Adventures In Federal Power Marketing

Michael Giberson

A news report in the Hungry Horse News (Columbia Falls, MT) captures the some of peculiar flavor of federal power marketing in the Northwest:

“The price of electricity mirrors the price of natural gas to a certain degree. With natural gas prices up, electricity prices are also up overall. That puts more money in BPA coffers, which, in sort of an odd twist, allows the administration to lower its costs and sell power at a cheaper rate.”

Something fishy is always going on at the Bonneville Power Administration. That’s a given for the federal entity that manages several hydroelectric dams along the Columbia and Snake rivers in the Pacific northwest. Normally, that “something fishy” is fish – the BPA is constantly trying to balance the many demands on its system: power supply, irrigation, recreational amenities, among other things, while at the same time allowing safe passage for many of the salmon and other fish that travel the rivers.

But something’s clearly a little off in the power marketing end of the agency. I think the story is, in part, this: While the BPA is obligated to provide power (at “cost”) to certain preference customers in the region, it also sells power it has available beyond those obligations in the wholesale market, but sometimes it doesn’t have enough power to meet all of these obligations, so it has to buy additional electricity on the wholesale market to supply the preference customers.

The full story is more complicated; see the details covered an a GAO report issued in July (Better Management of BPA’s Obligation to Provide Power Is Needed to Control Future Costs).
Hungry Horse News story found via Google News search. Many more related stories on the HHN website.

Will someone please remind me why we haven’t privatized this agency?


2 thoughts on “Adventures In Federal Power Marketing

  1. Hydropower is part “reliable” power and part “source or opportunity” power. If BPA is still entering into firm power contracts for “source of opportunity” power, which was one of the causes of the CA power problems, it should be ordered to cease and desist. “Source of opportunity” power is interruptible by definition. You can’t sell what you ain’t got!

  2. “…it also sells power it has available beyond those obligations in the wholesale market, but sometimes it doesn’t have enough power to meet all of these obligations, so it has to buy additional electricity on the wholesale market to supply the preference customers.”

    That’s absolutely right, and why BPA was crushed in 2001 when regional power prices shot through the roof. BPA was short power, and had to purchase spot to cover, costing the agency something like $1 B.

    But BPA is so strapped for cash now, it recently asked its customers to pay for a new transmission line. The customers pay for building the line in return for guaranteed capacity on that line in proportion to their investment.

Comments are closed.