BPA seeks quicker recovery of purchased power costs

Hit by increased electricity demand, Bonneville Power Administration, Portland, Ore., is asking federal regulators for full and quicker recovery from its customers of higher costs for purchased power. BPA is usually a net seller of power, but this summer has resorted to buying electricity on the spot market to meet increased customer demand.

Sept. 1, 2000

2 min read

Ann de Rouffignac
OGJOnline

BPA is usually a net seller of power, but this summer has resorted to buying electricity on the spot market to meet increased customer demand. The nonprofit federally owned agency generates, sells, and transports wholesale power within the Pacific Northwest.

�We have an energy deficit all the time now,� says Ed Mosey, spokesman for BPA. �The California market is driving the price of power into the stratosphere. When we buy, we�re paying that price.�

BPA produces about 17,000 Mw of hydroelectric power generation at peak and maintains 6,987 Mw on a sustained 12-month average. The hydroelectric power is considered some of the most economical power in the US.

But the agency has not increased its generation capacity, while demand has increased in the region for almost a decade. BPA must now supplement its internal generating capacity with purchased power.

BPA is asking regulators to approve a more flexible cost recovery adjustment clause that will allow an automatic temporary increase in power prices when its purchased power costs increase. BPA is scheduling meetings with rate case parties for the next 2 weeks to come up with a proposal that will win the approval of the BPA administrator�s law judge and the US Federal Regulatory Energy Commission (FERC).

BPA has experienced record power demand by area utilities that are seeking contracts from economical sources of power rather than having to resort to the spot market.

�We are already negotiating with customers for these contracts. They are putting more load on us than we had anticipated,� Mosey says.

BPA says customers are requesting contracts for 1,400 Mw on average more than anticipated. That means the original rate proposal and cost recovery mechanism approved by FERC earlier this year could put BPA�s financial stability at risk, the agency says.

The recent surge in demand is driven by a desire to buy Bonneville�s power which is still cheaper than other suppliers, even when the higher costs of purchased power is included.

�They would rather pay our melded cost-base rate than play the market,� Mosey says.