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Electricity: The BPA predicts it will lose money, and Northwest residents could face higher bills

By Ted Sickinger
The Oregonian

“This is a very serious decline that impacts our power supply and therefore our finances,” said BPA Administrator Steve Wright. “We’re hopeful that the outlook will improve, but we cannot count on it.”

The BPA has financial reserves to fall back on, and just completed a rate case, so the revenue loss won’t be immediately felt by its public utility customers, said agency spokesman Michael Milstein. If conditions continue to deteriorate, however, the BPA does have a mechanism to reopen its rates.

Customers of investor-owned utilities could feel some of the heat. Portland General Electric, Oregon’s largest utility, gets about a quarter of its power from hydro. Much of that is on contract, but the company has a substantial hydro operation of its own that delivers cheap, fuel-free power.

The company declined to comment on operations in advance of its Feb. 25 earnings announcement. But if summer runoff is low, and the cost of replacement power is significant enough, some of the costs can be passed directly to customers. PGE is already dependent on market purchases to meet customers’ needs, making it vulnerable to spikes in power prices.

Purely from the standpoint of utility costs, this is a relatively good year for a water shortage. As opposed to 2001, when low runoff, a heat wave and power shortages combined to create an energy crisis, the current recession means that demand is low, and power prices are reasonable.

“If you’re going to have a year with bad runoff, this is the year to have it,” said Bob Jenks, executive director of the Citizens’ Utility Board of Oregon.

Then, again, a lot will depend on summer weather throughout the West, he said. The lack of hydro could have significant impacts, “but it’s too early to say whether it’s likely to happen.”

Ted Sickinger: 503-221-8505;

The Oregonian
Portland, OR
February 7, 2010

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