "with the confidence that we are managing our way through a very difficult situation." Zarker said that a contract with the Bonneville Power Administration for City Light's full allotment of electricity, along with a share of power from a combustion turbine and a doubling of conservation efforts will eliminate the need for costly power purchases from the West Coast wholesale market by the end of the year.

The Seattle City Council already approved a 10% rate increase in September, but still climbing power prices have forced City Light to raise rates again, the superintendent said. The utility also pointed out that the region has experienced the third-driest November and December in the last 75 years, reducing the power capacity of the region's hydroelectric dams.

Schell and the city council in a related maneuver, announced a voluntary conservation program aimed at reducing the amount of electricity the utility must purchase from the West Coast wholesale market. The plan, which targets residential, commercial and industrial consumers, hopes to limit the size of future rate increases as well.

"We are calling on City Light customers to reduce their electrical demand by 10% at home and at work through the first quarter of this year," said Schell. "Customers will not only save money on their bills, but at today's wholesale electricity prices, they could help City Light save as much as $500,000 a day."

The Seattle City Council recommended the normal methods of conserving energy, including lowering thermostats, turning off appliances, and washing clothes with cold water.

"Conservation is the key," said Heidi Wills, chair of the Seattle City Council's Energy and Environmental Policy Committee. "It's the tool that customers can use to control their own bills, and it benefits the environment. There are lots of other ways to cut electricity use and reduce your bill. By simply turning off your personal computer when not in use, you can save up to $50 a year. And by the way," Wills added, "let's turn off that holiday lighting right now."

Schell said that officials would be working together with businesses throughout the city to help them save energy during the periods when it costs the most. He emphasized that the city will do its part. "I am directing my department heads to begin immediately to reduce electricity use by 10%," the mayor said.

Zarker noted that the utility currently must buy 20-30% of its electricity from the West Coast wholesale market during the winter months. "If we can reduce demand by 10% through conservation, it will help our financial situation considerably," the superintendent said.

Puget Sound Energy (PSE) is also on the warpath, urging its customers to observe Gov. Gary Locke's statewide call to conserve electricity. In combination with conservation efforts, the utility is asking its customers to shift their electricity usage to off-peak hours to lessen the burden during the day.

"Our region's households and businesses effectively could reduce their demand for electricity by shifting some of their energy consumption away from the hours when wholesale power prices generally spike up each day," said Gary Swofford, PSE's vice president of delivery.

Swofford said if PSE's 920,000 electric customers shifted just 10% of their peak-hour electricity use to off-peak hours, it would free up some 200 MW of power, enough to light almost 200,000 homes.

PSE also received a cost adjustment increase it had previously requested from the Washington Utilities and Transportation Commission (WUTC). The WUTC granted the utility an average rate increase of 19.4 cents per therm. The WUTC granted similar increases to two other Washington state utilities as well, Avista Utilities and Cascade Natural Gas.

The entire conservation strategy released last week by the Western Governors Association is available at www.westgov.org.

Alex Steis

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