Report bodes well for Wallula plant
A Northwest Power Planning Council report calls for new power plants to help prevent future power shortages.

A report that calls for new generating plants to help head off another West Coast power crisis should help boost the Wallula Power Project, a local official said today.

The report, issued Tuesday by the Northwest Power Planning Council, said while the risk of electricity shortages is low in 2003, it will increase in 2005 and 2006 if new power plants and energy conservation initiatives are not developed in the next three years.

The situation could grow worse in the hydropower-dependent Northwest if weather conditions keep runoff below normal, planners also warn.

``That forecast improves the chances for the (Wallula) project proceeding forward,'' Jim Kuntz, executive director for the Port of Walla Walla said today.

``I would assume the developers of the project will use this article as part of their presentations to Wall Street and other financiers that a project can be built,'' he said. ``It helps boost Wallula (Generation's) project.''The site application for the $550 million, 1,300-megawatt, natural-gas-fired power plant has been sent to Gov. Gary Locke for a final recommendation. But the soft economy and falling energy prices have raised concerns over whether developers can obtain financing for the project.

Robert Kahn, public affairs director for Newport Northwest LLC, which is the parent company of project developer Wallula Generation LLC, said ``the financial community, I'm sure, will be very interested in the Power Planning Council report, and that's very helpful.''``This is a boom and bust industry, but the fundamentals really haven't changed.

As indicated by the Power Planning Council, we still need electricity,'' Kahn said. The analysis by the council's Power Division staff said the probability of electricity shortages during the winter of 2002-03 is no greater than 4 percent, which is below the 5 percent standard accepted by the utility industry.

However, the probability increases to 7 percent during the winter of 2003-04 and to 15 percent in the following two winters.

``We will be OK this winter, but for the 2004-2006 period we are exposed to a level of risk that is higher than we think it should be,'' said Tom Karier, Power Planning Council chairman and one of Washington's two council members.

The problem identified in the analysis is the same, although smaller, as the one identified by the council in March 2000, several months before the energy crisis of 2000-01 began.

Through the 1990s, development of new power plants and energy conservation lagged steadily farther behind the growing demand for power, on the West Coast generally and in the Northwest specifically.

The problem was that the wholesale price of power generally was lower than the cost of power from new power plants or most types of energy conservation, and this discouraged new investments, the report said.

When the California power crisis developed and the Northwest suffered drought, power supplies diminished and the prices jumped to more than 10 times normal levels and stayed there from the fall of 2000 through the late spring of 2001.

``We could be headed right back into the problems we faced in 2000, and we need to think about how we will respond as a region if the new power market fails to encourage adequate investment in new power plants,'' Karier said.

``We've had a very dry fall, and we anticipate we will not have average runoff this year in the Columbia River. This is an important reminder that the Northwest is still very dependent on hydropower and vulnerable to the variability of weather.''