LETTER TO THE EDITOR: There’s a cap on cheap power
August 9, 2008 · Updated 6:01 PM
To the editor:
Last week a letter writer in favor of a Whidbey PUD stated that Puget Sound Energy (PSE) purchases electricity at a low wholesale price from the Bonneville Power Administration (BPA) - and then "marks it up to cover their costs plus profit."
That is not correct. Investor owned utilities (IOUs) like PSE do not purchase power from BPA. However, sometime back, the IOUs made the argument that, given that BPA is a government agency, their residential ratepayers should have access to the cheaper BPA power.
As a result, an arrangement for a small rate break was negotiated - which you'll see on your PSE electric bills as the "residential exchange rate." That rate benefit is the object of litigation by the region's public utilities.
Another important clarification: There is only a small amount of cheap BPA power available to new PUDs in the region and it is capped at 210 average megawatts. That amount of low cost electricity has to be shared among all new public utilities in Washington, Idaho, Oregon and Western Montana. The more new public utilities there are, the less each gets. (For context, Oak Harbor uses about 50 average megawatts a year.)