Wppss Faces Bpa Ultimatum Operators Must Get Costs Down, Or Biggest Customer Will Stop Buying

1,200. 1,201. 1,998.

The small liquid-crystal gauge in the middle of a control room panel at the Washington Public Power Supply System No. 2 plant flickers with a readout of megawatts produced by its huge generator.

Nearby instruments and computer screens glow with information on everything from the status of the reactor several floors above to the flow of water through the cooling towers.

Rob Webring, director of support services for the facility, said No. 2 has performed better than ever in the month since its post-refueling restart.

“We now have a good facility,” said Webring, who has helped work No. 2 through technical and regulatory woes since its December 1984 startup.

But none of the control room gauges provides what has become the most critical piece of information for No. 2 - the cost of each kilowatt-hour that surges from its transformer yard onto the Bonneville Power Administration grid.

If the Northwest’s last remaining nuclear plant is to survive, its operators must cut those operating costs.

Randy Hardy, head of the federal power-marketing agency, has told WPPSS officials that if they cannot get the cost of their power down, he will stop buying.

Webring and other officials of the supply system, a consortium of pubic utilities, take Hardy’s warning seriously. Bonneville is their only customer, and Bonneville is hurting.

The agency’s high costs and the onset of deregulation in the utility industry have opened the door to competitors who are picking off longtime customers.

Critics like Jeff Shields, Manager of Emerald People’s Utility District in Eugene, Ore., say Bonneville may be skimping on maintaining its transmission system to subsidize No. 2.

Nobody would buy the plant or its energy if put up for sale separately, he said.

WPPSS Plants No. 1 and No. 4, ghostly reminders of past miscalculations, rise stillborn in the surrounding rangeland.

Webring said the decision last year to officially terminate No. 1 and No. 3 finally swept away the distraction created by their upkeep.

“The need to concentrate on just No. 2 is a realization we’ve all come to,” he said.

Webring said officials realized a few years ago they had to cut costs, but had to complete some ongoing projects first.

Last September, the system began to trim payroll by letting vacated positions go unfilled, he said. But the cutting became earnest two weeks ago, when 208 workers were terminated, with as many as 30 more likely to follow them off of No. 2’s well-secured grounds by the end of the year.

Webring said the reductions should save $12 million in the fiscal year that started July 1. Other cuts in procurement, capital projects and other outlays will slice the overall operating budget for fiscal year 1997 to $210 million from $240 million.

“We’re just going back and looking at everything we do,” Webring said.

For example, he said, he has ordered a device that employees entering the plant will insert their hands into for security clearance.

The machine will enable plant operators to reduce the staff at the guard post, and pay for itself within a few months.

The supply system’s massive debt is already embedded in Bonneville’s rates, at least for another two decades.

Webring said the goal at No. 2 is a cost per kilowatt-hour of 2.7 cents, down from above 3 cents last year.

But that may not be enough. No. 2 could be a victim of fire and ice.

Owners of natural gas turbines are selling power for as little as two cents per kilowatt-hour. Some utilities, most notably Clark County Public Utility District, are building their own gas-fired generating plants to take advantage of very low prices for the fuel.

And this year’s abundant snowpack, augmented by above-average rainfall, also has dam turbines humming.

Forced to send water downstream to assist migrating fish, dam operators flooded the market with hydropower this spring, dropping prices at some hours of the day to less than a penny per kilowatt-hour.

Public utilities and aluminum smelters that once gave no thought to looking to anyone other than Bonneville for their power are removing their blinders, and liking what they see.

A few have already signed contracts with suppliers like Spokane’s Washington Water Power Co.

Bonneville responded last month, proposing a major rate decrease for the first time in its 58-year history. If approved, public utilities will pay 2.49 cents per kilowatthour, down from 2.71 cents.

But private utilities will pay more under the plan, as will users of Bonneville’s transmission grid. The shifting of costs has already set off a political firestorm.

For plant No. 2 operators, their problem remains the gap between their costs and what Bonneville can charge its customers for the power it produces.

“We’re really looking at a moving target,” said Webring.

Even without the massive debt that underwrote its own construction and that of the other four WPPSS nuclear plants, he said, No. 2 is probably the region’s most expensive generating resource.

Once, Bonneville could absorb those higher costs by blending electricity from No. 2 with power from its hydroelectric projects, which was extremely cheap.

But as the agency’s fish-restoration expenditures have soared toward $500 million per year, the system has lost its flexibility.

In its rate proposal, Bonneville assumes sales losses of 927 megawatts in its 1997 fiscal year, 1,170 megawatts in 1998.

If true, notes a staff paper prepared by the Northwest Power Planning Council, Bonneville may have no need for No. 2.

“There would, however, be no revenues to offset the termination and decommissioning costs,” the paper says.

The supply system estimates the cost of decommissioning No. 2 at $357 million over a 50-year period encompassing fuel removal, decontamination and demolition.

A small portion of the money paid to Bonneville for power is set aside for decommissioning. As long as the plant produces power - it has a 40-year operating license - the fund builds.

If the plant were terminated in the next year or two, Bonneville would have to shoulder those costs immediately. But it would no longer be taking a loss on each kilowatt-hour from the plant.

Jim Lewis, the Bonneville official who oversees agency purchases from non-federal sources, said the agency loses about $25 million annually on its No. 2 purchases.

That’s close to the ongoing annual cost of decommissioning the Trojan nuclear plant in Oregon, which was terminated three years ago.

“It’s very expensive to shut that thing down,” he said. “We don’t have the money in the bank today.”

In a study prepared before its recent rate proposal, Bonneville estimated its costs might be slightly higher in the five years following termination, or it might save as much as $140 million.

Although Lewis praised the efforts supply system managers are making to bring expenditures down at No. 2, he said competitors will keep the pressure on. “I’m pretty confident they’re going to make it,” Lewis said.

The liquid-crystal display in the control room indicates at least partial success.

At 1,200 megawatts the plant’s output exceeds its designed capacity because of improvements made in its equipment over the last decade.

And Webring said officials at No. 2 are looking at comparable plants all over the country to determine where they can save money in each phase of operations.

“We’re just going back and looking at every single area that we work on,” he said. Safety, he stressed, will not be compromised.

“My family lives 10 miles from here. We’re not going to do something stupid,” Webring said.

Striding through the administrative building at No. 2, he noted the number of empty cubicles, one hung with the sign “Space for rent.”

“The sense of urgency is great. We have hot to be competitive,” Webring said.

, DataTimes ILLUSTRATION: Color Photo