Changing market alters PUD's position on profit

The Bonneville Power Administration’s billing philosophy is changing. That’s the word from the representative who met with Wahkiakum’s PUD commissioners September 15.

The changes will make power more costly to the PUD - like buying milk at the market. Bonneville is forcing Wahkiakum PUD to view itself as more of a for-profit business, selling individual electrical usage as part of a market system.

PUD Commissioners Bob Jungers, Esther Gregg and Larry Reese welcomed Bonneville representatives Shannon Green and account specialists Wally Roghair and Ann Sneters to their meeting.

Green told commissioners they had come to discuss Bonneville’s new Tier 2 rate structure. The Tier 2 rate alternative falls under Bonneville’s “demand management plan,” Green said.

The plan forces PUD commissioners to predict the county’s power usage from 2012 –2014, and Roghair said PUD commissioners will be asked choose one of three different plans, each having a different package of options:

-The Tier 2 Short Term contract would let the PUD buy power at the lowest possible market price but if the market goes up so does the price.

-The Tier 2 Load Growth contract, which would run from 14 – 17 years and offers a mix of short term and long term pricing based on a sliding scale of things like renewable energy and waste generation.

-The Tier 2 Vintage contract would offer the PUD a mix of prices that also adds wind power, solar energy and waste energy.

Each plan also comes with different pricing options based on the length of the contract and the options chosen.

Bonneville pulled Wahkiakum’s historical usage records for 2005-2007 and created what it calls a “system shaped load” profile. This profile is used to determine Wahkiakum’s Tier 1 load shape, which is about five megawatts per month.

Tier 1 power is electricity the PUD buys at the best price. Anything above the historical load shape falls into the BPA’s Tier 2 pricing category.

Bonneville’s records predict that Wahkiakum’s electrical usage will continue to grow by about 2.1 percent by the year 2014.

The agency also calls Tier 1 power the county’s “high water mark load” and it uses this measurement of electrical usage to forecast Wahkiakum’s growth.

“Based on our calculations by 2012 Wahkiakum will start to move past its peak high water mark load several months during its yearly billing cycle and then move into Tier 2 power,” said Green.

If the increase happens, BPA then moves the Wahkiakum PUD into whichever Tier-2 rate program the county has chosen.

“That is an extra charge,” said Roghair, “things are going to change, and costs, much higher.”

Green passed out a graph to explain Bonneville’s new billing methodology. The graph had 12 equal lines up and down.

“Each line represents a month of the county’s benchmark usage,” she said, “If in January the county’s electrical usage creeps above the forecasted benchmark high, if the PUD hasn’t chosen a Tier 2 product, the BPA starts selling power to the PUD at market rate, which is always higher.”

"Are we in a position to know when we’re reaching our high water mark for each month?" Commissioner Larry Reese asked Tramblie.

“I think we’ll get indicators,” Tramblie replied.

“We're so small there is really not much we can do about the BPA forcing us into one of its programs,” said Reese. “We’re (the county) like a flea on the toe of an elephant - they don’t really know we’re here.”

The commissioners said they would review all the data before October 1 and let the BPA know which of the Tier 2 products they had chosen.