Puget Energy...lower 2003 earnings due...weather concerns (Cal Power crisis?)

Puget Sound Business Journal ^ | Jan 16, 2003

[Robert357]

Bellevue-based utility company Puget Energy Inc. expects its 2003 earnings to be cut by as much as 25 cents per share because of drought conditions in the Northwest, according to a Wednesday filing with the Securities and Exchange Commission.

The company's 2003 earnings are expected to take hit because of low hydroelectric production in the region.

Precipitation levels during the last three months of 2002 were 67 percent of normal in the Columbia River Basin above Grand Coulee Dam. The Northwest Rivers Forecast Center on Jan. 9 predicted that streamflows in that basin would be only 80 percent of normal, assuming average precipitation and snowpack for the balance of the winter season.

In a normal water year, Puget Sound Energy obtains about 38 percent of its energy supply from low-cost hydroelectric facilities on the Columbia River.

If the forecasted streamflow reductions occur, the company will need to replace that low-cost hydropower with more expensive thermally generated and purchased power, according to the filing.

The earnings reduction would have no impact on the company's $1 per share common stock dividend, Puget said.

[Robert357]

Precipitation levels during the last three months of 2002 were 67 percent of normal in the Columbia River Basin above Grand Coulee Dam.

If weather patterns dramatically change and the rest of the year is normal, things could get as good at 80% of normal streamflow (a.k.a. amount of PNW hydro energy).

What that means to the folks in Rio Linda is that there is likely going to be limited amounts of PNW hydro power available in California this summer. That means that the healthy amounts of snowpack and hydro in California mountains will help supply power to California. But if the California economy recoveres and demand for power jumps up, they are likely not going to have enough power generated in California and the stuff from the PNW will be much more expensive.

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[Robert357]

While not a repeat of the the year 2001 or early 2002, the conditions in the PNW are starting to become pretty clear that there will be a dramatic shortage of PNW hydro.

That will likely mean some higher power rates in California.

I wonder if anyone in the California Legislature is smart enough to put two and two together and realize that State Agencies and Schools will need much more money in their budgets for electricity in next year's State Budget?

Nah! They are politicians, what am I thinking!

[bigfootbob]

I'm a PSE customer. 2 years ago they were granted an emergency rate increase because of the low snow pack. Last year had record snows and the snow pack was back at or above normal. We didn't get an appropriate rate reduction, WHY? Now they want to jack it up again, B.S.!!! Let them eat cake!

[bigfootbob]

I forgot. PSE a couple of years ago fired all of their linemen in my area and contracted out with Potelco. They said this would not hamper service and would be a huge savings for customers. Where's the savings? Also, when the lights go out, it will take longer to have the power restored. Prior to all of this tinkering, 3 years ago or so, PSE was a fantastic energy provider.

[goodnesswins]

TRANSLATION: It ain't RAINING in Seattle! (But don't tell anyone!)

[Robert357]

Your observations are well taken.

Regarding Puget and its outsourcing of linemen.....don't get me started on that. I actually was hired to testify on behalf of the union in the Puget-Wa Nat Gas company merger before thw Wa Utility & Transportation Commission. My testimony was that reliability had suffered under Puget because they had downsized their linecrew staff, while customer numbers and facilities had increased. Their proposed merger saving in staff labor portended even worse reliability.

[Fabozz]

"It ain't RAINING in Seattle!"

Utter nonsense. It rains here all the time. All day, every day, except for maybe one or two hours during the year when all the travel brochure photographers rush out to shoot misleading pictures of beautiful scenery. Anyone, especially all you lucky residents of sunny California, would be insane even to consider visiting here, let alone moving here. It's too late for us, but the rest of you can save yourselves! Stay away!

You think they bought it?

[lewislynn]

I actually was hired to testify on behalf of the union ------My testimony was that reliability had suffered under Puget because they had downsized their (union?) linecrew staff,

Gee, and the only reason you didn't testify it was because of Gray Davis and evil Californians sucking up all the energy and paying exorbitant prices for it, was because you were "hired to testify on behalf of the union"?

[lewislynn]

But if the California economy recoveres and demand for power jumps up, they are likely not going to have enough power generated in California and the stuff from the PNW will be much more expensive.

Not really, because we can use what you won't need in Washington with your lack of an economy even with all the supposed energy you need.

BTW, aside from the $3,000 per employeee Idaho taxpayer dangling carrot, it was interesting Buck Knife Co. used energy prices as a part of the reason for leaving Ca.(they haven't left yet) yet they didn't choose a deregulated state, not even Texas.

Idaho, it seems, has come to the conclusion that their rates would be higher and more volitile under deregulation (as will all deregulated states when the price controls are lifted) so they choose not to participate in that scam.

As I pointed out somewhere else, I'll be looking for the report of when Buck moves it's operation from Idaho to China for the same reason it's proposed to move from Cal. to Idaho. Sadly it'll be more devastating to Idahoans.

[goodnesswins]

LOL....Well....someone better buy it....cause we're getting sick of all the outsiders here.....3rd generation Washingtonian here! (with web feet.)

[Robert357]

and the only reason you didn't testify it was because of Gray Davis and evil Californians sucking up all the energy and paying exorbitant prices for it, was because you were "hired

NO

As a professional engineer I am sworn to a cannon of ethics. When I write testimony and stand for cross examination, it is my professional reputation that is on the line, to say nothing of swearing an oath of truth before the presiding administrative law judge.

Some folks can be bought. I don't do that. I was sought out because of my recognized expertise in electric power reliability. I believed and still believe in what I said then.

[Robert357]

Not really, because we can use what you won't need in Washington with your lack of an economy

Then ask yourself, "What is the core concept within the Puget announcement?"

If you think about it, you will realize that they are saying that there is going to be a shortage of supply of PNW hydro. They are saying that demand for power is going to require that they pay more for electricity (supply & demand). What will happen is that within the PNW, the least costly resources will be grabed first by those up here, because the folks up here understand the hydro system better and have reacted long before the power folks in California realized what was going on. That means that what is left for export will be more expensive than usual.

Good Luck this summer!