Securing Power for the Islands
OPALCO signs a new contract with Bonneville Power Administration
Orcas Power & Light Cooperative recently joined 130 other Northwest public utilities in signing new 16-year electric power contracts with Bonneville Power Administration. This strategy, called the Provider of Choice Initiative, secures electricity for the Pacific Northwest through 2044.
OPALCO is a member of Pacific Northwest Generating Cooperative Power, along with 25 other regional electric cooperatives. PNGC Power has been instrumental in working with BPA on OPALCO’s behalf to get these agreements in place. PNGC Power operates as a joint operating entity that aggregates member co-ops’ electrical loads and resources under consolidated contractual agreements with BPA. Working with PNGC Power in this way allows individual co-ops like OPALCO to better manage power prices and supply risk.
BPA is a federal power marketing administration created in the 1930s as part of the Department of Energy. BPA sells power mainly generated by the federal hydroelectric dams in the Columbia River Basin and operates major high-voltage transmission across the Northwest. BPA and regional utilities spent the past four years negotiating a new contract model that starts in October 2028. As the energy from the federal Columbia River dams reaches its maximum, BPA has created a modified rate structure to reflect nonfederal supply additions—referred to as Tier 2 power.
Tier 2 power costs are almost double Tier 1 ($70 a megawatt versus $40 a MW). Since about 2010, OPALCO has been paying that higher cost for power when energy use goes over our allocated amount—usually during peak weather events. During these weather events, BPA generally must go to the market to buy energy to supply the region with what is needed. That market power is usually more expensive than the hydropower the region is regularly supplied with.
The most significant near-term change for load-following customers like OPALCO is likely higher and less forgiving capacity and demand charges, plus a new end-of-year energy true-up that can charge forecast errors at marginal Tier 2 energy prices. At the same time, BPA expanded behind-the-meter exemptions, which strengthens the value of local generation, storage and demand response. BPA is working on several initiatives to prepare for the region’s growing energy demand, including improvements to Energy Northwest’s nuclear power plant that will result in additional energy output, efficiencies to increase hydropower outputs, streamlining transmission access and investments of $25 billion in transmission projects across the Northwest.
“This is a great accomplishment for OPALCO, BPA, PNGC and regional utilities to continue to work together to provide communities across the Northwest with clean, low-cost reliable power for the next two decades,” says Brian Silverstein, OPALCO board member and former BPA senior vice president of transmission.
