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Power Marketing

Western's mission is to market and deliver clean, renewable, reliable, cost-based federal hydroelectric power and related services. It's hydroelectric power is generated from federal dams in 11 states.

Under our power marketing services, we offer four basic types of contracts:

  • Long-term firm power and other long term sales
  • nonfirm energy and short-term sales and purchases
  • seasonal power sales and
  • purchase power

The terms and conditions for selling the power from each Federal project are specified in individual marketing plans.

Although most of Western's power is sold to existing customers, through integrated resource planning we are able to set aside power from some projects to form a resource pool for new customers.

Contracting with firm power customers 
When existing contracts expire or when additions to generating capacity occurs, we develop a new marketing plan on a project-specific basis. Marketing plans specify when and how Western will sell power. Although marketing plans vary from project to project, they commonly address issues such as contract terms and conditions, the geographic area where electricity will be sold, classes of service and the amount of electricity offered, who is eligible to receive the electricity, how power is allocated among applicants and the deadline for successful applicants to sign their contracts.

Final marketing plans are the basis for allocating firm power to individual customers. An allocation does not grant a customer the right to receive power; this happens only when a contract is signed. The contract typically contains a capacity commitment (also referred to as the contract rate of delivery) and an energy commitment (except for the Central Valley Project, which markets power based on a percentage of the project’s hourly output).

Western normally requires the potential customer to enter into a contract within a defined time period after the allocation is made. The entire contracting process could take anywhere from several months to several years. The customer may also need to make delivery arrangements beyond Western’s point of delivery; customers take delivery according to the contract terms.

When do Western's contracts expire?  Most Western power contracts have a 20-year term. The Provo River Project contract expires Sept. 30, 2024, while Parker-Davis Project expires on Sept. 30, 2028. Boulder Canyon contracts expire Sept. 30, 2017, and Pick-Sloan Missouri Basin Program—Eastern Division contracts expire Dec. 31, 2020. Contracts for existing customers of the Salt Lake City Area Integrated Projects and Loveland Area Projects end on Sept. 30, 2024. Central Valley Project and Washoe Project contracts expire Dec. 31, 2024.  

Capacity vs. energy

What is the difference between capacity and energy? Capacity is the instantaneous amount of power available to meet consumer demand as they turn on lights, appliance and motors. It is measured in kilowatts or megawatts. Energy is the amount of electricity delivered over time and is measured in kilowatthours or megawatthours. One kilowatthour of energy delivered over one hour requires one kilowatt of capacity. Capacity and energy can be marketed and billed separately.

 

Firm power vs. non-firm energy 
Firm power is capacity and energy that Western guarantees to be available 24 hours a day. We usually offer different amounts of long-term capacity and energy for sale during two seasons—winter and summer. The length of the seasons may vary depending on which powerplants supply the generation. Differences result from the seasonal fluctuations in how much water flows through the powerplants and project use loads.

Nonfirm energy comes without a guarantee of continuous availability. Nonfirm means energy delivery can be interrupted at the seller's discretion upon telephone notice. Nonfirm energy is sold to utilities that prefer not to use an expensive fuel or to make expensive purchases from another seller. In this type of sale, the customer has the capacity to meet its consumers' demand for electricity, but would rather purchase nonfirm energy that is less expensive than the cost of its own generation or alternative sources of supply. 

Loads
The largest amount of electric power that Western has delivered to meet customer power use was a peak load of 7,237 MW on July 18, 1995.

Power marketing service areas
How Western’s marketing areas determined
Power sold by the power marketing administrations is generally distributed within the watershed of the river in which power is generated or in states that are partially within the watershed. This keeps the benefit of low-cost hydroelectric power within the region for such entities as military bases, Native American tribes or cities and towns that serve the area’s population.

In addition, it is more difficult to deliver electricity across long distances because of transmission line constraints, multiple charges for transmission over multiple systems and the physical loss of energy due to resistance in the transmission line conductors. All of these factors can make delivery outside the region impractical or higher in cost.

Types of power/services Western provides 
The main types of service include power marketing, transmission and ancillary services. Under power marketing services, we offer: long-term firm power and long-term peaking power sales; nonfirm energy/short-term sales and purchases; and seasonal power sales. For the Central Valley Project system, we offer a percentage of the output of the system and firming purchases. Transmission services include point-to-point service—transmission between points of receipt and delivery; Network Integration Transmission Service—delivering capacity and energy over a transmission network. Ancillary Services are services that support the transmission of capacity and energy from resources to loads while maintaining reliable system operation. These include scheduling, system control and dispatch; reactive supply and voltage control from generation sources service; regulation and frequency response services; operating reserve—spinning reserve service; and operating reserve-supplemental reserve service.

Power sales
Western sells and transmits power generated at 14 different multipurpose water resource projects throughout the West, which are managed by the U.S Bureau of Reclamation, U.S. Army Corps of Engineers and the State Department’s International Boundary and Water Commission. We also sell the United States’ 547 MW entitlement from the coal-fired Navajo Generating Station near Page, Ariz., and transmit power through our entitlements on the Pacific NW-SW Intertie Project. In FY 2005, Western sold 35.5 billion kWh of power.

Purchase power
By contract, Western guarantees to provide a certain amount of power to firm power customers. This means that when enough h ydrogeneration is not available due to drought or operational constraints, such as curtailed water releases for environmental reasons, then Western must purchase power from the open market from other utilities or independent power producers. Western may elect to purchase power in advance or buy on the open spot market.

  • Western also regularly purchases energy to meet our responsibilities as operators of four control areas (dispatch centers). Because we are required to match generation to load, we sometimes must buy energy to follow the hourly variations in customer loads. The costs of these purchases are passed on to the customer that has caused the imbalance.
  • Western also sells surplus energy when generation is greater than our contractual commitments.

In the CVP system , the customer has a percentage of the hourly output of the system. Western purchases firming energy to meet project use load or at the request of customers to guarantee a firm supply.