NGI The Weekly Gas Market Report
Conservation and off-peak power usage have become the rallyingcries from government and utility officials in the western statesfacing power shortages, as they seek to avert a California-typecrisis.
Governors of nine western states announced yesterday anemergency energy conservation strategy to avert shortages in manystates and mitigate future higher energy prices. The governorsvowed to work towards these goals, not only during the coldwinters, 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 thestrategy focusing on educating the public on energy conservationmethods. The governors, members of the Western Governors’Association, will meet at an Energy Policy Roundtable Feb. 2 inPortland, OR, to review the implementation of state strategies, andexamine short and long term solutions to the current power crisis.
In Washington state, one of the hardest hit by the decline inhydropower and power demands from California, municipal andinvestor-owned utilities have already initiated conservationdrives. Earlier this week Seattle Mayor Paul Schell and the SeattleCity Council instituted a conservation plan as its municipalutility, Seattle City Light, proposed an 18% rate increase. At thesame time, neighboring investor-owned utility Puget Sound Energyasked its consumers to switch whenever possible to off-peak poweruse.
In Seattle City Light’s 18% increase, the utility cited soaringwholesale power costs and a drier than usual year as the primaryreasons for the hike. Mayor Schell addressed the city council,repeating his request that the federal government step in and fixthe situation. He lamented “California’s sadly mistakenderegulation policies, which have opened the way for price-gougingmarket manipulation by power companies and power brokers,” andasked for the Federal Energy Regulatory Commission (FERC) to stepin and cap the price of market electricity throughout the West.
Schell also criticized the federal government for allowing thecurrent situation to worsen. FERC “is too timid to step in andsolve the problem, as they should, on behalf of all consumers inthe West,” Schell stated. “California’s greed and timid regulatorsrisk throwing the West and Washington state into recession.”
City Light Superintendent Gary Zarker told the city council thathe is proposing the rate increase “with the confidence that we aremanaging our way through a very difficult situation.” Zarker saidthat a contract with the Bonneville Power Administration for CityLight’s full allotment of electricity, along with a share of powerfrom a combustion turbine and a doubling of conservation effortswill eliminate the need for costly power purchases from the WestCoast wholesale market by the end of the year.
The Seattle City Council already approved a 10% rate increase inSeptember, but still climbing power prices have forced City Lightto raise rates again, the superintendent said. The utility alsopointed out that the region has experienced the third-driestNovember and December in the last 75 years, reducing the powercapacity of the region’s hydroelectric dams.
Schell and the city council in a related maneuver, announced avoluntary conservation program aimed at reducing the amount ofelectricity the utility must purchase from the West Coast wholesalemarket. The plan, which targets residential, commercial andindustrial consumers, hopes to limit the size of future rateincreases as well.
“We are calling on City Light customers to reduce theirelectrical demand by 10% at home and at work through the firstquarter of this year,” said Schell. “Customers will not only savemoney 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 ofconserving energy, including lowering thermostats, turning offappliances, and washing clothes with cold water.
“Conservation is the key,” said Heidi Wills, chair of theSeattle 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 tocut electricity use and reduce your bill. By simply turning offyour personal computer when not in use, you can save up to $50 ayear. And by the way,” Wills added, “let’s turn off that holidaylighting right now.”
Schell said that officials would be working together withbusinesses throughout the city to help them save energy during theperiods when it costs the most. He emphasized that the city will doits part. “I am directing my department heads to begin immediatelyto reduce electricity use by 10%,” the mayor said.
Zarker noted that the utility currently must buy 20-30% of itselectricity from the West Coast wholesale market during the wintermonths. “If we can reduce demand by 10% through conservation, itwill help our financial situation considerably,” the superintendentsaid.
Puget Sound Energy (PSE) is also on the warpath, urging itscustomers to observe Gov. Gary Locke’s statewide call to conserveelectricity. In combination with conservation efforts, the utilityis asking its customers to shift their electricity usage tooff-peak hours to lessen the burden during the day.
“Our region’s households and businesses effectively could reducetheir demand for electricity by shifting some of their energyconsumption away from the hours when wholesale power pricesgenerally spike up each day,” said Gary Swofford, PSE’s vicepresident of delivery.
Swofford said if PSE’s 920,000 electric customers shifted just10% of their peak-hour electricity use to off-peak hours, it wouldfree up some 200 MW of power, enough to light almost 200,000 homes.
The entire conservation strategy released yesterday by theWestern Governors Association is available at www.westgov.org.
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