Truckee Donner PUD board receives 2022 energy usage, costs, water quality presentation
TRUCKEE, Calif. — The Truckee Donner Public Utility District’s board of directors kicked spring off by discussing a number of important items at their recent meetings. The April meeting included a review of TDPUD’s electric usage and purchased power costs for 2022, a review of the 2022 water consumer confidence report, the approval of more water resiliency projects, and the continued support of the local Climate Transformation Alliance as it grows into its next phase of operations. The May meeting included taking a key step towards an important pipeline construction project in Hirschdale, and a vote in support for TDPUD’s continued funding and involvement with the Truckee Tahoe Workforce Housing Agency.
Electric Purchase Power Review
Every two years in the fall, TDPUD’s electric utility director forecasts the energy needs of the community for the coming two-year budget cycle, along with the associated costs, and presents a diversified power supply plan that defines where Truckee’s electricity will come from. Additionally, in the spring of each year, the electric utility director reviews the previous year’s energy usage and cost data for the TDPUD, and presents it to the board. This constant monitoring of TDPUD’s energy usage and costs against budget ensures that it has a consistent understanding of how the utility is performing against forecasts.
At the April board meeting, Electric Utility Director Joe Horvath presented a report to the board that detailed how the national and global turbulence of the energy markets impacted all electric utilities, including TDPUD, in 2022. The presentation also detailed actions TDPUD is taking to insulate its customers from future cost spikes in the market.
Energy usage increased in TDPUD’s service territory by 2.1 percent in 2022. Energy costs also increased for TDPUD due to a number of causes including extreme weather in the Western U.S., low hydro-electric production due to regional drought, and spikes in natural gas prices across the country. These combined factors led to power costs that were approximately $3 million over budget for TDPUD in 2022. However, unlike many other regional electric utilities, TDPUD leadership chose to shield its customers from immediately bearing the hardship of this unexpected cost by using reserve funds to cover the overage.
“Increased power purchase costs affected almost every utility in California and across the West,” said Electric Utility Director Joe Horvath. “The impact is that we were over budget, but there are short-term and long-term efforts underway that will help mitigate against over-budget positions in future years, by reducing our exposure to energy market purchases and providing more stability in costs. We’re always focused on balancing our priorities of providing responsible rates, clean power generation, and a reliable electric system for Truckee.”
The major factors that led to a bigger exposure to market and the increase in purchase power costs were:
- Unprecedented high prices for market energy purchases due to spikes in natural gas prices
- Increased energy use due to extreme weather (hot and cold) and electrification
- Unplanned outage of Nebo Heat Recovery Plant in November and December
- Unanticipated delay of the launch of the Red Mesa Solar Project
TDPUD historically sees its energy usage grow about one percent annually and has traditionally been able to offset additional growth with conservation efforts, but 2022 showed that this trend is changing. Much of last year’s increased energy usage can be attributed to the extreme high temperatures in September and a prolonged winter with extreme low temperatures in November and December. But aside from extreme temperatures, another change is that as our community continues to electrify, electricity usage will increase in step.
The unplanned outage at the Nebo Natural Gas Plant and the delay of the Red Mesa Solar Project resulted in the need to purchase electric energy from alternative sources. TDPUD was forced to go out onto the open market to replace the energy that was scheduled to come from those contracts. Resources like natural gas saw a large spike in price last year, consistently costing about twice what it had the year prior, with some periods of peak demand reaching up to 10 times the 2021 price. Due to extreme cold weather across the Western U.S. in December, winter energy demands increased. The increased demand, coupled with price spikes in response to natural gas prices, net energy costs for TDPUD came in at $3.1 million that month alone, compared to December budget cost of $1.4 million, creating a cost overage of $1.7 million.
“This is a perfect storm,” said TDPUD board director Tony Laliotis. “Between the push for electrification and the crazy inflationary economy that we’re in, I feel like we did the best we could with the cards we were dealt. I applaud this and past TDPUD boards for building the financial reserves that are needed to protect the utility and our community.”
TDPUD leadership was faced with the tough decision for how to cover the financial shortfall of these unprecedented energy costs. Some utilities in our region have chosen to assess a surcharge on customers’ bills as a way to quickly recoup that money. But at a time when Truckee residents are already having to stretch their dollars for everyday costs, TDPUD did not want to add to the financial pressure our community is feeling.
The board has strategically maintained a healthy rate stabilization reserve fund for many years, to protect customers from significant impact to their utility bills due to unforeseen energy price spikes. So TDPUD chose to use this fund to cover the overage. This expenditure amounts to about one-third of TDPUD’s electric rate reserve fund and does not reflect the only the reserve funds the electric utility sustains. Staff will present options to the board for replenishing these reserves over time during the budget and electric rate workshops later this fall.
TDPUD is focused on the future and how to mitigate unexpected costs like this in the future, and lessen its exposure to the open market. TDPUD’s wholesale power collective, Utah Associated Municipal Power Systems, is helping all of its members reduce their exposure to the open market by exploring new carbon-free electric resources, signing new long-term natural gas contracts to lock in consistent pricing, and establishing their own market volatility reserve fund. UAMPS also has new power projects coming online like Red Mesa Solar—which began producing power for Truckee in April—and is pursuing new energy resources, conservation efforts, and demand-response programs. TDPUD’s new integrated resource plan, which it will introduce this year, will also optimize where resources are best spent, as well as make sure the electric utility doesn’t lose its progress towards its carbon-free goals in the midst of energy market instability.
Water Quality Report and Resiliency Projects
At the April meeting, Water Utility Director Chad Reed presented the board with TDPUD’s 2022 Consumer Confidence Report. For this report, which is required by the Federal Safe Drinking Water Act, the state water board analyzes the water suppliers’ mandated water quality testing results and certifies that it is in compliance with all regulatory standards. TDPUD received exceptional results; the report found zero instances of contaminants above the federal- and state-accepted level in TDPUD’s water systems in 2022.
“We’re very proud of the clarity and quality of water we have,” said Reed. “We are very fortunate to have top-notch water in the district, not only because it comes from a pristine, groundwater aquifer, but because our water quality technicians take great care in delivering the best quality product through constant monitoring and testing of our water system.”
Customers who are interested in learning more can check their May water bill for the direct link to the report, or visit TDPUD’s website homepage for one-click access.
TDPUD’s water department also has a full slate of improvement projects underway or planned for this summer. At the April meeting, the board approved a revised cost-sharing agreement with the Town of Truckee to incorporate a water pipeline into the construction of the new Legacy Trail pedestrian bridge across the Truckee River. The majority of TDPUD’s wells lie south of the river, while the majority of customers live north of the river. With the construction of this new bridge, TDPUD has an opportunity to add additional redundancy to the system with a new water pipeline that crosses the river, giving the system more capability to move water throughout town.
The board also approved the construction of a new 2.5 million gallon water tank, to be located at the same site of TDPUD’s largest existing water tank. TDPUD has identified a need for additional water storage capacity, and a second tank has actually been planned at this location for nearly 20 years. It is in a centralized location and will allow TDPUD to increase potable water and fire flow storage, improve pump operating efficiencies and also allows for the existing tank to be taken offline for maintenance when needed and not disrupt service to customers.
At the May meeting, the board voted to approve the CEQA requirement for the Hirschdale Pipeline Project. The construction of this pipeline is the first step towards consolidating the two water systems that are under TDPUD’s management, which will bring benefits in water quality and reliability to Hirschdale customers.
Climate Transformation Alliance
In 2021, TDPUD joined forces with the Town of Truckee and the Truckee-Tahoe Airport District to create the Climate Transformation Alliance, a grassroots, public-private partnership that harnesses the expertise and environmental passion of local agencies, community organizations, businesses and individuals. The goal of CTA is to achieve carbon neutrality for our community by 2045.
CTA established a robust membership and governance in its first year and now is moving into its next phase of action by pursuing grants, enacting programming to educate and assist the community with effective carbon reduction projects, and continuously vetting new sustainable pursuits. The TDPUD board voted at its April meeting to continue to fund the CTA, so it can continue to make progress toward environmental improvements for our community.
“CTA has accomplished a lot this year, and the program we’re creating to help responsibly expand decarbonization and electrification efforts in Truckee is a huge benefit to us as an electric provider,” said TDPUD board director Christa Finn.
Truckee Tahoe Workforce Housing Agency
The board voted at its May meeting to approve TDPUD’s contribution to funding the Truckee-Tahoe Workforce Housing Agency’s ’23-’24 fiscal year budget. TDPUD has been involved with TTWHA since its inception, with its initial goal of connecting local public agency employees with housing resources. Last year, TTWHA expanded its mission to assist all locally-employed employees, not just those who work for public agencies. This allows TTWHA to be a more sustainable and better-utilized organization, since the needs of the public agencies will fluctuate from year to year, but the needs of the community as a whole are more consistent.
“TTWHA has become a central, one-stop shop for our local employees seeking housing solutions,” said General Manager Brian Wright. “TDPUD has had 16 employees benefit from agency’s resources, and we’re proud that we can be a part of the overall solution for one of the biggest challenges facing our community.”
Information about TDPUD board meetings and access to agendas, minutes, live streaming and archived video can be found at tdpud.org/boardmeetings.
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