Drought, Challenges Loom

The View from the West

BY MARTIN ROSENBERG
Editor-in-chief, EnergyBiz

The Western Area Power Administration service territory encompasses a transmission system spanning 15 states and 1.5 million square miles, serving 700 preference customers and numerous open access transmission customers who rely on the existing infrastructure for their power.

We recently caught up with Mark A. Gabriel, agency administrator, to discuss some major challenges ahead.

EnergyBiz: What are some of the changes you are noticing in your territory?

Gabriel: Wind and solar farms are cropping up across the country, and lifecycle costs are continuing to decrease, making their development economically appealing to investors and utilities. The energy industry is also seeing increased behind-the-meter distributed generation, especially in photovoltaic capacity in both new and existing construction as a result of utility incentives, new financing options and steadily decreasing costs. These variable energy resources and load-owned generation are creating a new operating environment for an electric grid that was not designed to handle large-scale, intermittent generation in real time. As operating conditions change, so too must the technology and regimes in place that were developed for an era of large-scale, easier-to-dispatch resources. In this changing landscape, cooperation, communication and collaboration among utilities are critical to strategically address this energy frontier.

EnergyBiz: What is the impact of the drought?

Gabriel: There are unprecedented low water levels across in many parts of the West - especially California, this year. Water has always been a precious commodity in the West, but with dwindling supply, competition for its use and increasing regulation, this resource will become even more important. The iconic Hoover Dam is experiencing the worst 14-year drought period in the last 100 years. For Western, insufficient water results in not having sufficient hydropower to meet our contractual obligations. Under many of our contracts, we must purchase more expensive power on the market to meet our obligations. In other contracts, such as Central Valley Project and Boulder Canyon Project, we market the hydropower that is available, and it is our customers' responsibility to obtain the remainder of what they need. In both cases, the increased costs are eventually reflected in consumer power bills.

EnergyBiz: How is reliability changing?

Gabriel: Utilities around the country pride themselves on reliability. However, maintaining our reliability is becoming more challenging because of new energy sources, ever-increasing compliance standards, unprecedented severe storms and higher expectations. Routine maintenance and hoping for the best are not adequate ways to ensure reliability. Western's Asset Management Program, combined with our Enterprise Risk Management Program, is providing a data-based look at our assets and risks so we can make wise investment decisions to ensure the reliability of our system and operations.

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