Ali Rodol is a powerbroker in the purest sense of the word – what his business card calls a “power marketer.” He's one of 18 marketers buying and selling electricity for Seattle City Light, trying to get the best price for times when the utility expects a surplus and the best deal when it expects its hydropower to come up short. “It’s like the stock market,” he says – except that it operates 24 hours a day. “Forward marketers" make very long bets, two years out. Others on City Light’s trading desk buy and sell for immediate and next-day delivery, adjusting to each shift in electric supply, customer demand, and the fluid, complex power market that Enron once tried to game.
This perspective gives Rodol and his colleagues special insight into the hazards of a changing climate. This year, they got skunked by el Niño and whatever else lies behind this year’s double punch of a warm winter and a very hot, very dry early summer.
City Light typically generates just a slight power surplus in January, February, and March, when the high-altitude water that drives its turbines on the Skagit, Pend Oreille, Tolt, and Cedar Rivers (and those of its other suppliers, the Bonneville Power Administration and BC Hydro) is locked up in snowpack. Then it generates a big surplus in April, May, and June, when that pack melts and rain falls instead of snow. The forward marketers' job is to sell early and make sure City Light isn’t left holding a surplus or tossing it down the spillway: “You don’t want to get stuck when power goes negative,” Rodol says.
This year has turned that strategy on its head. What was supposed to be mountain snowpack fell as rain, generating a huge unseasonable surplus from January to March. That’s meant much less melt and much less power in April, May, and June, a situation exacerbated by the current drought.
Take City Light’s Boundary Project on the Pend Oreille, which has no storage reservoir. Ordinarily, says Rodol, about 70,000 or so cubic feet of water — “sometimes 100,000” — flow through the system each second in May and June. “We can only use 53,000, 55,000 cubic feet. The rest we spill.” In May, the flow was down to 30,000. And in June? Rodol whips out his phone, though it’s the weekend, and calls the 24-hour marketing crew. “What are we at right now?” he asks. “Aha – 19,000 feet.” Snowpack in the Boundary watershed is 2 percent of normal. In the Skagit it’s zero.
He shakes his head. “I have never seen anything like this in my 30 years. February and March looked like May and June, and now May and June look like February and March. Now we are buying power!”
Those purchases must cover not only current needs but the electricity Seattle agreed to supply to other utilities two years ago. “It was much cheaper then!” Rodol laments, “I wish we hadn’t sold any, because now we’re buying it back.”
But how could they know? Peak streamflows arrived even earlier this year than what the University of Washington’s Climate Impacts Group forecasts for the end of this century’s average.
Rodol saw nothing like this inversion in any of the nine previous El Niño years during his tenure. Two of those, 1987-88 and 1997-98, were “strong” or “very strong” El Niños. This year’s El Niño was deemed “weak” when it brewed in the tropical Pacific; in March, the National Oceanographic and Atmospheric Administration predicted that it would “have little influence on weather and climate.” Is something besides El Niño at play here?
That’s the question dogging City Light and untold other businesses and agencies whose fates are tied to climate change. “Is this year an anomaly, or are things going to be this way?” muses Rodol. “I don’t think we’ve really thought about that.” City Light’s weather forecasts run just six months out, says utility spokesman Scott Thomsen. NOAA expects what it now calls a “strengthening El Niño” to persist into next year.
If this is the new normal, and winter has replaced spring and summer as the hydro surge season, City Light and its ratepayers can take this consolation: January, February, and March are good times to sell electricity to Eastern customers, as long as they need it for heat. This year City Light banked $36 million from wholesale sales in those months and another $6 million in April.
Thomsen says City Light still expects to hit its $41 million projected annual surplus: “We do not anticipate any surcharge impact on rates this year." He notes that being able to store water in reservoirs gives Seattle's utility some room to shop around: “You may be able to buy power cheaply and store water to use later.”
In the following months, however, City Light will have to compete with other hydro-starved markets for juice, just as more ratepayers discover a new fondness for what used to be a very un-Seattle appliance: the power-gulping air conditioner.
This article was updated on July, 2, 2015 to reflect several corrections, including the longevity of City Light's power marketing team, its typical winter power levels, and the months this year when it sold large power surpluses.
