HomeMy WebLinkAbout5 UAMPS Payson Project Staff Report
To: Board of Directors
From- Stephen Hollabaugh—Assistant General Manager
Date: September 24, 2001
Subject Discussion of Long-Term wholesale Power Supply Issues and possible new
generation with UAMPS(Payson Project).
At the strategic planning meeting, I quickly discussed the District's wholesale power costs
from now to the end of 2009. Below is a description of that report.
Idacorp. Long Terre Power Contract and Surplus Power:
Our contract with Idacorp starting in 2002 and running through 2009 is priced at$0.072 per
kWh. Within this contract is some surplus power. When prices were high, we had planned
to sell this surplus but forward prices have fallen to a level that the surplus energy would be
projected to sell at a loss or deficit.
Rate Stabilization Fund:
The current balance in the rate stabilization fund approximately $650,000. The August rate
increase will raise approximately$500,000 towards the rate stabilization fund.
Swaps:
My definition of a swap is when I simultaneously sell power at one location and buy the
same amount of power at another location to be delivered to the District. The District then
"swaps" power from Idaho to Utah at a lower Price. I have made an arrangement with
Idacorp that shares the benefits of a swap when this is done. April, May and June swaps
saved the District approximately $700,000. A future swap in October, November and
December will save approximately$1,200,000.
Summary of Rate Stabilization Fund:
$ 650,000 Current Balance
$ 700,000 April May and June Swap Savings
$ 500,000 August percentage of Rate increase to Stabilization Fund
$1 200,000 Estimated Oct Nov & Dec. 2001 Swap Savings
$3,050,000 Approx. Amount as of Jan 1, 2002 in Rate Stabilization Fund
®Page 1
Surplus Power Deficits:
Below is an estimate of the loss or deficit by year of the surplus power:
2002 -$1,500,000
2003 -$5,000,000
2004 -$5,000,000
2005 -$5,000,000
2006 -$5,000,000
2007 -$4,000,000
2008 -$4,000,000
2009 -$3,000,000
As you can see, the Districts needs to do something to mitigate these losses as the rate
stabilization fund will not be adequate for this amount of deficit.
Strategies to Mitigate the Surplus Power Deficits:
UAMPS Plan
Restructure Idacorp contract
Swaps where economic
Future Generation with UAMPS
Action 1 also have contacted a financial consultant (McDonald Partners)who is very familiar
in this area to help the District evaluate specific restructuring opportunities and/or proposals
related to existing contracts.
I will develop plans that may include some or all of the above and bring them to the Board.
Future Generation with DAMPS:
I will give a workshop describing the "Payson Project" combined cycle generator project.
The power-point presentation will describe the preliminary plans for this generation project. I
thought the Board might like to become familiar with this prior to a decision point that will
come later if this project goes forward.
Page 2
Staff Report
To: Board of Directors - 1
From: Stephen Hollabaugh—Assistant General Manager r
r
Date- September 24, 2001
Subject Discussion of Long-Tenn Wholesale Power Supply Issues and possible new
generation with UAMPS(Payson Project).
At the strategic planning meeting, I quickly discussed the District's wholesale power costs
from now to the end of 2009. Below is a description of that report.
Idacorp. Long Term Power Contract and Surplus Power:
Our contract with Idacorp starting in 2002 and running through 2009 is priced at$0.072 per
kWh. Within this contract is some surplus power. When prices were high, we had planned
to sell this surplus but forward prices have fallen to a level that the surplus energy would be
projected to sell at a loss or deficit.
Rate Stabilization Fund:
The current balance in the rate stabilization fund approximately $650,000. The August rate
increase will raise approximately $500,000 towards the rate stabilization fund.
Swaps:
My definition of a swap is when 1 simultaneously sell power at one location and buy the
same amount of power at another location to be delivered to the District. The District then
"swaps" power from Idaho to Utah at a lower Price. I have made an arrangement with
Idacorp that shares the benefits of a swap when this is done. April, May and June swaps
saved the District approximately $700,000. A future swap in October, November and
December will save approximately $1,200,000.
Summary of Rate Stabilization Fund:
$ 650,000 Current Balance
$ 700,000 April May and June Swap Savings
$ 500,000 August percentage of Rate increase to Stabilization Fund
$1 200,000 Estimated Oct Nov & Dec. 2001 Swap Savings
$3,050,000 Approx. Amount as of Jan 1, 2002 in Rate Stabilization Fund
0 Page 1
Surplus Power Deficits:
Below is an estimate of the loss or deficit by year of the surplus power:
2002 -$1,500,000
2003 -$5,000,000
2004 -$5,000,000
2005 -$5,000,000
2006 -$5,000,000
2007 -$4,000,000
2008 -$4,000,000
2009 -$3,000,000
As you can see, the Districts needs to do something to mitigate these losses as the rate
stabilization fund will not be adequate for this amount of deficit.
Strategies to Mitigate the Surplus Power Deficits:
UAMPS Plan
Restructure Idacorp contract
Swaps where economic
Future Generation with UAMPS
Action I also have contacted a financial consultant (McDonald Partners)who is very familiar
in this area to help the District evaluate specific restructuring opportunities and/or proposals
related to existing contracts.
I will develop plans that may include some or all of the above and bring them to the Board.
Future Generation with UAMPS:
I will give a workshop describing the "Payson Project' combined cycle generator project.
The power-point presentation will describe the preliminary plans for this generation project. I
thought the Board might like to become familiar with this prior to a decision point that will
come later if this project goes forward.
0 Page 2