Truckee utility rejects power contract

The debate was heated and the meetings interminable, but on Wednesday night the Truckee Donner Public Utility District’s board of directors put an end to the speculation about entering into a 50-year power contract.

The 4-1 vote rejecting the proposal to buy shares of a yet-to-be built coal-fired power plant in Utah was somewhat of a surprise. Leading into Wednesday the board appeared to be split 2-2 with Joe Aguera’s vote the wild card.

Instead, it was Director Ron Hemig’s vote that was the surprise.

Board members, meanwhile, said they appreciated the large amount of feedback they received from inside — and outside — the community. None of the board members, however, commented directly about a letter sent by Gov. Arnold Schwarzenegger earlier in the week urging them not to approve the deal.

The district must now consider a variety of other power supply options in the coming months.

Other possible outcomes from the contract debate include the formation of a citizens advisory committee to address future electric supply options, including coal and renewables.

How’d they vote? Tim Taylor: In Favor Pat Sutton: Opposed Ron Hemig: Opposed Joe Aguera: Opposed Bill Thomason: Opposed

Reason to decline

Those opposed to the contract, both in Truckee and beyond, were concerned by the duration of the contract, its lack of cost caps, coal’s contribution to global warming and poor planning on the part of the district.

“I’m glad that everybody spoke up as much as they did. It’s exciting to see people come together on the environmental issues, and to see that it is a priority above everything else,” said Truckee resident Micheal Washington. “I think with the attitude of the board, if people hadn’t spoken up, it would have passed.”

Locals weren’t the only ones chiming in on the deal. Second homeowners and visitors from across the state, including Schwarzenegger, sent dozens of e-mails to district staff and board members.

In a letter addressed to Hemig on Wednesday, Schwarzenegger urged the board to reject the contract and “join California’s other forward-looking municipalities in using cleaner and renewable sources of electric generation.”

The governor also wrote that a yes vote on the contract would be a clear “attempt to circumvent Senate Bill 1368 before it goes into effect.”

SB 1368 was signed by Schwarzenegger late this fall, and when it goes into effect at the first of the year, will prohibit publicly owned electric utilities in the state from entering into long-term financial commitments with power suppliers who do no meet California emissions standards.

This bill was a major reason that board director Bill Thomason said he voted against the contract.

“Going against the Legislature and Gov. Schwarzenegger — to sit up here and thumb our nose at them — is just not right, and I am not going to do that,” Thomason said.

Thomason was opposed to the contract from the get-go, but Hemig was in favor. He shocked many audience members when he announced that he had changed his mind and would cast a vote declining the contract.

“Ron Hemig surprised me,” Washington said. “I think that he had so many holes blown through his ship last night that if he would have taken a pro position it would have been political suicide.”

50 years is a long, long time

The lone vote in support of the contract came from newly appointed board president Tim Taylor. Taylor voiced concern over the economic backlash ratepayers could experience without a contract that allows for stable power rates.

“The TDPUD should be following a course of action that not only meets the California [renewable portfolio standard], but exceeds it to a level that can be afforded by all in the community, not just some,” Taylor said.

Taylor suggested a compromise to purchase eight to 12 megawatts (MWh) of power, instead of the suggested 15 to 24 MWh, but at the 11th hour, it seemed too late for some ratepayers and board members to consider.

“[The board] put themselves in this situation,” said ratepayer Al Farrantine. “I ran for the PUD [this fall] and I didn’t hear about this until the week before the election. How do you tell a community that you have 60 days to weigh in on a 50-year contract?”

District staff had worked to secure a contract with Utah Associated Municipal Power Systems for nearly five years, and until the term of the contract — 50 years — was placed on the table in an early November meeting, all five board members said that they were in favor of the option.

The proposed contract called for the district to purchase entitlement shares in Intermountain Power Project 3, a coal-fired power plant in Delta, Utah that will start producing energy in 2012.

The agreement would have also allowed the district to purchase power at cost, rather than on the commodity market, which some district staffers said would have saved the district millions annually.

What’s next?

The Truckee Donner Public Utility District declined a contract with Utah Associated Municipal Power Systems this week that would have filled a percentage of the district’s energy portfolio beginning in 2012.

And now, without the contract, the district will need to look elsewhere for power and cost savings.

Purchasing energy on the open market will be one answer, but other options are still being formulated.

“I think we have a big job that will come as a result of this,” said Director Pat Sutton. “We need to put some things on the agenda after the first of the year to start a discussion of creating a citizens advisory committee, and to maybe request some answers to questions that have arisen during some of these meetings.”

At Wednesday’s meeting, board members and ratepayers also tossed around ideas that included increasing energy conservation efforts, building a small, local, renewable power plant, or implementing a voluntary surcharge for ratepayers who are interested in buying more green power.

“I also think that we should pursue an extension of the contract we currently have with Constellation (Energy Generation Group),” Sutton said. “It’s an option that has never really been discussed by the board. We weren’t looking at it because it would be expensive, but we’re going to need something, and that is one of the critical next steps.”