Information Concerning Western Area Power Administration's Sale and Purchase of Power

GAO was requested to provide history, facts, and figures concerning the Western Power Administration's: (1) purchases of power from the Centralia powerplant that are marketed in California; (2) sale of power to Pacific Gas and Electric Company (PG&E); and (3) arrangements to purchase power back from PG&E, and how this relates to Western's purchase power requirements.

Western markets power produced at Federal dams in northern California which has basically been sold to preference customers and PG&E. A 1951 contract was developed to meld the Federal hydropower with the PG&E generation and to deliver power to preference customers. A second contract permitted PG&E to purchase surplus Federal hydropower not required by preference customers. A 1967 contract allows for the importation of Northwest power into Western's system with excess power being provided to PG&E. Energy sold to PG&E before July 31, 1967, is in Energy Account No. 1; sales since that date are in Energy Account No. 2; and capacity sold to PG&E after January 1, 1965, is in a Capacity Account. To obtain Northwest power, Western entered into a contract in 1967 to purchase power from the coal-fired Centralia powerplant in Washington. Because this contract ended in December 1981, Western has had to replace Centralia power to meet its customers' firm requirements. Thus, it has developed two options. Under Option A, Western would repurchase power from PG&E using Energy Acounts No. 1 and 2 and the Capacity Account as much as possible. Under Option B, Western would seek power from other sources using its repurchase privileges sparingly to avoid repurchases from Energy Account No. 2. This would cost about $191 million less than option A. In the long run, option A would have greater impact on the budget and the consumer. Meeting its obligations under option B depends upon negotiation of favorable power purchase contracts from other sources.