News

Chelan PUD looks ahead at the right balance for future energy sales contracts

by Rachel Hansen | Mar 16, 2021

Chelan PUD is evaluating its strategies to sell carbon-free, surplus power as long-term energy output contracts – such as Alcoa and Puget Sound Energy -- expire over the next decade.

General Manager Steve Wright presented a plan Monday that would support more economic growth locally, while also allowing the PUD to capitalize on favorable market conditions. (starts at 00:38:55 on the board audio).

“With the current long-term market, we’re seeing the opportunity to create revenue that could lead to rate stability for our customer-owners,” Wright said. “We believe the market sees value now in renewable hydropower that can support carbon emission reduction goals.”

Chelan PUD produces more than enough power to meet local demand for electricity. Chelan PUD’s revenue from wholesale purchasers is the reason its customer-owners – residential, commercial and industrial -- enjoy some of the lowest rates in the nation. 

“We are heavily dependent on these revenues to maintain the low rates in Chelan County,” Wright said.

Chelan PUD currently sells the energy it produces based on a formula roughly calculated as 50-30-20:

  • 50% is sold at wholesale as cost-of-production based, long-term slice of the hydroelectric contracts, including the Alcoa contract that expires in 2028, and Puget Sound Energy which expires in 2031.
  • 30% is sold at wholesale in market-based, 5- to 10-year slices of the hydrosystem.
  • 20% is used to serve customer-owners – residential, commercial and industrial – in Chelan County.

Wright proposed that commissioners consider a new formula that retains the basic structure for wholesale transactions while creating room for local loads to grow over time:

  • 40-50% would be sold as long-term slice contracts based on cost of operations and the value of hydroelectricity. These contracts could serve customers outside Chelan County, or new large-load customers in Chelan County.
  • 20-30% of energy would be sold in fixed-price, market-based contracts over 5 to 10 years. This amount may be reduced over time to serve unanticipated local load growth.
  • 20-30% would be used to serve local customer-owners as local load growth occurs.

Commissioners will consider the proposal over the next month. The slide deck from the proposal is available online at chelanpud.org. Please send any comments or questions about the proposal to contactus@chelanpud.org.

In other news, commissioners:

  • Heard a report on the Peshastin Water District’s acquisition request. The PUD is continuing to engage this conversation on the basis that merging with PWD will have no negative financial impact for existing PUD water customers. (00:11:54)
  • Approved an interlocal agreement with City of Wenatchee regarding planning and improvements to Riverfront Park (02:03:05)
  • Heard an update about energy assistance and past-due balances (02:11:05)

 

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The next PUD commission meeting is at 10 a.m. on Monday, April 5. The public is welcome to attend remotely in accordance with the latest guidance from the state Department of Health.

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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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