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Northwest Passage: BPA's Changing Role

The treacherous journey toward a more efficient and transparent Northwest power market may be nearing its conclusion.
Fortnightly Magazine - July 2004

provides for an independent operating structure and sets forth principles that are intended to facilitate region-wide grid planning and an arm's-length approach to valuing and allocating resources on the system.

"Grid West will have a broad, regional approach to planning transmission additions," Carr says. "It will be able to identify who are the beneficiaries of the new transmission infrastructure in a way that can be used to determine who should pay for it. In the big picture, this is the biggest benefit that it brings."

BPA's New Groove

As efforts toward the Grid West RTO have proceeded, so have initiatives to modernize and restructure BPA's operational structure. Although these two separate efforts are interdependent and interrelated in many ways, they both require major changes at BPA.

"These two proposals force the agency to stare the future in the face," says Kahn of NIPPC. "How BPA chooses to react remains to be seen."

The Northwest Power Planning Council published a set of preliminary recommendations in 2002 for BPA's future role, based on stakeholder discussions regarding the agency's operating conditions. The process was put on hiatus for much of 2002, as BPA faced a financial crisis precipitated largely by the agency's costly power contract arrangements from the previous two years. Efforts resumed in 2003, and in early 2004 the NWPCC produced a series of recommendations intended to provide input to BPA and other organizations considering the agency's future role.

The recommendations 4 are timely, considering the status of the BPA's current customer contracts, some of which are set to expire in 2007, and the rest in 2011. Already many of BPA's major customers-including the region's investor-owned utilities-have renegotiated their contracts through 2006. But agreements still must be negotiated for subsequent years.

"It takes literally years to make changes, so starting now is imperative to focus on the period starting in 2007, and to get prepared for the post-2011 period," says Scott Brattebo, director of regulation for Pacificorp. "Bonneville will have new rates in place, so we already are beginning to start working on new ideas for how it should restructure rates."

Adding to the urgency, BPA's generation inventory is projected to be exhausted in about 2008 or 2009, and the agency's customers need to know what the procedure will be for securing new power supplies.

"In the past Bonneville inventories were adequate to meet the demands of preferred customers, but that's not so going forward," Brattebo says. "There is a general consensus among BPA's customers that they don't want Bonneville to continue investing in new required resources to meet load growth. The responsibility to seek non-federal resources to meet their load should pass to the utilities."

Customers that would call upon BPA to acquire new power supplies to meet their load growth would be expected to bear the incremental cost of those new power supplies. In other words, the days of melding purchased power with federal power to serve preferred customers and DSIs will come to an end, and BPA's preferred customers would no longer need to worry about the potential effects of high-cost