Recent severe weather events such as 2021’s summer heatwave and drought are heavily impacting the energy market, with some energy experts drawing comparisons to the 2001 California energy crisis.
Energy demand has soared this summer, and utility companies in Idaho are finding ways to meet that demand while also considering the environment.
“From March to (most of July), it’s been one of the driest springs and summers on record,” said Adam Richins, chief operating officer at Idaho Power. “The grid has definitely been tested. It’s holding firm, and we feel pretty good at where we’re at.”
The Idaho Statesman reported in July that the Gem State has received an average of just under 4.4 inches of precipitation in 2021, less than half of the normal amount. It’s the second-worst precipitation year in recorded history for the state, trailing 1924, when just 3.5 inches of precipitation had fallen by the same date.
With hotter weather, the demand for electricity is higher because more people run air conditioning more frequently, said Brian Johnson, Schweitzer Engineering Laboratories endowed chair in power engineering and distinguished professor at the University of Idaho.
Hotter weather also causes utility equipment like power lines and transformers to degrade from generating more heat, he said.
Power companies also are unable to sell as much surplus power during hotter weather, Johnson said. More companies are having to rely on hydropower for their customers rather than selling it, which is driving the market prices upward because of its more limited supply due to the drought and a decreased snowpack from the winter.
That is what Idaho Falls Power is currently facing, said General Manager Bear Prairie. The city-owned utility receives roughly 40% of its power generation from its dams along the Snake River, and the drought is cutting into its ability to sell surplus to help offset other power supply expenses.
“Wholesale market prices are at levels that are higher than we saw in the 2001 energy crisis which can put extreme financial stain on energy costs for Idaho Falls Power when we also experience drought conditions like we have this year,” Prairie said.
The energy crisis was an unprecedented market disruption, with electricity prices tripling normal costs as a result of deregulated market manipulation from energy companies.
Johnson said a situation such as the Texas blackouts earlier this year are unlikely in Idaho because the state’s electric grid isn’t isolated from the rest of the country, which was the primary cause of the issues in Texas. Instead, a situation comparable to the California rolling blackouts in August 2020 is more likely if the perfect combination of factors hits Idaho.
“The combination to watch out for is a series of bad water years, late-season hot weather … and if capacity is being increased as fast as demand is going up (from Idaho’s population growth),” Johnson said.
Richins said he’s unsure if the increased market prices will continue in the future. The biggest factor for Idaho’s electric grid outlook will depend on transmission lines, which move large amounts of power from region to region.
Transmission lines have become more widely used with companies increasingly transitioning toward renewable energy, Richins said. They allow companies to import and export different forms of energy depending on what their seasonal needs are.
“It’s not as much of an energy issue as it is a transmission issue,” Richins said. “How are we going to be able to continue moving all this renewable energy around?”
Many power companies and utilities are moving to a de-carbonized world to reduce the effects of climate change. Richins said Idaho Power believes it can meet its goal of using 100% renewable energy by 2045, but it can’t all be done at once because more transmission lines are necessary to move renewable and diverse forms of energy across the Pacific Northwest.
“There’s no silver bullet in the energy game,” Richins said. “As long as you continue to be diversified and focus on being smart going forward, we’ll see success here.”
The Bonneville Power Administration announced in a July 28 news release it was decreasing power rates by an average of 2.5% and slashed its proposed transmission rate increase in half to an average of 6.1%. This is the first time the administration has decreased these rates in decades, the release said.
This is good news for utility companies that receive power from the administration, even if it comes with some caveats, Prairie said. About one-third of the electric power used in the Northwest comes from the administration, and the majority of the power used in Idaho Falls is purchased from BPA, according to Idaho Falls Power.
“BPA lowering the price that we pay for power supplied from them is certainly good news, but it is also tempered by two factors,” Prairie said. “First, our transmission rates from BPA are going up next year 12.4%. While this is a much lower total cost relative to power, it does cut into the financial benefits of the power rate decrease.”
The second factor was the effects of the drought and Idaho Falls Power losing surplus opportunities from energy sources such as hydropower.
Idaho Falls Power anticipated this change from BPA and planned its budget around it to avoid raising power rates, Prairie said. This is the fourth consecutive year the utility has held its power rates flat with no increase, remaining among the lowest in the nation with energy charges costing residential customers just over 6 cents per kilowatt-hour.