Power Brokers Plugged Into Market
The deal-making starts early at Washington Water Power Co.
Before most people have brewed their first pot of coffee, WWP traders are selling their surplus kilowatts. It’s nearly noon in New York, and the East Coast brokers are on the line.
The deal-makers on WWP’s trading floor swap wholesale energy like their better-known counterparts in the stock and commodities markets.
They trade electricity like pork bellies, 24 hours a day. Last year, they made $230 million for WWP from sales of wholesale electricity.
The trading floor is 6 months old. Few outsiders know it exists, but it’s the wave of the future in the nation’s electricity market.
The traders work just down the hall from WWP’s paneled executive suites on East Mission Avenue in a setting that’s far less noisy and chaotic than the trading floors of Wall Street.
The phones ring steadily, the computer screens flash the day’s energy prices and excitement erupts when a good deal comes through.
As she trades electricity on the Western grid, Kathy Hara’s computers show the availability of WWP’s resources at every moment.
There’s plenty of power to sell this month after all WWP’s retail customers have been served. The region’s rivers are swollen with spring runoff, and WWP’s hydropower plants are running wide open.
One of Hara’s computers shows the surplus graphically - an immense spread between what’s being used and what’s available.
Hara tracks system usage hour by hour - including a 100-megawatt uptick in the early hours of May 4 when tens of thousands of Bloomsday runners woke up to coffee and showers before the race.
WWP manager Joe Morrato also is at his computer screen, checking out deals in the Southwest.
His computer shows an eager broker in the desert. Phoenix is starting to sizzle, and air conditioners are cranking up.
Morrato makes a trade through a power broker at the Palo Verde nuclear plant complex near Phoenix - racking up a $4,000 profit for WWP.
A few minutes later, WWP newcomer Dean Gallacher makes a natural gas sale that also earns a hefty profit.
Morrato leaps up for a high-five with the young Canadian, the company’s new manager for natural gas buying and selling.
There are more trades to be made on the Oregon-California border, the main electric highway between the Northwest and the huge California market.
Meanwhile, Dennis Vermillion walks the floor, watching. He makes sure the fast-paced trades stay within safe limits - so no one transaction puts too much money at risk.
“There is a potential for risk, and I’m here to manage it,” he says.
As an additional safeguard, trading caps are programmed into WWP’s computers.
WWP was one of the first utilities in the West to jump into wholesale trading.
In 1992, the company opened an office in Phoenix for trading with the Southwest and California. Before then, WWP had delivered power only from its own system.
“We saw an opportunity for more trades. At that time, people wondered what the heck we were doing,” said Edward Groce, of WWP’s wholesale marketing division.
WWP hopes to gain expertise through its trading to position itself for the sweeping changes facing the electricity industry, Vermillion said.
“We view it as an opportunity rather than a threat,” he said.
On July 1, there’ll be a second energy trading floor in Spokane.
Avista Energy, a child of WWP’s new nonregulated Avista Corp., will move downtown to the top floor of the IBM Building.
It will trade kilowatts to far-flung regions of the United States, including the big Southeast energy market.
, DataTimes ILLUSTRATION: 2 Photos (1 Color)