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ENERGY: Investor-Owned Power Companies Scrambling to Keep Washington Lights ON |
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Written On: July/August 2004 |
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Written By: by Paul Schlienz |
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Washington’s three investor-owned utilities — Puget Sound Energy, Avista, and PacifiCorp — have deep roots in our state’s history and a vital role to play in our energy future. For over a century, these publicly traded companies have successfully matched electrical supply to demand. In the process, they helped the Northwest grow into the vital region it is today.
Electrical power first came to Washington in 1881, only two years after Thomas Edison invented the incandescent light bulb. Our state’s citizens got their first glimpse of this exciting new technology when the steamer Willamette pulled into Seattle’s Elliott Bay one summer night. The strange, soft glow that emanated from the ship came from a newly invented electric arc lamp, powered by an on-board generator.
Shortly thereafter, in 1882, the Tacoma Mill Co. installed Washington's first electrical generator to provide lighting for its mill and yards. That same year, Edison opened New York’s Pearl Street Station, which provided the first central generating service to 59 customers.
Edison & Company Start Seattle Light Co.
In 1886, two representatives of Edison, Sidney Mitchell and F.H. Sparling came to Seattle and formed the Seattle Electric Light Co. with local investors. The company promptly won Seattle’s first municipal franchise for electric street lighting. In 1898, the company opened its first hydroelectric plant at Snoqualmie Falls, which is still in use today.
In 1900, the Seattle Electric Light Company merged with several electric streetcar lines to form the Puget Sound Traction, Light & Power Co., which would ultimately become known as Puget Power. Beginning in 1910, Puget Power found itself in bitter competition with Seattle’s municipally-owned City Light for customers and dominance of the Seattle market. Finally, in 1950, City Light acquired Puget Power’s assets and services within Seattle’s city limits.
From then on, Puget Power concentrated on providing power to much of the remainder of the Puget Sound region, which exploded with growth during the post-World War II era. In the 1990s, Puget Power acquired Washington Natural Gas. Now known as Puget Sound Energy, this Bellevue-based company is the largest energy provider in western Washington. With approximately 2,200 employees, it currently serves 1.4 million customers. The company’s largest source of power generation remains hydroelectric.
Washington Water Power Formed in 1889
During the late 19th Century, many other small, private power companies emerged throughout the Pacific Northwest. Washington Water Power was one of them. It was founded in 1889 in Spokane by 10 investors who recognized the potential of the Spokane River to provide power for the city that was growing around its falls and rapids. By building upon abundant hydropower, Washington Water Power ultimately expanded its service area far beyond Spokane.
In 1999, Washington Water Power changed its name to Avista. Today, Avista is the parent company for a number of affiliates, including Avista Utilities, which provides electric and natural gas generation, transmission and distribution. In addition to eight hydroelectric dams, the utility operates coal, gas and wood waste plants.
Still based in Spokane, Avista powers a vast region including much of eastern Washington and northern Idaho where it serves nearly 325,000 electric customers. With approximately 1,400 employees, the utility also serves significant portions of Oregon and smaller territories within California and Montana. Additionally, Avista provides natural gas to about 300,000 customers. All told, Avista’s service area is over 30,000 square miles.
“Fifty-nine percent of our generation resources are hydroelectric,” stated Scott Morris, president of Avista Utilities. “Twenty-five percent of our mix is natural gas fired generation, 13 percent is coal, and roughly 3 percent is biomass. We also have 35 megawatts of wind.”
PacifiCorp Dates Back to 1910
Formed from several smaller companies in 1910, Pacific Power & Light Co. began with a mere 7,000 customers in Astoria and Pendleton, OR, and Yakima and Walla Walla, WA. From this tiny acorn, Pacific Power steadily grew as it acquired other companies, properties and service areas. Over the years, the company built transmission systems and extensions to serve rural areas.
Today, this Portland-based company is a behemoth with 6,700 employees and 1.5 million customers in the western states. Now known as PacifiCorp, the utility operates as Pacific Power in Oregon, Washington, Wyoming and California. In Utah and Idaho, it retains the name of Utah Power with which it merged in 1989. In 1999, the company went global when it merged with Scottish Power, a United Kingdom-based electric utility.
PacifiCorp’s generation sources are as diverse as the company.
“We have about 8,000 megawatts of generation resources that we own or sell or have under contract,” said Judi Johansen, PacifiCorp’s president. “About 6,000 of it is from our own coal-fired resources and about 1,100 to 1,200 are from hydro. We also have gas-fired plants, primarily on the east side of the Cascades. We get a smaller portion of our generation from wind and geothermal as well.”
Hydro Power Electrified Northwest
The Northwest was long known for its cheap hydroelectric power, which allowed the region to industrialize. Then, beginning in 2000, the effects of the California energy crisis, energy deregulation, and a series of drought years that starved dams and reservoirs of water spiked Northwest energy prices to previously unthinkable levels. The region that had once boasted the country’s cheapest energy now is burdened with electricity costs that are among the highest. Entire industries dependent on large amounts of cheap power, such as aluminum, are in danger of extinction.
Although hydropower, to a great extent, made the Northwest what it is today, it will not be so dominant in the future. In addition to its vulnerability to drought, hydro’s potential is limited by the fact that the region has few sites left to build hydroelectric dams to accommodate growth in electrical demand.
In response, Washington’s investor-owned utilities are working to lessen their dependence on hydro by encouraging conservation and looking at new power sources ranging from thermal generation to renewable resources.
All have energy conservation rebate programs and are aggressively searching for “green power” sources. For example, PacifiCorp plans to add 1,400 megawatts of wind and geothermal generation in the next 10 years. It also has invested in the world’s largest solar energy project in the Mojave Desert.
“PacifiCorp has developed a portfolio of options for growing demand across our six states,” Johansen said. “They include heavy investment in conservation and energy efficiency, significant investment in renewable energy and investment in natural gas-fired turbines. It’s possible that we may even invest in further coal units in the future.”
Puget Power Introduced Green Power Pricing
In response to the electricity shortage in 2000, Puget Power introduced “Green Power” pricing. Customers pay 10 percent more on their electric bill each month so the company can purchase biomass, wind or solar power. PacifiCorp followed suit with its Blue Sky Block which adds about $2 per month for each 100 kilowatt per hour block of electricity, while Avista recently introduced its new wind power rate with its “Buck-A-Block for Renewable Energy” program. Under Avista’s plan, customers can purchase 55 kilowatt hours of wind power for an extra dollar.
“Our primary new resource will be cost-effective conservation programs, which we are more than doubling,” said Steve Reynolds, president of Puget Sound Energy. “We’re also looking at gas-fired generation, renewable energy, and, in the longer term, other alternatives like the possibility of bringing low cost coal generation into western Washington.”
“What we’ll be looking at is everything from the traditional natural gas fired generation to coal generation,” Morris said. “We recently purchased 35 megawatts of wind at very cost effective prices. At Avista, we’ve done a great job of diversifying our portfolio for our customers.”
Although the Northwest’s electrical rates are unlikely to ever be as low as they once were, all three utilities remain committed to low cost energy at competitive prices.
“As the region and our population and electric usage has gone up, we continue to have to build new resources,” Morris concluded. “Anytime you build a new resource, it’s going to cost more. Nevertheless, our region will still enjoy being very competitive in price perspective because of our hydro base that we will always have.”
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