Grant County PUD power auction is nation's first
Auction held today for share of the output of Priest Rapids Dam
EPHRATA — At 5 p.m. today, the Grant County Public Utility District will have closed the bidding on a power sales auction for a portion of power generated at Priest Rapids Dam. The auction is the first of its kind in the nation.
A group of 19 pre-qualified bidders, including utilities and power marketers in both the U.S. and Canada, will be placing bids today by fax or telephone for about 6.52 percent of the dam's output generated over a 14-month period.
The PUD has been preparing for the auction for months and sent out 689 auction announcements all over the country and Canada to utilities and power brokers.
The PUD is currently in the process of relicensing the dam with the Federal Energy Regulatory Commission, along with Wanapum Dam as part of the Priest Rapids Hydroelectric Project. The current 50-year license for the project expires Oct. 31, 2005.
Legislation from the 1950s that authorized construction of the Priest Rapids Dam contained a requirement to offer a reasonable portion of the power to certain Northwest utilities. The PUD received a federal order from FERC in 1998 that fixed the reasonable portion at 30 percent.
The order also contained certain principles under which the 30 percent must be sold. One of those principles is that the power sales must be consistent with market-based principles and procedures.
"Selling a small amount of the reasonable portion via the auction virtually assures that the district is in compliance with this section of the federal order," stated Jeff Atkinson, PUD manager of power planning and marketing. "The FERC order and the marketing plan the district developed to comply with the order are all part of our relicensing effort, so the auction is an important event for us."
According to Atkinson, the power industry has had a positive response to the sale for two reasons.
First, hydroelectricity is valuable because it's flexible, reliable and renewable.
People in the power industry are also upbeat about the dam's location. Power is actively bought and sold in only a few locations in the western U.S. One of those locations is the Mid-Columbia trading hub. With the dam being positioned right at the heart of this hub, there are virtually no costs for transporting the electricity for trading.
The risk to bidders has been determining the value of 6.52 percent of the power from Priest Rapids Dam from Nov. 1, 2005 to Dec. 31, 2006. The amount of power they receive will be unknown and depend mostly on Columbia River flows and requirements for migrating salmon.
The winning bid could be announced as early as Friday. That bid will set the price for other utilities which have contracts for the 14-month period. On Aug. 1, the commission will sign the contract with the winning bidder.
The PUD plans to have an annual auction on at least 6 percent of the dam's power output. The price set by that annual auction will determine the price for the remaining 30 percent that is contracted each year.
On Nov. 1, PUD customers will start receiving 70 percent of the power from Priest Rapids to meet local demand. Currently, about 50 percent of Grant County's power comes from the Bonneville Power Administration and other sources. The remaining half is generated by the Priest Rapids Hydroelectric Project.
"If Grant (County) needs more than this 70 percent to meet local needs, which it is projected to in 2006, then Grant (County) gets to use revenues from the sale of the auction and the rest of the 30 percent to buy power on the open market," Atkinson said.