 PenLight Chief Executive Officer, Jafar Taghavi |
August 2008
Times They Are A Changing
The NW power business model will begin to go through some major changes by October 2011 when our new contract with the Bonneville Power Administration (BPA) takes affect. I have been telling the community and our staff over the past year since my arrival as PLC new CEO that tomorrow’s business will no longer be business as usual.
Our members have enjoyed no rate increases since October of 2001 in spite of rising fuel costs that have had a negative impact our economy and our business. However we are committed to keeping rates at the same level until Oct of 2009. We have seen the cost of copper, aluminum and fuel increase dramatically over the last few years as we move forward with our reliability program. Like many of you we are trying to stretch the value of every dollar we spend.
One of the major changes in the new BPA contract will require PLC to meet its future load growth. In other words BPA will provide us with a baseline power commitment based upon our 2010 load. Any load growth after this will have to be purchased at a higher rate known as “tier 2” through BPA or we can elect to purchase power from a third party or develop our own generation. We are currently studying all of these options to determine the best cost effective approach.
To further complicate the issue, we will be require to purchase 15% of our power resources from renewable energy sources by 2020 because of the passage of initiative 937 by Washington voters in 2005. Since hydroelectric power isn’t considered a renewable resource we have to consider wind, solar, and biomass which will cost three times the current cost of hydro power. There was a bill that failed in the last legislative session to increase this mandate by to 25% by 2025. The state of California’s renewable mandate recognizes hydro as a renewable, so does this mean that they be able to take of advantage of our hydro that we must forsake to meet their renewable mandates? We strongly support renewables and the intent of I-937 but at what cost to the consumers. We also strongly feel that hydro has to be considered in the equation to meet the requirements of I-937. Today, 97% of the energy that we purchase is emission free.
As you can see the picture becomes very complicated especially with the state looking for more ways to oversee and regulate public power, a relationship that until now was between the utilities and BPA who is responsible to marketing the federal power generated from the Columbia River Basin. The days of low cost hydro will soon be leaving us and being able to provide low cost power to our members will a be challenge that we are ready to meet.
In the meantime we are committed to investing in new technologies to operate more efficiently now and in the future. We’ll continue to invest in improving the reliability of the most vulnerable parts of our electrical system. We made the commitment of being not just being good but great because we expect great things for a great community.
