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Doug Bechtel
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I sit here with pen poised above pad and there is nothing there. I can't think of a single subject for an OPALCOGRAM. Usually, when I get in this fix I think about what is going on at OPALCO and what I have been working on recently.
I think the biggest thing facing OPALCO right now is the Bonneville Power Administration reinvention. We have reached a critical time in the reinvention process and things are changing on a minute by minute basis.
I spent Tuesday and Wednesday of this week in Portland watching out for OPALCO's interests. I found out Tuesday morning that everything was up in the air. The meetings that I had scheduled were canceled, rescheduled or changed. What prompted all this upheaval was a meeting of the senior staff within Bonneville, at which they were told almost 40% of the power that Bonneville sells to utilities like OPALCO was in danger of being lost to other suppliers. Since 85% of Bonneville's cost of operation is fixed, the loss of 40% of their loads would have catastrophic consequences to Bonneville's ability to survive. There is a current power surplus on the west coast so there is no other market which would buy this excess power.
I did end up with several meetings with people from Bonneville who asked what they need to do to keep cus-tomers. I have talked to a lot of utility people recently, many of whom are planning to buy power from someone other than Bonneville and the real concern seems to be Bonneville's inability to control costs, particularly since many of these costs (such as salmon rehabilitation) are outside of Bonneville's ability to control. If you followed the news recently, you have heard that the latest plan from the National Marine Fisheries Service will cost an additional $150,000,000 a year to save the Columbia River salmon. This brings the total fish costs to a half billion dollars ($510,000,000 actually) a year. Don't forget we (you and I through our power bills) have already spent over two billion dollars on saving salmon evidently with nothing to show for it.
Maybe I am an op-timist, but I honestly believe that Bonneville will survive its reinvention, will get its costs under control, and will be in a better position in the future to regain its position as a low cost provider of electric energy.
Several utilities are seriously considering proposals from other suppliers that have price escalators of 3.5%, 4% or even more each year. This gets pretty expen-sive in a long term contract and the real question is whether Bonneville's rates over the next several years will increase more or less than 4% per year. It is going to be a pretty hard decision to make but it is a decision OPALCO is going to have to make over the next several months.
What is the value of certainty of rates, how much premium will you pay for that certainty? There is no question that Bonneville is going to lose a significant amount of load. The question is, will enough load remain to keep Bonneville financially viable? Interesting times!!
See! There is never a problem finding something to talk about in these OPALCOGRAMS.
Doug Bechtel
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