HomeMy WebLinkAbout13 Rye patch geothermal Plant Agenda Item # 13_
WORKSHOP
To: Board of Directors
From: Stephen Hollabaugh
Date: November 19, 2008
Subject: Status of the Rye Patch Geothermal Generation Plant and the
Corresponding Purchase Power Agreement
1. WHY THIS MATTER IS BEFORE THE BOARD
The Board requested an update on the Rye Patch Geothermal Generation Plant.
2. HISTORY
The District signed a power purchase agreement in July of 2007 with Presco Energy
who owns the Rye Patch geothermal plant and planned to repower the plant. This
power purchase agreement was between Plumas Sierra REC, Truckee Donner PUD
and Presco Energy. The purchase power agreement included a price for power after
the plant became operational and did not include any payments until that time. The
contract term shall begin on the Commercial Operation Date and continue for 10
years, unless terminated earlier.
Key provisions of the contract are as follows:
• Contract is for 10 years with two 5 year renewal options.
• Contract capacity for the first phase is expected to be a minimum of 5 MW and
up to 8MW.
• Contract price is 6.4 cents/kWh with 1% annual escalation.
• An option to acquire the REC's (renewable energy credits) is included at 0.5
cents/kWh.
• Presco Energy has an interconnection agreement with Sierra Pacific Power
Company, but will require an operating agreement to cover such matters as
generation imbalance. Generation imbalance costs are born by Presco
• TDPUD and Plumas Sierra REC have or will have transmission system
agreements with Sierra, arrangements for points of delivery and transmission
costs are the Buyers' responsibility.
• Proposed commercial operation date was June 1, 2008.
• Termination for failure to meet a September 1, 2008 commercial date, failure to
maintain at least 75% capacity for 90 days, force majeure preventing deliveries
for greater than 90 days, mutual agreement and failure to obtain an operating
agreement with Sierra are offered.
• Planned outages are to be coordinated and agreed in advance.
The District received progress reports in November, 2007 and again in April 2008
stating that work was progressing slowly toward repowering of the plant."kink"Some
substation and transformer work had progressed but Presco Energy found ain
the production well and re-drilling would be required while drill-rig availability was
becoming an issue.
3. NEW INFORMATION
The District received a letter from Presco Energy on October 20, 2008 stating that
their efforts to finance the plant construction and start-up are at an impasse, with the
lenders unable to acquire funds under the current cost and price structure. Capital
costs have spiraled out of reach in the last eight months, particularly for the type of
plant and equipment at Rye Patch. Presco Energy was also unsuccessful in their
appeal with the BLM to have the tracts removed by the Bureau of Reclamation
reinstated of the August competitive sale, delaying further Project activity until the
tracts adjacent to the Plant can be purchased, at the earliest in August of 2009.
Presco Energy went on to request a mutual termination of the Power Purchase
Agreement.
The District and Plumas Sierra REC are looking into the contract and are leaning
towards not terminating the contract at this time. If in the future the plant does come
on line, the District will still want the energy outlined in this Power Purchase
Agreement. In the 2009 purchase power budget, the District budgeted some energy
coming from this agreement in December, 2009.
4. FISCAL IMPACT
The power purchase agreement in place required the District to pay only when energy
is delivered. Currently there has not been any energy delivered. If this energy is not
delivered, the District will have energy delivered to meet our load from other sources
such as the UAMPS All-In-Pool or market purchases.
5. RECOMMENDATION
Review this report and provide comments.
Stephen Hollabaugh Michael D. Holley
Assistant General Manager General Manager