Congressional update - July 17, 1998

Congressional Update - July 17, 1998

A Newsletter for Congress and Constituents

Impartial analysis shows future value of BPA electricity to Northwest ratepayers

For more information:
Dick Watson or Pete Swartz
Power Division
800-452-5161

Electricity from the Bonneville Power Administration will continue to be a good deal for Northwest ratepayers except if the most adverse financial conditions combine with the most expensive salmon restoration efforts in the future, an analysis by the Northwest Power Planning Council shows.
     ?The analysis shows that under a wide range of future market prices for electricity, this system has a lot of benefit to the region,? Council Chair John Etchart of Montana said.
     The Council's Power Division used a sophisticated computer model, known as Aurora, for the analysis. The Aurora model simulates the West Coast electricity system.
To ensure an impartial analysis, the Council invited representatives from Indian tribes, the aluminum industry, environmental groups, electric utilities and experts in policy regarding fish and wildlife and energy to oversee the effort.
     The analysis estimates the costs Bonneville may have to recover through its power rates given a range of possible prices for electricity and salmon restoration obligations. Bonneville pays for most of the region's salmon restoration efforts through the Northwest Power Planning Council's Columbia River Basin Fish and Wildlife Program.
     In addition to three ranges for future electricity prices, the analysis included eight future salmon restoration scenarios. These ranged from few changes at the dams or in river conditions, such as boosting flows or spilling water during the spring and summer when juvenile fish are migrating to the ocean, to breaching the four lower Snake River dams and John Day Dam on the Columbia River. Each scenario, or a variation, is being studied by the U.S. Army Corps of Engineers as the dam-operating agency prepares a feasibility study on the future of the four lower Snake River dams. A draft of the Corps? study is due in April 1999.
     ?The analysis was silent as to whether any of the salmon restoration measures would be prudent or would provide biological benefits,? Etchart noted.
      According to the Council's analysis:

With high future market prices for electricity ? over 6 cents per kilowatt hour by the year 2020 ? Bonneville has positive net revenues under all of the fish and wildlife scenarios considered. The market price currently is around 2 cents per kilowatt hour.
With medium escalation of future market prices for electricity ? to about 4 cents per kilowatt hour by 2020 ? Bonneville has positive net revenues in all but the most costly fish and wildlife scenarios.
With low market prices ? about 2 cents per kilowatt hour by 2020 ? Bonneville's costs exceed expenses in more expensive fish and wildlife scenarios, but it's close. Even a 10-percent increase in market prices could make the difference between positive and negative revenues.

The analysis, entitled Analysis of the Bonneville Power Administration's Potential Future Costs and Revenues, Document 98-11, is available online or from the Council's office, 800-452-5161.