HomeMy WebLinkAbout2000-04-19 Agenda Packet - Board (24) l�
TDPUD Memorandum
March 7, 2000
To: Board of Directors
From: Stephen Holiabaugh -Power Supply Engineer
Subject: Power Supply Costs 2001 and beyond.
AGENDA #1 0- 11
The Wholesale prices of electricity, where will it go?
Prices are going up compared to the past Market prices.
I am currently looking at prices for the 2001 year. Wholesale prices are down slightly from
earlier in the month for this time frame. This has historically been a good time to lock in prices
due to the spring hydro run off affecting future prices. However, prices for 2001 and beyond
are higher than in past years.
Our strategy is to buy at Market Prices (which we have) as opposed to above market prices
that Sierra has charged us in the past. We met our objective of buying at market prices but
future prices are higher than in the past due to: High summer prices and volatility in the market.
We have done very well for the 1999 and 2000 contracts.
We have done very well with our 1999 and 2000 purchased compared to the market. Below is
a table that lists the wholesale prices for 2000 and 2001. The average price for 2000 shown is
30.71 while the 2001 average price is 34.59 per MWh (this is equal to 3.07 and 3.46 cents per
kWh).
Mid-Columbia Daily Average Prices
2000 LL HL Avg. 2001 Avg.
Jan-00 23.21 26.75 25.23 Jan-00 35.15
Feb-00 25.03 26.74 26.00 Feb-00 30.48
Mar-00 26.36 27.77 27.16 Mar-00 28.43
Apr-00 18.00 25.00 21.99 Apr-00 26.95
May-00 15.00 25.50 20.99KAug-00
24.21
Jun-00 14.25 25.60 20.72 23.68
Jul-00 26.00 35.05 31.16 35.83
Aug-00 32.00 56.10 45.74 50.9
Sep-00 32.00 55.60 45.45 46.41
Oct-00 30.50 40.25 36.06 38.28
Nov00 28.50 36.95 33.32 37.71
Dec-00 29.50 38.60 34.69 Dec-001 37.07
Average 25.03 34.99 30.71 Average 34.59
Note: Jan. - Mar 2000 is based upon averaged Mid-C daily index prices and Apr.
- Dec. are based upon forward Mid-C OTC prices along with 2001 prices. These
prices do not include a $2.25 adder that is in our current contract and will need to be
added to the above prices for delivery to TDPUD.
The District has entered into a Calendar year 1999 and 2000 contract with Idaho Power. The
contract fixes the power cost at$25.75 per MWh for all hours during 1999 and $26.75 per MWh
for all hours during 2000. This price includes a $2.25 adder that is in our current contract. This
contract gives the District some "insurance" against high prices and price volatility that are
expected in the market during 1999 and 2000.
This price is well below the current market prices for 2000, therefore we have done very
well with this purchase compared to the market prices.
I have put together a chart showing the "Comparison of Costs Full Requirements vs.
Current Market Based Rates". This chart uses the estimated 2000-year load along with
historical, current and estimated future prices. The data below corresponds to the chart.
Historical Full Year 2000 Power Year 2001 Power
Requirements SPPCo. Supply Costs at Supply costs at
Market Based Rates Market Rates
Total yearly $8,188,038 $4,763,414 $6,193,831
Power Cost$
Total Delivered $62.83 $36.55 $45.23
Price per Mwh
What to do for 2001 and beyond?
I feel that this has historically been a good time to lock in prices due to the spring hydro
run off affecting future prices. However, prices for 2001 and beyond are higher than in
past years.
I propose locking in 2001 and possibly 2002 at this time. My crystal ball predicts prices
to only go up from here. We have a price for 2001 from Idaho at $34.55 +2.25 and 2002
at $35.35 + 2.25. The 2001 price including transmission corresponds to the $45.23
delivered price included in the chart referenced above.
Other Options?
I'll discuss this with you at the Board meeting.
Comparison of Costs as:
Full Requirements vs. Current Market Based Rates
(Using Year 2000 Forecasted Loads) _
IN Historical Sierra Pacific Full
r' Requirements Customer
Year 2000 Power Supply Budget at
Market Based Rates
$9,000,000
❑Year 2001 Power Supply Budget at
Market Based Rates
$8,000,000
$7,000,000 - y4
$6,000,000
$5,000,000
$4,000,000
4
$3,000,000
r 4
$2,000,000
$1,000,000
$0
Total Power Supply Cost$