Grant PUD negotiates contracts that reduce risk of possible rate increases
Casey McCarthy/Columbia Basin Herald Grant County PUD linemen work on adding service for a new home being built off of Pioneer Way in Moses Lake on Monday afternoon, while replacing the existing pole that had been there since 1956.
EPHRATA — Grant County PUD officials are in negotiations with power purchasers for contracts that would help reduce the risk of possible rate increases to PUD customers.
Rich Flanigan, Grant PUD senior manager of wholesale marketing and supply, said Friday that the idea behind a “slice” contract is to reduce the possibility rates would have to be raised as a result of a bad water year — low river flows.
“We get certainty in revenues,” Flanigan said.
In a slice contract, the PUD sells its share of the output of Priest Rapids and Wanapum dams to outside parties, who then provide electricity to meet the PUD’s needs up to a previously established threshold.
Utility district officials are working on two contracts, Flanigan said. One buyer would receive 33.3 percent of the district’s output; the second would receive 20 percent.
The district has an existing contract for the output of most of its share of electrical output, but it expires in September. When the PUD advertised for bids for new contracts, bidders were willing to pay more money for the 33 percent share, Flanigan said.
The 33 percent contract would be for five years. The 20 percent contract would be for three years. Some of the remaining output already is under contract.
When these contracts are signed, all the PUD’s generation will be under contract through the end of 2021.
As an example of why companies want to buy PUD power, Flanigan cited the fees imposed on electricity generated by sources that produce carbon emissions. Hydropower doesn’t generate carbon, which means buyers are willing to pay more for it in markets with those fees, California being an example.
But companies selling electricity often have to guarantee delivery and can’t always be sure that reasonably priced power will be available when they need it.
“We’re just not willing to take a lot of those risks,” Flanigan said.
But buyers of PUD power are willing to take them, he addded.
The contracts cover only the electrical generation.
“We still own and operate the dams,” Flanigan said. “We’re making all the main decisions.”
Cheryl Schweizer can be reached via email at [email protected].