At the outset of June the indicators are mounting that water in the Pacific Northwest will continue at record levels and the amount of natural gas needed in thermal electric generation will continue to decline.

The Northwest River Forecast Center expects water supply at the Dalles Dam to be at the seventh highest level in the past 50 years, and separately in Idaho the state regulatory commission just approved a 4.8% rate decrease for Idaho Power Co. tied to excess hydroelectric power that has displaced a significant amount of higher-cost gas-fired and other thermal generation. Idaho Power’s fuel bill was $40 million less than anticipated over the past 12 months due to the added water.

Gas demand for power generation in the Northwest is expected to “run at a minimum” this summer, according to the latest report from Barclays Capital’s commodities research unit.

“This could mean that on many days gas-fired power plants in the region remain idle around the clock,” said Barclays’ report, speculating that surplus hydro availability is expected to be at its greatest level in June.

The report also noted that relative to last year, which also showed gas demand at what Barclays called minimum levels, there is limited downside risks for gas consumption this summer. “Gas demand could take a greater hit in June and August this year, possibly dropping 300-500 MMcf/d relative to 2010.”

High runoff of water causing dams to spill at rates threatening to violate environmental regulations have also caused a range war between the region’s principal federal power marketer/transporter, the Bonneville Power Administration (BPA), and the wind industry (see Daily GPI, May 20) over the power agency’s drastic cutback in supplies from wind turbine facilities that now account for more than 3,000 MW of the region’s generating capacity.

“This is forcing the involuntary curtailment of thermal and wind generation,” the Barclays report said. One result is that off-peak forward wind prices for June are trading at negative levels in anticipation of oversupply in the region. Based on BPA’s current operating plan (environmental redispatch protocol), the agency has been at times curtailing up to 1,438 MW of thermal and wind generation in the four-state region (Idaho, Montana, Oregon and Washington).

“Forward power prices for delivery in June this year at the Mid-Columbia point have dipped into negative territory in anticipation of oversupply,” the Barclays report said. “Negative prices mean that the seller pays the buyer to take the generated power.” (The negative prices could still be economical in cases where the seller gets production tax credits, or renewable energy certificates.)

More than the almost nonstop rain that is common in the region, snowpack levels, and the rates of runoff, are what really impact energy production sources. Barclays noted that snowfall has been “particularly strong” this year, with most of the Northwest having more than 110% of normal in the October-April period. Snowpack levels have been averaging even higher at more than 150% of normal in most parts of the region.

In the midst of the water surge, even border states such as Utah have experienced high snow-water equivalent levels in excess of 150% of normal in most areas, and in mid-May the U.S. Department of Interior sent out a request for proposals (RFP) for a string of low-impact hydroelectric facilities at a federal water project in central Utah. Bonneville’s equivalent, the Western Area Power Administration, would have the first chance to buy the added hydropower, according to the RFP.

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