Our primary power marketing product is long-term firm power. Firm power is capacity and energy that we guarantee to be available 24 hours a day. We reserve a portion of our generation to continue delivering firm power even if an outage occurs at a powerplant. The amount of reserve power is established by various power pooling agreements and reliability criteria of utility reliability councils, such as the Western Systems Coordinating Council and the Mid-Continent Area Power Pool. Before marketing firm power, we must reduce our generation resource available for sale by required reserves.
Other long-term sales
At times, we sell contingent or withdrawable capacity. Contingent or withdrawable capacity is sold to customers who agree that the capacity may be unavailable under certain conditions. The customer is then responsible for replacing the capacity that is withdrawn or otherwise unavailable. This way, we avoid making expensive purchases of capacity to meet our obligations to customers. We may base the amounts of withdrawable or contingent capacity on amounts that the powerplants may generate under the best water conditions. We can only supply the capacity that the powerplants actually generate. Western may sell energy associated with peaking power rather than requiring its return.
Nonfirm energy/Short-term sales
Although most of our major power marketing contracts are for long-term sales of capacity and energy, we provide many other related services if we have the available resources and operational flexibility. 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.
Nonfirm energy is usually sold with the requirement that the sale can be stopped on telephone notice and the buyer must have the resource available to meet its own load. Rates for nonfirm energy only include a charge for the energy delivered, since the customer has the capacity to meet its loads, if necessary. Nonfirm energy is marketed under several names that reflect the conditions of the sale or charges for the energy.
Seasonal sales include power generated or made available to customers only during certain seasons of the year.
Purchase power is power that Western must buy from other suppliers when we do not have enough Federal generation available (due to bad water conditions or operational constraints) to meet our contract commitments. Power may also be purchased to support short-term sales. In some marketing plans, we are moving away from marketing resources that anticipate significant power purchases to meet firm contractual commitments. In others, we plan to market the hydroelectric resource as a base resource, which can be enhanced by customer products (such as firm power and ancillary services) at the customer's choosing.
For more information see General Power Contract Provisions.