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Business Q&A -- Steven G. Hickok

Steven G. Hickok is the Chief Operating Officer of the Bonneville Power Administration

Q: What is the role the Bonneville Power Administration plays in areas served by Pacific Power?

Bonneville sells about half the electricity in the Pacific Northwest and we have 80 percent of the high-voltage transmissions. So even if we're not providing the electrons to you, we're going to be carrying them to you anyway.

Bonneville, by law, serves the public systems as preference customers. It serves the residential and small farm loads and the investor-owned utilities. You may notice on your bill from Pacific Power that there is a Bonneville component associated with the residential, small farm or subscription contracts. The investor-owned systems have generated for themselves traditionally. They develop their own power supplies, and for the most part public systems have bought from Bonneville.

Q: What are the advantages of a north-south intertie, such as the one just east of Medford?

It's always an advantage being this close to that much transfer capacity, because you can be served from so many different directions and the size of the capacity is far in excess of what the Medford area needs for its own supply. You?re kind of on the Interstate 5 of electric power. It's good to be near the high-voltage wires.

Other than a reliability advantage, it might also be an advantage in future siting of future power plants. So if you?re interested in the future development of this area, it's good to be near those lines.

Q: A co-generation plant was built in Klamath Falls last year and another is fast-tracking near the Klamath River. What are the chances of a plant going on in this area?

The availability of land, quality of the airshed and environmental impacts as well as proximity to the high-voltage power grid are all factors that influence the developer's siting decision. Most merchant developers want to be in a position so they can sell south in the summer and north in the winter and arguably that's where they should be. That's why interties exist.

Q: During 2001, Bonneville encouraged developers to expedite siting, construction and integration of new plants that would have added as much as 30,000 megawatts of new capacity in the region. Yet you've reported only three plants have been completed, adding 855 megawatts, and only four of nine projects started are still under way. What happened?

Most of those plants don't pencil out in this kind of wholesale market. So if the developer doesn't have a long-term contract for sale of the output of the projects for a price that's considerably in excess of the current short-term wholesale market price, they're not going to go forward. That's what knocked most of them out of the saddle — they can't get a long-term contract. They look at the short-term market and they don't want to dump power into that, that's a loser. So, they put them on hold or abandon them.

Do you see the situation changing?

Yes, gradually through time as the states settle on the rules for retail. Oregon actually has itself squared away better than some of the Northwest states. The Legislature recently set it on a pretty conservative course of offering retail choice under certain conditions to certain classes of customers and its phase-in over a certain period of time is a backstop supplier on the part of existing utilities. It's all kind of built to be a slow-motion transition to an era of greater retail choice, which is going to take a while.

Meanwhile, nothing like that is yet going on in Washington or Idaho. Montana actually fast-tracked and made some of the mistakes California made and is regretting it somewhat. All of the Montana generation was sold into the hands of a single merchant, Pennsylvania Power & Light.

Q: What is the impact of the coal-supplied power plants in Utah and Wyoming on our system?

All the power plants are energizing the same grid. The coal generation that Pacific Power has on the eastern perimeter of the system is fairly inexpensive thermal generation. The next power plants that everyone wants to build are gas-fired because Canadian gas is fairly readily available at decent long-term prices. That's all blended in with the hydropower from Bonneville, investor-owned and public systems. It's the proximity of these resources — coal, gas and hydro — — that makes the fundamentals of the Northwest so attractive. We've got a good base that's inexpensive and expandable.

To suggest a subject for this column, please contact business reporter Greg Stiles at 776-4463 or e-mail