503 



Agreement to be filed at the FERC this fall, to be ready for the 1993-94 winter heating 

 season. There is an immediate need for the arrangements: not only has the Northwest 

 hydro system not refilled, it has been significantly derated for salmon mitigation and we no 

 longer have the Trojan plant to help meet load. Additional transmission capacity to 

 California may allow imports to help meet energy demand, but there is the possibility of 

 interruption of that capacity, which could cause a physical shortage of electrical power in 

 the region. 



During a shortage and curtailment situation, it is expected that power will be 

 exchanged at prices up to 100 mills, compared with BPA's average wholesale firm power 

 rates in the mid-20s and retail rates ranging up to the mid-50s. Wholesale rates to BPA's 

 DSI customers could continue in the low 20s. Why would any utility, or EPA, pay prices 

 of as much as 100 mills/kWh when it can only earn 25-55 mills? Because the alternative is 

 worse: during an actual shortage, there is the real possibility of not meeting load, of 

 brown-outs or black-outs. Such interruptions in the supply of electricity to retail consumers 

 could pose serious problems of human safety, health, and welfare. Curtailments would 

 almost certainly have the effect of reducing economic output and quite possibly translate 

 into lost jobs. In these circumstances, the social cost of not meeting each kilowatt-hour of 

 load could easily exceed 100 mills. BPA and the region's utilities, as well as the states and 

 the DSls, recognize these costs, and thus have committed to both the Share-the-Shortage 

 Agreement and the Regional Curtailment Plan as reasonable ways to ensure that loads are 

 reduced in a controlled manner and that available energy does go to meet those reduced 

 loads. The Regional Curtailment Plan should help ensure that there are no brown-outs or 

 black-outs, and the Share-the-Shortage Agreement should help direct the financial 

 consequences of the power exchanges necessary to keep the region's lights on. 



