Our Energy, Our Future
by Jafar Taghavi
The Peninsula Gateway, June 17, 2009
Nationwide electric co-ops like PenLight are using the "Our Energy, Our Future" campaign to start conversations on how we will address our future energy needs. Concerns for global and regional climate change are pushing the agenda on dealing with carbon pollution. Our utility business is about to undergo major changes with new regulatory requirements from both state and federal governments.
Unlike other co-ops located east of the Rockies who rely on coal and natural gas for their energy sources, we have been fortunate to have an abundance of clean hydroelectric power from the 32 dams on the Columbia River System. Our fuel mixtures consist of 86 percent hydro power, and only 4 percent of our total energy comes from carbon-based power supplies.
You would think utilities like us in the Pacific Northwest would be in a fairly good position when it comes to reducing their impact on climate change - not so. The passage of Initiative 937 in 2006 by Washington voters requires utilities that have more than 25,000 consumers to have 15 percent renewable energy by 2020, excluding current hydro power.
The first phase of I-937 will start in 2012 at 3 percent, increase to 9 percent by 2016 and end at 15 percent in 2020. Faced with the challenge of meeting the new renewable mandate, the Board of Directors approved PenLight to enter a partnership with three other utility partners to build Harvest Wind, a 100 megawatt, $250 million wind generator project located near Goldendale. Our $50 million share of the project's energy output will only meet half our renewable mandate. PenLight will still need to acquire additional renewable resources.
Our current power purchase agreement with the Bonneville Power Administration will end Sept. 30, 2011. Last December, we signed a new agreement that will take us through 2028. A major change in our contract requires us to pay market rate for any new load growth as of Oct. 1, 2011 (known as Tier II). The contract guarantees us that we can still purchase at a preferred rate our Tier I load, which will be set at our 2010 level. We are exploring whether we want to purchase our Tier II power from BPA or purchase through a third party. Either way, it will be at market rate.
Starting Oct. 1, 2009, BPA will start a new two-year rate period. BPA dialog over the past year pointed to a wholesale rate as high as 20 percent due to low snowpack and lower-than-forecast wholesale electric prices. At this point, we know it will be a single- and not a double-digit rate increase. BPA's final wholesale rates will be announced by the end of the summer.
We see conservation and energy efficiency as a means to help reduce our future load growth, thus reducing our exposure to market volatility. Since 1982, PenLight has invested $9.1 million in conservation, representing a savings of more than 131 million kWh of energy; enough electricity to power more than 8,700 homes for a year.
PenLight will continue to offer new programs to help its members save energy and money. The Northwest Power Planning and Conservation Council is responsible for setting regional conservation and efficiency goals. The current plan recommends a 50 percent increase for a target goal of 6,000 average megawatts over the next 20 years. These goals will be divided among BPA's customers, like PenLight, as part of our power purchase agreement. Furthermore, starting in 2010, I-937 requires us to evaluate our conservation potential and achieve a percentage of that potential in the succeeding two years. This assessment must be updated every two years to ensure we are achieving the most cost-effective conservation.
Since 1991, the federal government has been trying to produce a salmon recovery plan for the Columbia and Snake rivers that would be acceptable to all of the stakeholders. The plan is known as the Biological Opinion (Bi-Op). The opportunity to embark on a new era of salmon recovery and end decades of litigation and divisiveness is within our grasp. Unprecedented agreement emerged during the crafting of a new plan to help protect listed salmon and steelhead. An overwhelming majority of the states, tribes, federal agencies and river interests in the region now stand ready to move forward with implementation.
However, despite the broad-based support for the investment of billions of dollars in the next decade, the plan remains at the mercy of U.S. District Court Judge Redden. Opponents are demanding extreme measures such as removal of the four lower Snake River dams, and the Obama administration is reviewing the plan.
This new plan would provide real benefits for salmon and is based on sound science, which we believe will be evident as the administration does its review. Supporters recognize the hydro system provides the region not only with clean, renewable energy, but also with jobs, economic stability and cleaner skies. These also are priorities for the Obama administration.
Our business environment is rapidly changing. Our challenge for the future is to stay ahead of these changes and find the resources to meet them. We have more than 500 PenLight Ambassadors assisting us by contacting legislators to let them know where we stand on critical issues. We welcome your interest and involvement; please consider joining PenLight Ambassadors at www.penlight.org.
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