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McCullough Research warns of rate increase in Pac NW.(INDUSTRY NEWS CURRENT HAPPENINGS AND EVENTS)

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| April 01, 2005 | COPYRIGHT 2005 BNP Media. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

In a report to its clients, McCullough Research has reported that a provision in the proposed Federal Budget has could raise Bonneville Power Administration (BPA) rates 20% per year to match market rates. While the concept of market rates is attractive to McCullough, the firm suggests that the proposal is not without its risks to the regional economy and the west.

While the market hub known as Mid-C or Mid-Columbia is only seconds away from Southern California on the DC Intertie, Platt's reports that traders require a 31% risk margin for transactions in California's administered markets versus transactions in the Pacific Northwest's open markets.

The language in the Office of Management and Budget proposal is not clear whether the intention is to raise BPA's wholesale rates to market rates on the West Coast or to bring rates to national levels. The proposal to bring rates to national levels would make little sense as a market solution, because the Western Interconnection, the states and provinces ranging from Alberta to California, are not part ...

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