Filling the power gap
Finalizing power contracts isn’t getting any easier for the Truckee Donner Public Utility District.
There has been much conversation lately about the district’s proposal to sign a 50-year contract to receive coal-based energy beginning in 2012, but the current power contract with Constellation Energy Generation Group actually ends in 2008 and the district has yet to find a power source to fill the entire four-year gap.
“We hope to have an opportunity to do shaped capacity and energy contracts with [Utah Associated Municipal Power Systems], and that is our best opportunity for that time frame,” said Electric Utility Manager Stephen Hollabaugh.
Shaped capacity and energy contracts last 12 to 15 months, and allow buyers to purchase a specific amount of power based on demand, said Hollabaugh.
The first of these contracts has already been agreed on for January 2008 through March of 2009, board president Ron Hemig said, but availability of consecutive contracts is not guaranteed.
The tentative plan has been for the district to buy an ownership interest in a power plant called Intermountain Power Project 3 (IPP3), and to begin receiving power when the plant begins generating energy in 2012.
Sitting right next to the IPP3 site, are IPP1 and IPP2, two sister generators that have been producing coal-based power since the 1980s. Because the utility district is already a UAMPS partner, the district is eligible to vie for excess power that other owners don’t need.
“But this will only go on, probably, through 2011. This can’t go on forever,” Hollabaugh said.
Not only will the option for shaped capacity and energy contracts be terminated at some point, but even while they are available they are still limited in number.
“There are a number of utilities associated with UAMPS that are trying to fill the same gap that we are,” Hollabaugh said.
If the district is unable to secure a contract, then it will be forced to purchase power on the open market for prices as high as $70 per megawatt hour ” $15 to $20 more than what the district is currently paying, said Hemig.
“That’s sticker shock like you wouldn’t believe,” and it will be passed on to the ratepayer, Hemig said.
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