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BPA proposes to build a 75-mile 500-kilovolt line from the Alvey Substation in Goshen, just south of Eugene, to a new substation near North Bend on the Oregon coast. The line would reinforce BPA’s electrical service to Oregon’s southern coast and provide the transmission necessary for a steel mill that Nucor Corp. may build in the Coos Bay/North Bend area.
The project would include a new 230-kV line between BPA’s proposed North Bend Substation and the Isthmus Substation that PacifiCorp may build and a double-circuit 230-kV line between Isthmus Substation and the Nucor mill.
“We are committed to providing the best service to our existing customers in the south Oregon coast area. This project will make that service even better,” says BPA transmission account executive Tony Rodrigues. “We’re also greatly concerned with making sure the costs of building this line don’t get unfairly shifted to our existing customers. That’s why we’re working with Nucor to determine how much they will contribute to building this line. The rest of the costs will be recovered from transmission rates to Nucor and the additional load the steel mill will likely bring to the area.”
Even without the mill, BPA would need to improve, strengthen and support the transmission service it provides to south coast utilities because of population growth. Those improvements will need to be made sooner if Nucor decides to build a new steel mill.
The public meetings in Creswell, Elkton and North Bend are just the beginning of the environmental work necessary for the project. The agency has not yet made any decisions. In fact, BPA is planning to host two more public meetings in May to discuss another alternative — stringing the 500-kV line from PacifiCorps' Dixonville Substation to the proposed substation in North Bend. BPA will work through August studying the environmental impacts of all the alternatives before distributing a draft environmental impact statement for public comment. The agency hopes to complete the EIS by March 1999 and make the decision whether to build a transmission line in April 1999.
“We’ve put the EIS process on a fast track in order to keep the Coos Bay area a viable site for Nucor,” says Ken Barnhart, BPA’s environmental project lead. “We will do our best to get the process done in time to meet Nucor’s schedule. But, on the other hand, we’re a responsible agency and we won’t do anything that would jeopardize the environment.”
Nucor, a North Carolina-based company, is one of the four largest domestic producers of steel and steel products. It is proposing to build a mini-mill in Coos Bay/North Bend. The mill would have the capacity to produce up to 1.2 million tons of hot-rolled carbon coils annually. These coils are typically used to make pipes and tubes, grain bins, metal buildings and drums.
The plant would likely employ about 250 people with average annual salaries of about $55,000. That’s great news for both the Coos Bay and North Bend communities because the plant would offset job losses in the timber and fishing industries.
Oregon and local government officials strongly support this project. In a letter, Oregon Sen. Ron Wyden wrote, “This plant is critical to the local economy and will provide long-term benefits to the state and the Pacific Northwest.”
Nucor has not yet decided whether it will build the steel mill in Coos Bay/North Bend. The site under consideration is industrial property owned by Weyerhaeuser. Nucor still needs to purchase the land. Also, Nucor needs to determine how much it will contribute to the $80 million cost of building the 500-kV transmission line. In a creative business deal, Nucor offered to provide the steel for the 300 transmission towers that would be needed for the transmission line. BPA officials are currently evaluating the value of that contribution.
The high-voltage transmission line is required to minimize voltage fluctuations, or flickers, that would be caused by the mill’s arc furnace. BPA’s engineers used aerial photography and topographic maps to find ways to connect the mill to BPA’s 500-kV main grid system. They looked at critical areas that must be avoided because of population or natural resources. Then they tried to find the best way to go from one point to the next.
But many people would still live near the proposed transmission line and its 135-foot-tall steel-lattice towers. That’s why they came in droves with questions and concerns. Sometimes, they were project supporters and sometimes, well, they were just plain against it. The meetings gave everyone a chance to be heard. — Crystal Ball, public affairs specialist in Communications
The Olympia line maintenance crew has its own monument.
The life-size chain-saw sculpture of a lineman climbing a tower will soon receive a preservative coat and become a permanent fixture on the Olympia Substation front lawn.
The sculpture is the gift of a professional wood carver known simply as “Charlie.” In March, while replacing poles on the Shelton-Kitsap line, the crew struck up a casual friendship with the landowner next to the right-of-way. Each day, the crew talked with Charlie and admired his chain-saw carvings of fish, eagles, loggers and the like. When he carved a statue of a small bear personalized to the BPA Olympia Transmission Line Maintenance crew, the crew was very grateful. The bear lives in the crew’s coffee room.
Some time after the crew had finished its work on the Shelton-Kitsap line, Gary Westling, lineman foreman III, got another call from Charlie, who said he had something for the crew. It was the lineman sculpture. Everyone was amazed. Says Westling, “The crew thinks it’s cool to have a lineman.”
Some employees are expressing consternation over two actions in the staffing arena that seem contradictory.
Employees may well wonder how the agency can be putting together a voluntary separation incentive/early retirement offering at the same time it is asking for Department of Energy approval to make outside hires.
At the very least, it looks like a mixed message. The need to reduce staffing levels seems to conflict with the need to make outside hires. But, the conflict is more apparent than real. What we have is a skills mix problem.
First, we continue to need to reduce staffing levels. There is a lot of obvious pressure on this point. Competitive markets in power supplies, transmission maintenance services, construction services and administrative services are all acting to force our costs further down. This often translates into staffing reduction. Our recent outside cost review panel recommended actions that would take us $140 million a year below our current flight plans, and some of those actions have staffing implications. If the recommendations were fully implemented, we estimate they could reduce staffing requirements by another 250-350 positions below the flight plans by fiscal year 2002. Those reductions would be a mix of employee and contractor positions. Our current staffing target is 2,755 BPA employees and 250 contractor employees by the end of FY 1999. As of April 11, we had 2,774 BPA positions filled and approximately 470 on-site contractor employees. When we recalibrate the flight plans during our strategic planning sessions this summer, we will probably re-examine the FY 1999 target and create new targets for years all the way to FY 2006. Meanwhile, this year’s VSI and early retirement offerings are consistent with both our current picture and our expectation about the revisions we will do this summer. These offerings reaffirm our commitment to getting staffing levels as low as possible as quickly as possible using voluntary methods.
Second, we also need to address a skills mix problem. A large part of the efficiency, flexibility and responsiveness we need to have when we’re staffed this low is tied to having exactly the right number of people with the right skills in the right positions. We don’t have that today. We have some serious gaps, and the situation could get significantly worse in the next few years if we aren’t proactive about it. Right now we are using a methodical redeployment effort as one tool to begin correcting imbalances in the skills mix. We are trying to do much more than usual to find and develop essential skills inside the agency to fill the gaps. For example, we are doing retraining to fill many scheduler positions in both the power and transmission business lines. But, where we can’t meet immediate or near-term needs for certain expertise levels, we must be able to go outside to find those skills. Hence the mixed-looking message: we’re bringing some people in at a time when we’re generally hastening people out the door.
The skills problem is currently most prevalent in areas heavily affected by our industry’s restructuring. It was separation of power from transmission and the 24-hour operation of the new California Power Exchange that made schedulers the poster children of the new demands created by restructuring.
The aging of our work force will soon complicate the skills picture across the entire organization. Forty percent of BPA’s work force is at least 50 years old. Over the next five years, 645 employees will qualify for regular retirement and another 729 would qualify for early retirement. These two numbers total a whopping 50 percent of all BPA employees now on the job. We are developing a complete profile of this picture that will help us anticipate when the retirement situation may significantly affect each job category. We obviously have to do a more thorough job of succession planning if we are going to give ourselves the chance to navigate successfully through this double transition of industry changes and the graying of our work force.
So, we do have seemingly contradictory needs. We have to reduce our staffing levels and we have to add people with certain skills. We have to anticipate that parts of our work force are going to be shrinking faster than we want, or even than we can adjust to if we wait until it happens before we react.
All this means it makes sense for us to be doing some outside hiring even as we are still downsizing. BPA is not alone in this. The entire federal government has reduced the number of its employees significantly while still engaging in limited recruitment. Our outside hiring will be strategic. It will be targeted toward specific skills for which we have a current or projected need that cannot be handled by internal redeployment.
It’s a delicate balancing act. — Steve Hickok, acting chief operating officer
The mid-year report card on the agency-wide Success Share program will grab a lot of attention next month.
Before that happens, the Circuit thought it would be interesting to take a look at individual contributions to the agency’s progress. If the big targets are going to be met, it will be because individuals throughout the agency did their jobs well. What follows are brief profiles of the efforts of a few recent On-the-Spot award winners. Space doesn’t allow room to mention everyone; as Diana McLain, who manages the agency’s awards program, observes, “In the first six months of FY 1998, about 300 time-off awards and 600 On-the-Spot awards were given.” This is just a randomly grabbed sample. Most of those profiled were parts of teams whose other members also received awards.
When employees in the Power Business Line moved to headquarters from Ross last fall, employees in Information Resources were working overtime and weekends to make sure computers were up and running at their new locations. John Silagi, a computer specialist in Information Resources was recognized for his attention to detail in supporting the moves and ensuring that PBL employees experienced a smooth transition with few disruptions to their workloads.
“The Scheduling and Pre-Scheduling groups were a particular challenge because of the complexity of their systems and the variety of drive connections,” says Silagi. “We had to assure that their computers were connected to the right servers and that configuration files were correct for their new locations. This was a great effort by a lot of people.”
Silagi enjoys his job because it gives him an opportunity to use his problem-solving abilities to help others. “Building interfaces between computers and people is a challenge that gives me a lot of satisfaction,” he says.
And being on the cutting edge of new technology is what keeps him motivated. “I’m optimistic because, for the first time in recent BPA history, we are developing agency targets that are associated with information systems and focusing on the results the systems are supposed to provide.”
Dan Winchester, an electrical engineer in the Power Business Line, was recognized in January for his outstanding technical support connecting BPA with the California Power Exchange and the Automated Power Exchange. “I just started this job in November,” says Winchester. “It’s challenging, fast paced, and I get to work with a hard-working group of individuals.”
Winchester credits the outstanding cooperation of the individuals that helped him get systems online, allowing BPA to participate in the development of the California deregulated power market. As the technical team lead for the California Integration Project team, Winchester planned, designed and managed the development of the hardware and software infrastructure that makes it possible for BPA’s traders and schedulers to do business with the new deregulated California power market. “This project was successful because we worked as a team to pull together information, services and equipment that allowed us to put the Power Exchange and the Automated Power Exchange online in a very short period of time,” says Winchester.
Lorena Legarde is an audio-visual production specialist in the Business Services group. Last October she was recognized for her expertise in creating an apprenticeship recruiting video specific to lineworkers, substation operators and power system electricians in the Transmission Business Line.
The video is shown at job fairs at high schools in Oregon and Washington. “It’s designed to generate interest in a career in one of these areas at BPA,” says Legarde.
Legarde has been supporting the business lines and Corporate for nine years. “I love my job because I’m able to create something that will benefit the business,” says Legarde. “In most cases, I’m able to create from scratch, but I also do made-to-order that is very hands-on and tangible.”
C.T. Beede is an account executive in Missoula, Mont. Last fall he was recognized for signing contracts with seven Western Montana utilities for 100 percent of their wholesale power supply needs post-2000. “The signing sent a powerful message around the Pacific Northwest that as the first state in the region to move to open competition, Montana understands that, BPA provides the best value and reliability of power supply alternatives for the future,” says Beede.
Although he has only been at BPA for three and a half years, Beede has been in the electric utility business for over 20 years at the distribution and retail supply level. “I’ve been working with these utilities longer than any of these utility managers have been in their respective jobs,” says Beede. “As a result, I’m able to maintain a high level of trust, rapport and open communication with them.”
With minor exceptions, the customers of BPA in Montana have relied solely on BPA to meet their power supply needs. They also look to BPA for technical and analytical advice and assistance in the areas of Energy Efficiency, transmission and engineering. “I feel very fortunate to have an opportunity to play a key role in enhancing the successful partnership between the customers in Montana and BPA,” says Beede.
After implementing a switching order, Burley Covey, a substation operator in Redmond, Ore., spotted some unusual arcing on a switch at Redmond Substation. “The problem was one of the harder ones to spot because, after the arcing diminished, the equipment appeared to be working normally,” says Covey. After discussing the situation with his peers, the switching procedure was re-enacted to determine what piece of equipment was at fault.
Covey, along with operators Dave Donlan and Dave Lundeen, received an On-the-Spot Award for taking care of the problem before it caused an outage. “When I switch out equipment for maintenance and repair, there is no room for error,” says Covey. “That’s what reliability is all about.”
Energy Efficiency has a brand new products and services directory, thanks in part to Sharon Doggett, who took raw information and added a marketing spin to create a useful handbook. Doggett, a public utilities specialist, was awarded an On-the-Spot in December for preparing and producing the directory.
“When our PBL customers said they wanted something tangible, we decided that it was time to put pen to paper, make a list and show the value EE has to offer,” says Doggett. “From what I can tell, it was the right move.” The directory is an internal tool developed specifically for the PBL account executives. But it is also something the Energy Efficiency representatives draw on to do their work. It describes EE products and services currently available to the Power Business Line for bundling with their power products, as well as introductory information about EE’s purpose and role.
As a communications advisor, Doggett writes, creates and advises on a variety of EE marketing materials and other tools that keep EE informed and get the word out about the organization. “Communications, whether to promote, educate or inspire is such a key element to the success of any effort,” says Doggett. “I’m glad for the chance to be a part of that.” — Cheri Larson, public affairs specialist in Communications
Six people from the Seattle office donned their BPA SuperShirts for the annual Earthwork Northwest project on April 18. Team members helped out with Earthwork, a project of the Student Conservation Association that is touted as the largest environmental restoration project in the United States. The event took place simultaneously at 60 sites from Everett to Tacoma. The BPA team at Discovery Park, Carolyn Tanagi, Judy Polenske, Janet Lubach, Kyra Chatfield and Donald Stewart, cleaned up litter from the beach. The litter ranged from large tires and PVC pipe, to crumbs of plastic foam, to tatters of plastic. Kirsten Watts spent her four hours clearing Scotchbroom, cutting back monstrous blackberry bushes and collecting garbage at China Lake in Tacoma. — Kyra Chatfield
Earth Day brought sunshine and about three dozen volunteers to the west section of the Ellen Davis Trail on the Ross Complex. On April 22, employees and executives worked hard liberating native plants by removing blackberry and ivy vines. A few volunteers were even ambitious enough to knock over a dead tree and trim long branches to provide improved visibility for trail-goers. The effort was coordinated through the Vancouver Parks and Recreation volunteer program. The VPR representative, Caylor Roling, was impressed with the amount of work volunteers accomplished in the three-hour time period. Roling said, “I was unprepared for this amount of debris” and put to work a volunteer crew from a nearby school to remove about nine pickup loads of debris. Although most volunteers went home exhausted, many commented that they enjoyed the time spent outside the office and meeting other employees. Many also promised to return next year. — Melanie Jackson
Portland employees sported their BPA SuperShirts and flexed their muscles under the sun at the clean up project at Willamette Cove on April 22. The project was sponsored by BPA, Metro and SOLV (Stop Oregon Litter and Vandalism) in observance of Earth Day. Over 60 employees joined students from Roosevelt High School and the Open Meadow Alternative School to clear scrap metal from the river and remove blackberries and Scotchbroom from the future park. — Cheri Larson
BPA is pushing MOPS and hoping to help some public utilities do a little cleaning up.
MOPS is Washington Water Power’s experiment in customer choice — More Options for Power Service. The experiment lets some of WWP’s residential and commercial customers buy power from other electric energy suppliers.
One of those alternative suppliers is the Grant County Public Utility District. BPA is working with Grant to provide a little of the much-ballyhooed customer choice.
It seems to be working. “We thought that if we could get 10 percent of the customers signed up we’d be doing great. On this pilot project, Grant has 25 percent of the customers signed up, so we are really pleased,” says Fred Rettenmund, BPA account executive and MOPS team lead.
BPA and Grant County PUD expect to learn quite a bit during the MOPS pilot project. For example, the partners expect to develop an understanding of how retail customers make decisions about choosing a supplier and how to get power delivered in another utility’s territory. And BPA and Grant will gain experience in how to work cooperatively in a retail market. “Our first six months of experience in MOPS has been quite useful for Grant, WWP and BPA. We all have learned a number of practical things about retail marketing and how to deal with a number of important technical matters such as load profiling, scheduling and dealing with the energy imbalances related to serving small customers,” says Rettenmund.
The MOPS project began in July 1997 and will run until July 1999. The affected cities are Odessa and Harrington, Wash., with a combined population of approximately 1,000. Each participating customer is guaranteed a savings of between 7.3 percent and 9.2 percent, depending on whether the customer is residential, commercial or agricultural and depending on the amount of power used.
Each household or business decides whether to participate in the pilot project, and each can choose to change back to the former service arrangements with WWP at the end of any billing period. After the project is over, WWP will again provide all power services within its territory.
Under the pilot, each retail customer receives a monthly bill from WWP that shows the cost of the power it receives from Grant PUD (which gets the power from BPA) and the cost of power delivery from WWP.
Pilot programs are taking place against a broader background of deregulation. The eyes of the country are clearly on California because it is such a huge experiment in deregulation and retail energy competition.
In the Northwest, Montana is the first state to pass retail access legislation. The Montana legislation calls for large customers to have direct access to alternative sources of electricity starting in July and for some smaller customers to have access through pilots starting in November. Within these goals, a number of issues are still being hotly contested about how retail access should be implemented.
Other Northwest states are actively considering their options for retail access. In addition to direct access to alternative energy suppliers as in MOPS, an option called the Portfolio Access Model is getting considerable attention in parts of the region. This approach would give larger customers direct access. But smaller customers, such as residential and small commercial customers, would be able to choose from a menu of power products that might include market-priced power, “green” power and, perhaps, a BPA power product.
One of the major motivators for these pilots is that no one fully understands how retail competition will work. Nor does anyone really understand how to compete at the retail level.
Deregulation raises more questions than just how retail customers make choices. Some people question the very reason for deregulation. “Deregulation is meant to encourage competition, which theoretically lowers electricity prices,” says Liz Evans, public utilities specialist in the Power Business Line. “But the effects of deregulation are often not equal for everyone.”
This is of concern in the Pacific Northwest, which has the cheapest power prices in the country. Will there be a leveling of prices across the country — bringing lower prices to historically high-cost areas such as New England and California but higher prices to historically low-cost areas such as the Pacific Northwest? No one really knows if rates will go up or down in the Northwest because of retail deregulation. What is highly likely is that, within a few years, residents will be able to pick their electric power supplier just as they choose their long-distance telephone company.
BPA is creating partnerships with its customers to learn about the effects of deregulation. As the industry changes, BPA will continue to provide power at cost to all preference utilities whether they serve rural areas or large cities. — Carlene Stenehjem, public affairs specialist in Communications
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It may seem strange that BPA has anything to do with retail access pilot programs such as More Options for Power Service. After all, BPA sells power in the wholesale market. The agency doesn’t sell power directly to retail consumers, nor does it intend to. But BPA’s customers do sell to retail consumers. And, with deregulation a possibility in the future, BPA may need to help do its part to ensure that the benefits of the Columbia River hydro system flow to all Northwest consumers. Enter BPA’s Domestic and Rural Strategy, also known as the “little guy” strategy. And the agency’s roots. Part of the Bonneville Project Act of 1937 says that BPA is to provide power from the federal Columbia River system “for the benefit of the general public, and particularly of domestic and rural consumers.” A lot has changed since the 1930s, but some aspects of the industry remain the same. It is still more expensive to deliver power to rural areas and to small commercial and residential consumers in urban areas than it is to deliver to large industrial customers. So, it is no surprise that, as deregulation is tested through pilot projects and changes in state laws, the industry is seeing many energy suppliers chasing sales to large commercial and industrial accounts while very few are chasing after small consumers. In today’s market, rural and residential consumers may need to wait a considerable time until they see the benefits of deregulation. |
Join your co-workers by buying a BPA running shirt and participating in Portland's Starlight Run on May 30. Get your shirt and race registration at lunch in the headquarters lobby on may 18 and 20, at the TBL barbeque at Ross on May 14 or contact: Ken Kane, ACC-7, 503-230-5361. |
BPA takes seriously its charge to look after the interests of those small and rural consumers. “BPA is committed to ensuring that the benefits flow through to domestic and rural consumers regardless of their power provider,” says Liz Evans, public utilities specialist in the Power Business Line. BPA is working with its traditional preference customers — public utility districts such as Grant PUD, municipal power departments and rural electric cooperatives — and with an emerging new category called aggregators in order to ensure that domestic and rural consumers throughout the Pacific Northwest have access to the benefits of the federal power system.
At this point, aggregators are more a theory than a reality because Montana is the only Pacific Northwest state to pass retail access legislation. When legislation does pass, residential, rural and small commercial consumers will likely look for ways to band together for pricing leverage. Cities, school districts, tribes and other nonprofit public bodies that work to aggregate load from small commercial and residential customers may qualify for preference power. If they do, BPA will work to be their power provider.
So, BPA is working with its customers on retail pilot programs as part of its efforts to learn what it will take to compete effectively in a retail access world as well as how to sell power to aggregators of domestic and rural consumers. That is what BPA was created to do in 1937 and that is what it continues to do.
The good news is that a notorious predator, the northern squawfish, that eats millions of young salmon and steelhead will soon cease to exist. At least on paper. The bad news is that it is being replaced by the northern pikeminnow.
Never heard of the northern pikeminnow? Few people have. That’s because the American Fisheries Society is in the process of renaming the northern squawfish the northern pikeminnow. It’s not official yet, but it should be soon. In the meantime, BPA is using the new name.
By any name, the fish is a voracious predator.
The 1998 northern pikeminnow season, formerly the northern squawfish season, began May 4 and runs through Sept. 27. The prospects are that 1998 will be a more successful season than 1997 because the Columbia River isn’t running as fast and as high as it was last year. The 1997 season ended with more than 119,000 northern pikeminnow caught in 27,000 angler days. The more northern pikeminnows caught, the more salmon and steelhead juveniles will survive downstream passage to the ocean.
Anglers will again receive $3 for each of the first 100 northern pikeminnows 11 inches or longer returned to a registration station. Fish numbers 101 through 400 are worth $4 each, while every fish after 400 is worth $5. Special tagged fish will be worth $50 again this year.
In June 1997, the Columbia River tribes, which found the name offensive, petitioned the names committee of the AFS to change the name of the squawfish. The AFS, made up primarily of university professors of fisheries, establishes the official common names for North American fish. The tribes recommended bigmouth minnow because that is what they had been calling the fish for the past few years. The committee, however, rejected bigmouth minnow and has tentatively settled on northern pikeminnow.
The AFS picked the name pikeminnow because the fish resembles a pike and both are predators. The squawfish is in the minnow family, so that’s where minnow came from.
When the AFS officially changes the name of the fish, it will change all squawfish species to pikeminnow. For example, the Colorado squawfish (which is listed as endangered under the Endangered Species Act) and the Sacramento squawfish will become the Colorado pikeminnow and the Sacramento pikeminnow.
For a brochure explaining the northern pikeminnow season, call 230-3478 in Portland or (800) 622-4520 outside Portland. For more information on special events, call the northern pikeminnow hot line at (800) 858-9015. — Carlene Stenehjem, public affairs specialist in Communications
Risk is a new business reality in the deregulating electricity industry. With increased risk comes the desire to manage it. The industry is busily trying to find financial umbrellas for those inevitable rainy days.
“We’re understanding the significance of risk and how to manage it in the agency,” says Ed Bleifuss, Power Business Line risk manager. “It’s a new function and tremendously interesting.”
As regulated monopolies, electric utilities were required to provide a guaranteed level of service to their customers in return for a guaranteed rate of return on their investment. There was little true competition in the market, and utilities faced little business risk.
With deregulation and the introduction of competition, utilities are losing their guaranteed rate of return on their investment. “Utilities now have risks and no assurance that they can earn sufficient revenue to cover those risks,” Bleifuss says.
BPA is familiar with risk. The agency never did have a guaranteed rate of return and has always faced risks that range from fluctuations in water years to unpredictable market prices at which the agency can buy and sell power.
Now BPA is becoming familiar with the new risk-management tools. “We use financial instruments best suited to managing our commodity price risk,” Bleifuss says.
So, what’s a financial instrument? Better start with an explanation of commodity price risk. Commodity price risk comes largely from the fact that electricity is now a commodity traded financially on the New York Mercantile Exchange, or NYMEX. The price of electricity changes minute by minute as it is traded. “Supply and demand push prices around and, for the first time, everyone knows what the prices are,” says Bleifuss.
BPA’s account executives, customer service hubs and Bulk Hub traders deal in physical instruments, which means they buy and sell the actual commodity (power). They do the buying and selling in a way designed to meet revenue targets while limiting risk. The PBL risk-management team works with them using financial instruments to manage the risk.
While, risk management is a team effort and all BPA employees should consider risk when making decisions, the Risk Management group is specifically charged with quantifying PBL business risks and obtaining risk-reducing financial instruments.
Assume that an account executive is working with a customer that wants to purchase power from BPA for several years at a negotiated, indexed price. That means the price is tied, or indexed, to some other price, such as NYMEX. As a result, BPA would receive a varying amount of revenue month to month as the indexed price fluctuates.
Many of BPA’s costs are fixed, so perhaps BPA would like to reduce its revenue risk and receive a fixed stream of revenues rather than a fluctuating one. What BPA can do is pair up with a counterparty such as risk-alliance partner Morgan Stanley. BPA would turn over to Morgan Stanley the revenue it receives each month from the customer. In return, Morgan Stanley would pay BPA a fixed amount each month, thus absorbing the revenue risk of the transaction. BPA would negotiate the fixed amount Morgan Stanley pays based on whatever criteria it prefers, such as “at least as high as the revenues to be received from the priority firm power rate.” This type of financial instrument is called a swap.
That was long-term risk. Here’s a sample of risk management for the short term.
“We have risk management people who sit on the trading floor,” says Bleifuss. “Those people are there to hedge near-term risk.” For example, if BPA’s hydro studies show there won’t be enough hydropower to meet load at a future time, BPA might buy an option for future power delivery. BPA would pay a premium to the counterparty, just like an insurance premium, to alleviate the agency’s future purchase price risk. That is, BPA would agree on the highest price it would be willing to pay and would pay a premium to insure against the risk that the price will be higher when BPA needs to purchase power. If power prices rise above the pre-set limit when the agency needs to make the purchase, the insurer would send BPA the difference between the actual price and BPA’s limit. This type of financial instrument is a call. A call on physical energy to be delivered is also frequently arranged by the Bulk Hub traders.
The opposite of a call is a put. A put insures against market prices falling when BPA is in the market to sell power. It provides a floor for agency revenues.
The other fundamental financial tool is a futures contract. Bleifuss explains, “That one you have to do through the NYMEX exchange like stock transactions on the New York Stock Exchange.” In a futures contract, electricity is bought and sold but rarely delivered – deals generally are cashed out.
“The whole reason for doing this is to manage pre-existing risk,” Bleifuss says. “The way these work is equal and opposite to the risk we face on the physical side.” BPA hopes for higher prices when it is selling power and lower prices when buying. The agency can use financial instruments to assure itself more predictable prices either way.
This is all pretty esoteric. Why not just use physical instruments — buy and sell power as a commodity — since that’s BPA’s business? “Well, the vast majority of business PBL does today is, of course, for physical delivery. Financial instruments are a developing part of our business. They provide variety, flexibility and another way to limit the risks we face in a deregulated market place,” Bleifuss says. “Understanding and using financial instruments is giving us a more complete knowledge of the electric commodity market, adding to our overall understanding of the electricity business as it evolves.” — Martha Swain, public affairs specialist in Power Products, Pricing and Rates
The feet of the average fifth grader don’t fill size-11 men’s boots. Still, students from all over the region are clamoring to step into a pair of electrician’s bright orange rubber boots to begin their hunt for aquatic bugs during Kids in the Creek programs.
“Kids in the Creek is the most-requested activity at water festivals because of increased interest in watershed protection,” explains Hope Pennell, environmental scientist in Spokane. When classrooms must sign up in advance for activities with limited capacity during the Wenatchee River Salmon Festival in Leavenworth, Wash., and Water Awareness Week events in Idaho, Kids in the Creek fills first.
What began in 1991 when Rob Swedo, community relations officer in BPA’s Spokane office, accepted an invitation for the agency to participate in the Liberty Lake Water Festival has grown into a program that reaches over a dozen communities in three states.
As the program has spread to new cities and festivals and has been adapted for classrooms, teacher workshops, science fairs and other educational arenas, BPA has forged partnerships to meet the growing demand. Swedo explains, “Several years ago I realized that partnerships were a critical link for the program’s growth because of BPA’s limited resources (people and money).” Customers, tribes, other agencies, high school students and teachers are now among the Kids in the Creek presenters.
“Training the non-BPA staff represents a continuing effort to encourage outside partnerships in presenting ‘Kids’ to allow the program to reach more youngsters,” says George Eskridge, community presence team lead.
In preparation for the full 1998 calendar of events, Pennell and Sherry Brown, NSRI contractor in Spokane, organized a training session April 13 at Liberty Lake and its tributary Split Creek. Demand was so high that another training session is being scheduled at Liberty Lake. And, a training session for the Seattle area is being scheduled for early October, just before the Issaquah Salmon Days.
Experienced presenters from BPA and Modern Electric Water Cooperative were on hand at the April 13 session. They offered personal variations of the standard script while newcomers first played the role of students and then tried their hand at leading the activities while the experienced leaders offered reminders and suggestions. This year’s non-BPA trainees included representatives from the Kalispel Indian Community, Kootenai Electric Cooperative and Pend Oreille County Public Utility District. They will now join with non-BPA presenters including representatives of Northern Lights, the Coeur d’Alene Tribe of Indians, local high school science and environmental clubs, and teachers who’ve helped with Boise Salmon and Steelhead Days, Idaho Water Awareness Week and other events.
Because of all the new trainers, between May and October 1998, nearly 4,000 people in three states will learn how to read a stream and understand its health through Kids in the Creek programs. With the exception of a few teachers, parents and siblings, most of these people will be between the ages of nine and 12. Every participant goes home with a laminated pocket card depicting the species of macroinvertebrates (bugs) that indicate a healthy stream. The card also carries the BPA logo to remind people of the many public benefits the agency provides.
Presenters also are provided with resources. Brown has developed a teacher’s manual that expands on the original one created by Syrie Holen in 1991, improved streamside visual aids and created a Kids in the Creek Web site. The goal has been to create a stand-alone program that customers, the tribes and other agencies can use to reach a far larger audience than BPA could reach on its own.
While many agencies and other entities around the region offer variations on water quality monitoring curricula and programs (such as the Oregon Department of Fish and Wildlife’s Stream Scene, after which Kids in the Creek is modeled), BPA’s program stands out from the rest and draws partners who want to share the spotlight as they do something good in their community. Patsy Eccles, BPA secretary in Spokane who has been leading Kids in the Creek since its inception, expresses a sentiment often heard from the volunteers, “There’s a real sense of satisfaction that comes from sharing this experience with the kids and making a positive impact in the community.” — Kyra Chatfield, community relations coordinator in Seattle
Ever have problems getting moving on Mondays? Feel like you’re spinning your wheels? Grinding away on the job? Well, now you can grind away while getting away from BPA.
BPA headquarters employees are tak-ing to the streets each Monday after-noon for some free-wheeling exercise. This spring Martha Kemple and Claudia Andrews began org-anizing weekly bike loops, which begin and end at headquarters.
“We’ve been thinking about doing this for two or three years. In March we finally decided we really needed to get down and do it!” says Kemple, computer specialist, Financial Systems.
A similar riding group has been taking weekly Monday afternoon treks from Ross for several years. Mike Viles leads the Ross contingent. Later this year the two groups will join up on several excursions.
The headquarters cyclists are gradually building up to rides of 35 to 40 miles. “But that shouldn’t scare anyone off. Our longer trips include shorter cutoffs for folks who don’t want to make the entire loop,” says Kemple. And, of course, many of the riders leave the group at convenient spots during the ride so they can finish their two-wheeled commute home.
The merry band of riders usually numbers about a dozen and the cast of characters changes from week to week. The group rides leave each Monday at 4:30 p.m., usually regardless of the weather, from the 9th Avenue side of headquarters. The weekly rides should continue into the early fall. For more information contact Kemple at 503-230-5271 or Claudia Andrews at 503-230-3311. — Ken Kane, public affairs specialist in Communications
Everyone grab a pen and last month’s Circuit. It’s time to make some corrections.
To make arrangements to use the BPA airplane, call Terry Hoover at 503-230-4100.
Trying to find headquarters? It’s at 905 NE 11th Avenue. But, anyone who writes to employees at headquarters should use the post office box — P.O. Box 3621, Portland OR 97208-3621.
And Diversity Management? It’s on the first floor of headquarters, just east of Energy Efficiency.