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Potential long-term energy sales agreements designed as a win-win for all

by Rachel Hansen | Dec 20, 2021

Chelan PUD is poised to implement an element of its updated energy marketing strategy through a long-term energy sales contract designed to ensure that Chelan PUD’s customer-owners benefit. Commissioners reviewed the plan Monday. (Available on the board audio recording at 00:53:15).

“Increasing levels of commitment to decarbonizing the electric sector, particularly in the western United States, is increasing the value of hydropower,” General Manager Steve Wright said. “This is translating into a good time to sell Chelan PUD’s surplus for the benefit of power purchasers and our customer-owners.

Carbon-free hydropower provides the capability to produce electricity on demand, a particularly valuable product as the West evolves away from the use of fossil-fuel fired resources that have historically supported a reliable electrical grid.

Chelan PUD produces more than enough electricity to serve Chelan County. The surplus produced by Rocky Reach and Rock Island dams are sold in wholesale power markets.

Under its long-term marketing strategy, Chelan PUD offers a mix of shorter term market-based and longer term cost-based products. Both types of contracts are based on selling a “slice” of Chelan’s hydropower output, which reduces risk of variable output from hydropower production.

The long-term marketing strategy also provides flexibility for the PUD to serve growing electrical demand in Chelan County.

Overall, the goal of the long-term marketing strategy is to strike the right balance of contracts to reduce risk, create value and provide financial stability for decades to come.

The current negotiations focus on long-term slice contracts that are based on the cost of production, plus an adder for the value of hydropower as the foundation of a clean energy portfolio. That’s important for potential energy buyers as they prepare for major regulatory changes regarding carbon-free energy and resource adequacy.

Customer-owners benefit because the added value – an estimated 30 percentage points above the “plus” value compared to past long-term slice contracts – will help the PUD keep local rates among the lowest in the nation while also providing public power benefits, such as park amenities and broadband capability. The contracts also help cover future costs of producing hydropower at Rocky Reach and Rock Island dams.

On Monday, staff updated the Board on current contract negotiations relative to principles established last spring and a contract template established last summer. Staff plan to return to the Board within 10 days to ask for approval of a resolution that would give authority for management to sign a 20-year contract for up to 10 percent of Chelan PUD’s hydropower capability. 

“Our vision, ‘to provide the best value for the most people for the longest time,’ applies to everything we do,” Wright said. “With this new approach, we are well-positioned to accomplish that vision and build a brighter future for Chelan County.”

In other business, commissioners:

  • Heard an update on a plan to roll out a new customer outage notification system in 2022. (01:37:25)
  • Heard a preview of legislative measures that relate to energy. (01:05:50)
  • Held three public hearings regarding Chelan PUD’s Clean Energy Implementation Plan, 2022-2023 Conservation Targets and 2021 Integrated Resource Plan (01:52:57-02:00:00).
  • Explored a proposal for a waterfront park in Malaga as a potential early-action measure for relicensing Rock Island Dam (02:05:00)

 

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Here for you, providing the best for the most for the longest – chelanpud.org

Media contacts

Rachel Hansen: (509) 661-4320
Neil Neroutsos: (509) 661-8291

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Visit our Safety and Outage Center for information, or to report an outage, 24 hours a day, 7 days a week, call 1-877-PUD-8123.

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