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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

incremental power.

At the same time, load-serving customers are seeking greater confidence that BPA's contracted prices will remain stable over the long term. Thus, the NWPCC recommendations call for BPA to offer 20-year power sales contracts.

"Everyone recognizes that things will happen that will require changes in the rate structure," Kempton says. "But in those cases they want a mechanism for examining their options within the process of a 20-year contract."

Bonneville acknowledges the need for changes in its operations and has announced plans for a policy process in the summer of 2004 to define its future role and address medium-term contract issues.

"We are trying to create clarity about the obligation to serve," Wright says. "We want to be clear about the use of the existing system, who will get how much, and about who will have the obligation to serve load."

By addressing both the agency's role and the regional market structure, stakeholders are ensuring a more stable future in the Northwest. Additionally, they are laying the groundwork for a market that will attract badly needed infrastructure investment. The challenge now is to sustain the momentum that the regional representatives have developed and reach an end state that satisfies everyone's needs.

"Have we created the institutional structures to make sure that steady investment will happen over time?" Wright asks. "No, we haven't. That's why we are interested in creating Grid West and bringing clarity on our obligation to serve."

If the agency and the region can accomplish these tasks, then the Northwest will be well prepared to meet 21st century power demands. And BPA's multiple masters will become slightly easier to please.

Endnotes

  1. Then-DOE Secretary Bill Richardson brokered a deal wherein the aluminum mills would curtail operations and resell up to 1,000 MW of power that BPA would acquire in the wholesale market. The deal effectively subsidized aluminum industry jobs, arguably at the expense of BPA customers. See Redman, Eric, "The Aluminum Lobby: Impact of the Direct Service Industries on Electric Consumers of the Northwest," , Spring 2002, Willamette Public Policy Research Center.
  2. Lackey, Robert T. 2001. "Salmon and the Endangered Species Act: Troublesome Questions." . (19(2): 6-9); ( http://www.epa.gov/wed/pages/staff/lackey/pubs/trouble.pdf).
  3. , Northwest Power Planning Council, Dec. 12, 1996 (CR96-26); ( http://www.nwcouncil.org/library/1996/cr96-26.htm).
  4. , Northwest Power & Conservation Council, May 2004 (NWPCC 2004-05); http://www.nwcouncil.org/library/2004/2004-5.pdf.


Water Worries

Environmental factors are playing a larger role in the Pacific Northwest energy drama, with some interesting ramifications for the region's power supply future.

Recently the spotlight turned to global warming and climate change effects. The latest climate model, released in February 2004 by the U.S. Department of Energy's Pacific Northwest National Laboratory (PNL), indicates that in the best-case scenario, snowpack will shrink by up to 70 percent in the coastal mountains during the next 50 years. This would have widespread regional effects, possibly including reduced hydropower production in the spring and summer months.

During the Western electricity crisis, low-water conditions contributed to power shortfalls in California and price spikes throughout the region. Such conditions also put increased pressure on river ecology.

In the