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Economic and dam related articles

The View from Other Public Utilities

by Christine Pratt
The Wenatchee World, November 5, 2011

Clark Public Utilities, Vancouver
Customers: 180,000
2012 budget: $380 million
Power sources: 60% from Bonneville Power Administration, also has a gas-fired turbine, wind power.

Bought into a wind farm in Milton-Freewater, Ore., in preparation for I-937. Wind power purchased has been more expensive than the market prices for power.

Losses from wind power investment to comply with I-937 contributed to an $9.7 million budget deficit that commissioners closed with an average 2.8-percent rate increase (3.9 percent for residential customers).

"The investment in wind has not been the lowest-cost option for power... but that doesn't mean it won't be a good deal in the long run," says Erica Erland, spokeswoman for the utility. "Our perspective as a public agency is that we're committed to compliance and to the spirit of the legislation to encourage renewable energy in market transformation. As we learn more about the financial impact, we'll share that with the legislature."

Cowlitz County PUD, Longview
Customers: 48,400
Power sources: About 90 percent from Bonneville Power Administration, owns small hydro, wind
2012 budget: $256.5 million (proposed)

Invested in wind from 2007 through 2009, because officials wanted the extra power and knew that I-937 was coming. They felt they got a good deal. The plan was to sell the surplus wind power to California, and they did for a while for a $6.5 million gain. Then market prices dropped, California changed its law to oblige its utilities to buy most wind power from in-state sources.

The changes have created market uncertainty and loss. Wind revenues, which had been about $20 million annually, are expected to drop to about $9 million next year.

The decline accounts for 11 percent of the total 17.5 percent rate increase proposed this year. Other factors include switch from Grant County PUD to BPA for additional power at higher cost.

"We still think wind was a good idea," says utility spokesman Dave Andrew. "You hope the market changes and we'll eventually need that power. As we look at I-937 there's a conundrum of what's good public policy versus what's good for our utility. An investment when you're long on power, is that a good investment?"

Tacoma Power
Customers: 169,000
Power sources: owns 7 hydro projects, buys 55% of its power from Bonneville Power Administration
2012 budget: $394 million

Bought renewable energy credits (RECs) linked to large wind projects owned by Iberdrola Renewables just to meet I-973 targets. The RECs will cost an estimated $22.8 million from 2012 to 2019.

Improved efficiencies at the utility's dams and new generation at one of its dams will reduce the need for more RECs. The utility raised rates 5 percent this year. The RECs only amount to about half a percent of that, so far.

"We're a utility that, almost more than any utility in the region, has enough power to cover load and excess to sell," said Chris Gleason, utility spokeswoman. "The RECs are like writing a check to nowhere. We do believe that if we have a need, renewables are the way to go, but we don't think we should have to pay until we have that need. It's a fundamental business decision not to spend money on something that you don't need."

Snohomish County PUD, Everett
Customers: 325,000
Power sources: About 81 percent from Bonneville Power Administration, some wind, biomass, solar, some PUD hydro.
2012 budget: $722 million (proposed)

Has invested in wind power over the last two years. It now makes up 8 percent of the utility's energy portfolio.

In a letter this year to state Rep. Dave Upthegrove, utility officials estimated that the utility would have to buy 65 average megawatts of renewables to meet I-937 targets at an estimated cost of $20 million to $30 million.

But General Manager Steven Klein says that would be a worst-case scenario, with no area growth -- a scenario he expects will end as the economy starts to grow again.

With little generation of its own, the utility has set about going after renewables and locally generated carbon-free energy as a means to diversify its power mix.

"We were heading down a path focused on conservation and renewables regardless of I-937," Klein says. "We see renewables as a key focus area, strategically."

The letter, he says, is an attempt to tell legislators that utilities shouldn't be forced to invest in something they don't need.

"It just doesn't make sense for utilities to build things (wind turbines) and impact the environment if all they do is sit and turn around and then have to dump that power in the market," he said.

Christine Pratt
Renewables: The View from Other Public Utilities
The Wenatchee World, November 5, 2011

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