Northwestern municipal utilities slap on surcharges

Tacoma Power and Seattle City Light, the two largest municipally owned electric utilities in the Pacific Northwest, will hike customer bills to cover costs of purchased power. The utilities added a 50% and 10% surcharge, respectively, to customer�s electric bills effective Jan. 1.The Pacific Northwest suffers from short supplies of power and spiking prices similar to California. In winter, the northwestern electric utilities generally buy power from California.


Ann de Rouffignac
OGJ Online

Tacoma Power and Seattle City Light, the two largest municipally owned electric utilities in the Pacific Northwest, will hike customer bills to cover costs of purchased power.

The utilities approved a 50% and 10% surcharge, respectively, to customers' electric bills effective Jan. 1.

The Pacific Northwest suffers from short supplies of power and spiking prices similar to California. In winter, the northwestern electric utilities generally buy power from California.

Demand peaks in the summer in California and in the winter in the Northwest. But California continues to import power during its so-called �off peak� at the expense of the Northwest which is suffering its own power problems.

�We normally would buy from California but can�t. To add insult to injury, we were ordered by the Energy Secretary to sell our surplus power to California,� says Sue Veseth, spokeswoman for Tacoma Power. �Like anybody has any surplus.�

Energy Sec. Richardson ordered independent power producers, utilities, and marketers to sell �surplus� power to California. The action was not well received in the Northwest that faces its own problems.

Veseth says reservoir levels for its hydroelectric generation have set a new low. The area is also experiencing an early hard winter. Because the western power markets are linked, prices have skyrocketed in the Northwest just like in California.

Some northwestern utilities have tried to avoid the power markets by drawing down reservoirs below acceptable levels.

�We have enough water to generate. But we are drawing down our reserves that are supposed to be for March and April,� says Dan Williams, spokesman for Seattle City Light.

But the hydro does not supply enough power to meet Tacoma's and Seattle's winter load demands. At least 30-40% of their load is being met with purchased power. That�s why they had to slap on the surcharge.

�We are getting hammered,� says Williams. �We are paying 10 times more than we are used to.�

Williams says winter prices were typically about $50/Mw-hr. Now, they are approaching $500/Mw-hr.

The municipal adopted the surcharge in September effective Jan. 1. But market conditions have worsened since then, he says.

�Things have grown worse. It�s possible that soon we will have to ask for more,� Williams says.

Tacoma Power tells a similar tale.

Tacoma had originally asked for a 100% surcharge but city council only would approve a 50% charge. Tacoma Power agreed but set a condition that it could return and ask for an additional surcharge, says Veseth.

The municipal utility began the summer with a $100 million surplus which was supposed to last until October 2001. But Tacoma Power ran through the money in a matter of months, she says.

�For example, we were buying power that would cost between $2 million and $7 million but only collecting $450,000 from customers,� she says. �Without this surcharge, we will run out of money by February.�

Not only do these Northwest municipals have high purchase power costs, they face uncertain supplies of power, too.

�On Friday, we couldn�t buy power for Monday at any price,� says Veseth. � We had to ask our largest customers to get off the system.�

The municipal utilities are also making desperate appeals to customers for conservation. One commercial entity Pabco Roofing went so far as to reschedule its holiday break, reducing electrical load, she says.

�We are not out of this yet,� Veseth. �Our coldest time is in January and February.�

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