western issues 7 / 23 / 01 below is the weekly western issues update sent to tim earlier . if you have any questions , please feel free to kristin walsh ( x 39510 ) .
executive summary
ferc multi - party refund negotiations
bpa financials & smelter agreements
bc hydro rate freeze
power refunds
the big event that happened last week in washington dc , in regards to california and the rest of the western energy markets , was that multi - party negotiations that flopped - apparently the difference between $ 8 . 9 billion and $ 703 . 6 million between parties could not be settled . below is a rough breakdown corporate offerings :
williams , duke , reliant , dynegy , & mirant : $ 510 million combined
powerex ( bc hydro ) : $ 125 million
15 power marketers including enron : $ 49 . 6 million
7 california municipal utilities : $ 6 . 5 million
load - serving entities outside ca : $ 12 . 5 million
northwest utilities submitted their calculations of overcharges , however , judge curtis wagner has virtually ignored northwest claims of $ 611 million in overcharges , stating " there was little time to address the issues raised by the pacific northwest parties . they did not have data on what they are owed , nor an amount of refunds due them . " contrary to the judge ' s claim , a number of northwest utilities did submit claim amounts at the settlement conference , although the problem is each utility has its own methodology for calculating these amounts . wagner was probably frustrated that there was no standard methodology for these calculations and appears to be leaning against giving nw utilities the same fast - track status as california . ferc had originally not even wanted to consider nw claims in this conference until a group of nw senators got together and applied some pressure - the result was there was not much time to get the overcharge data together . below is another rough breakdown of the claims :
pacificcorp : $ 6 . 7 million
snohomish pud : $ 229 million
tacoma power : $ 71 . 9 million
seattle city light : $ 222 million
port of seattle : $ 11 . 1 million
bpa : $ 70 million *
bpa
bpa borrowing : sen . patty murray ( d - wa ) has been leading the fight for bpa ' s request of $ 2 b in additional borrowing authority and was pleased the senate voted to increase access to additional funds , however , sen . murray has promised to fight the re - authorization caveat . murray ' s spokesman said the committee may have been concerned about ' bumping up against spending caps ' when it added the mandate for annual re - authorization . bonneville has warned it could exhaust its borrowing authority by the end of 2003 unless the amount was boosted from the current limit of $ 3 . 75 billion - - the increase got through the senate energy & water development subcommittee , but had the caveat added when it reached the full appropriations committee . increased borrowing authority would be used to update transmission infrastructure , retrofit columbia river hydropower projects to boost efficiency and continue conservation programs . we can expect to see more action coming out of sen . murray ' s office .
refunds : recent media reports have hinted to the possibility of northwest utilities ( including bpa ) seeking refunds for the overpriced power california is currently fighting . this information seems supported by fears that earlier settlements reached between northwest utilities and california state may be challenged by bankruptcy proceedings . if a bankruptcy court were to issue a ruling that significantly altered agreements between bpa and pg & e ( & potentially bankrupt socal . ed . ) , it is possible that bpa could press a refund request in the range of $ 70 m to $ 100 m . however , while bpa ' s refund request may be an option to stabilize their finances , they are also careful about voicing their opinion because of the $ 167 million in gross sales they made from california
bpa administration : the bush administration reportedly has no current plans to replace the bpa ' s administrator . the entire northwest delegation ( democrats and republicans from the bpa region ) has asked that he be made the full - time administrator . however , since many of the decision - makers at doe are conservative republicans , they ' re not comfortable with him because he is a democrat . at this time , doe people are unsure of how to handle this matter and appear to be in a state of limbo .
dsi / aluminum smelter - load reduction agreements : bpa is in the hot seat right now , realizing that falling electricity prices is making it possible for smelters under load reduction agreements to begin shopping around for other sources . few believe that these current market prices will be sustainable , considering the fact that the west will see a significant supply increase within the next year . consequently , dsi ' s will be very concerned about signing long term price contracts given the current downward pressure on prices ( which are still historically very high , but dropping ) . currently , there are two northwest smelters seeking to restart plant operations . alcoa is in preliminary talks with bc hydro to secure additional power to restart its intalco smelter , and kaiser , free from the money and the constraints of a load - reduction agreement , is also attempting to restart plants . we will continuing monitoring of this situation and will update as the story develops .
bc hydro
rate freeze : the current rate freeze was imposed by the former ndp government , and it ends 30 september 2001 . it is up to the government to direct the bcuc to lift the rate freeze , and before it can do that , it has to schedule a rate hearing and decide to put the utility back under the bcuc ' s purview . it has been a number of years since there was a rate hearing , and people are not looking forward to it because it begs all sorts of questions about overall energy policy . a rate hearing will be delayed until the new government has completed its administrative " core review " and decided on a broader energy policy , including its goals for bc hydro . lifting the rate freeze partly depends on how much regulators believe should be held in the rate stabilization account - this money has been redirected elsewhere over the past few years , leaving the utility unprepared for the sort of low - water conditions that have surfaced this year . bc hydro wants the freeze lifted , and the new government will have an ideological bias against continuing the rate freeze given that it was put in place by the ndp and flouts free enterprise principles . this suggests the rate freeze is on the way out , but it may persist beyond the original 30 september deadline for the reasons outlined above . how long it persists depends on how long it takes the new government to complete the core review .
western issues 7 / 23 / 01
below is the weekly western issues update sent to tim earlier . if you have any questions , please feel free to kristin walsh ( x 39510 ) .
executive summary
ferc multi - party refund negotiations
bpa financials & smelter agreements
bc hydro rate freeze
power refunds
the big event that happened last week in washington dc , in regards to california and the rest of the western energy markets , was that multi - party negotiations that flopped - apparently the difference between $ 8 . 9 billion and $ 703 . 6 million between parties could not be settled . below is a rough breakdown corporate offerings :
williams , duke , reliant , dynegy , & mirant : $ 510 million combined
powerex ( bc hydro ) : $ 125 million
15 power marketers including enron : $ 49 . 6 million
7 california municipal utilities : $ 6 . 5 million
load - serving entities outside ca : $ 12 . 5 million
northwest utilities submitted their calculations of overcharges , however , judge curtis wagner has virtually ignored northwest claims of $ 611 million in overcharges , stating " there was little time to address the issues raised by the pacific northwest parties . they did not have data on what they are owed , nor an amount of refunds due them . " contrary to the judge ' s claim , a number of northwest utilities did submit claim amounts at the settlement conference , although the problem is each utility has its own methodology for calculating these amounts . wagner was probably frustrated that there was no standard methodology for these calculations and appears to be leaning against giving nw utilities the same fast - track status as california . ferc had originally not even wanted to consider nw claims in this conference until a group of nw senators got together and applied some pressure - the result was there was not much time to get the overcharge data together . below is another rough breakdown of the claims :
pacificcorp : $ 6 . 7 million
snohomish pud : $ 229 million
tacoma power : $ 71 . 9 million
seattle city light : $ 222 million
port of seattle : $ 11 . 1 million
bpa : $ 70 million *
bpa
bpa borrowing : sen . patty murray ( d - wa ) has been leading the fight for bpa ' s request of $ 2 b in additional borrowing authority and was pleased the senate voted to increase access to additional funds , however , sen . murray has promised to fight the re - authorization caveat . murray ' s spokesman said the committee may have been concerned about ' bumping up against spending caps ' when it added the mandate for annual re - authorization . bonneville has warned it could exhaust its borrowing authority by the end of 2003 unless the amount was boosted from the current limit of $ 3 . 75 billion - - the increase got through the senate energy & water development subcommittee , but had the caveat added when it reached the full appropriations committee . increased borrowing authority would be used to update transmission infrastructure , retrofit columbia river hydropower projects to boost efficiency and continue conservation programs . we can expect to see more action coming out of sen . murray ' s office .
refunds : recent media reports have hinted to the possibility of northwest utilities ( including bpa ) seeking refunds for the overpriced power california is currently fighting . this information seems supported by fears that earlier settlements reached between northwest utilities and california state may be challenged by bankruptcy proceedings . if a bankruptcy court were to issue a ruling that significantly altered agreements between bpa and pg & e ( & potentially bankrupt socal . ed . ) , it is possible that bpa could press a refund request in the range of $ 70 m to $ 100 m . however , while bpa ' s refund request may be an option to stabilize their finances , they are also careful about voicing their opinion because of the $ 167 million in gross sales they made from california
bpa administration : the bush administration reportedly has no current plans to replace the bpa ' s administrator . the entire northwest delegation ( democrats and republicans from the bpa region ) has asked that he be made the full - time administrator . however , since many of the decision - makers at doe are conservative republicans , they ' re not comfortable with him because he is a democrat . at this time , doe people are unsure of how to handle this matter and appear to be in a state of limbo .
dsi / aluminum smelter - load reduction agreements : bpa is in the hot seat right now , realizing that falling electricity prices is making it possible for smelters under load reduction agreements to begin shopping around for other sources . few believe that these current market prices will be sustainable , considering the fact that the west will see a significant supply increase within the next year . consequently , dsi ' s will be very concerned about signing long term price contracts given the current downward pressure on prices ( which are still historically very high , but dropping ) . currently , there are two northwest smelters seeking to restart plant operations . alcoa is in preliminary talks with bc hydro to secure additional power to restart its intalco smelter , and kaiser , free from the money and the constraints of a load - reduction agreement , is also attempting to restart plants . we will continuing monitoring of this situation and will update as the story develops .
bc hydro
rate freeze : the current rate freeze was imposed by the former ndp government , and it ends 30 september 2001 . it is up to the government to direct the bcuc to lift the rate freeze , and before it can do that , it has to schedule a rate hearing and decide to put the utility back under the bcuc ' s purview . it has been a number of years since there was a rate hearing , and people are not looking forward to it because it begs all sorts of questions about overall energy policy . a rate hearing will be delayed until the new government has completed its administrative " core review " and decided on a broader energy policy , including its goals for bc hydro . lifting the rate freeze partly depends on how much regulators believe should be held in the rate stabilization account - this money has been redirected elsewhere over the past few years , leaving the utility unprepared for the sort of low - water conditions that have surfaced this year . bc hydro wants the freeze lifted , and the new government will have an ideological bias against continuing the rate freeze given that it was put in place by the ndp and flouts free enterprise principles . this suggests the rate freeze is on the way out , but it may persist beyond the original 30 september deadline for the reasons outlined above . how long it persists depends on how long it takes the new government to complete the core review .