A perfect storm of conditions this winter — including a Canadian natural gas pipeline blast, low hydroelectric production and an abnormal cold snap — sent Pacific Northwest natural gas prices surging in late March and drove up utility bills for Washington residents and local businesses.
The Cowlitz County PUD dodged the worst of that event, but as the region prepares to scale back even more of its coal- and natural gas-fired power plants to comply with a new energy law, Cowlitz PUD General Manager Gary Huhta is calling on other utilities in the area to brace for the next one.
“That was a bit of a wake-up call for the utilities,” Huhta said last week. “You could not buy energy on some of those hours. It was just unavailable.”
At stake for customers: Power reliability and affordability, especially in the winter. While the PUD has plans in place for the next weather event, a blackout or energy shortage at a nearby utility would spell trouble and rising energy prices for the entire region.
Under this year’s clean energy bill, SB 5116, Washington utilities are required to reach carbon-neutrality by 2030 and 100 percent clean energy by 2045. This means that utilities must phase out natural gas and coal plants, which scientists say contribute to global climate change. Those resources make up less than 4 percent of the PUD’s electricity sources, which largely come from hydroelectric dams, but they provide better on-demand energy than solar or wind power, which aren’t as reliable during a winter storm.
The PUD has taken an open-minded position on SB 5116 in the past, pointing out that it could benefit the utility in good water years where the PUD has spare energy to sell. Former PUD general manager Steve Kern has agreed with lawmakers that utilities should transition out of coal.
But he and the PUD have expressed concerns that pulling out of coal and natural gas too soon could hamstring the region’s ability to generate power in a pinch, just as the Pacific Northwest is approaching looming energy deficits. Kern said in May that the bill would likely result in net costs to customers and that utilities had work to do with Olympia lawmakers to hammer out its details.
“(SB 5116) feels a little bit (like) expecting technology to solve the future problems before the technology’s even ready,” Huhta said. “It’s anticipating that it’ll be there when the time is needed. And that concerns us a lot.”
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The Cowlitz PUD hedges for high demand periods by locking in its energy purchases early. Its own policy also requires it to always have high energy capacity resources available when needed for peak loads. Huhta said last week that the PUD is now pushing other utilities to take similar precautions and “row together” to prepare for weather events like the one that evolved in late March.
Utilities won’t invest “out of the goodness of their heart” in those high-capacity resources, Huhta said, because it can be cheaper (but riskier) to cover only their regular energy needs and try to play the market when demand rises. But when that gamble fails, it can lead to brownouts or blackouts and damage the grid.
The energy system is deeply interconnected, and many utilities buy some of their power on the open market, so utilities rely on each other to be ready for high demand periods to avoid huge price spikes and blackouts.
The region will soon lose power from two large coal burning plants in western Montana, which are 50 percent owned by Puget Sound Energy. Those plants, which combined generate slightly more power each year than Cowlitz PUD’s entire load, will shut down at the end of this year, about two years ahead of schedule. Because so much of power they generate is routed into the Pacific Northwest, losing them puts more pressure on the region to find new energy sources and prepare for higher demand.
Battery technology — which could bank power for high-demand periods — isn’t developed enough to consider a large-scale investment, Huhta said. And while solar and wind power technology are improving, they are still tied to the whims of Mother Nature.
A forecast by the Pacific Northwest Utilities Conference Committee, an organization of public and private utilities, predicts that the Northwest’s energy demands will exceed its firm supply (a conservative estimate of how much power utilities can provide) starting in 2024-2025. The region already faces similar deficits in December, January and February, according to the report. And currently planned construction of new renewable resources won’t offset the power losses from shuttering coal plants, the report warns.
“It’s a warning,” Huhta said. “It’s definitely a warning that we’re facing problems. This warning has been out there now for a few years, but utilities have been, I would say, kind of sitting on their hands.”