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BPA Announces Wholesale Rate Hike, Hermiston Spared by Staff Hermiston Herald, July 28, 2011

The Bonneville Power Administration announced this week that BPA's wholesale power rates will go up 7.8 percent, a move prompted by needed improvements to the region's 31 federal dams and lone nuclear power facility.

The rate increase will affect the City of Hermiston, but not the city's residents, according to Ed Brookshier, Hermiston's city manager.

"We were expecting a rate increase," Brookshier said, stating the city included those added expenditures in the 2011-2012 budget. "It will somewhat diminish our reserves. We are not passing that on to the consumer."

The added power cost will be offset by the conclusion of Residential Exchange Program negotiations, recently signed off on by BPA. The new agreement will ensure long-term stability for both investor-owned and publicly owned utilities.

"That's put to bed now, thank goodness," said Russ Dorran, superintendent of Hermiston's energy services, alluding to the string of litigations and negotiations over the convoluted REP program.

According to Dorran, Hermiston will receive $213,500 annually until 2019 as a result of the settlement.

"It's not an insignificant amount," Brookshier said.

That puts Hermiston on solid footing to deal with potential increases spurred by renewable wind energy costs. This month, a coalition of wind-power companies filed a complaint with the Federal Energy Regulatory Commission stating that BPA overstepped its bounds by shutting down wind production due to unusually high runoff this spring.

According to BPA spokesman Dough Johnson, BPA needed the extra transmission capacity in order to deal with increased power production caused by the excess water. Spilling too much water can cause fish-killing nitrogen build up, something Johnson said BPA has committed to avoid.

(bluefish notes: transmission capacity was rarely if ever a constraint on the system this spring when "Overgeneration" concerns arose.)

The wind-power producers, however, are upset because they will not receive renewable energy production tax credits, a multi-million dollar hit according to Johnson. Johnson said the loss was estimated by some sources to be as high as $37 million, but turned out to be much lower.

"It was just a few million dollars," Johnson said. "They were losing revenue, and we're aware of that."

Several utility companies, including the Northwest Requirements Utilities, a regional utility coalition that includes the city of Hermiston, filed statements of support for BPA.

"If the wind generators get their way, ultimately it will increase costs," Brookshier said. "It would most definitely increase costs."

At the heart of the issue is legislation passed in 2007 that requires a certain percentage of electricity production come from renewable energy sources. The legislation does not include in the "renewable" definition hydropower generated from facilities built prior to 1995, however.

That has spurred the growth of wind power production. Johnson, however, stated that as the BPA updates its production facilities, some of the energy produced could be considered renewable.

Adding new turbines that produce more power to existing dams could allow some of the power to fall into the renewable category, according to Johnson.

Related Pages:
'Renewable' Requirements Make No Sense by Neill Woelk, Hermiston Herald, 5/20/11