Clallam County PUD closer to deciding 20 year power pacts

The deadline is drawing closer for the Clallam County Public Utility District to decide how and where to get the district's power supply for the next 20 years beginning in 2011.

The district's three-person board of directors edged closer to a decision following an Aug. 19 workshop on the "Slice" and "Load Following" options being offered by the Bonneville Power Administration.

At its Aug. 25 meeting, the board authorized submitting a "good faith estimate" to Bonneville of the district's projected power purchases under the Slice program, said Fred Mitchell, Clallam PUD telecommunications and power resources manager.

The estimates are 70, 70 and 60 percent of the district's maximum, optimum and minimum power load in 2010, he said.

"Bonneville wants signed contracts by Dec. 31 and wants to get a feel for the level of interest in the Slice product," Mitchell said.

"So this motion by the board says if they can present Clallam PUD with an acceptable contract and we can get our minimum level of Slice percentage, then the district would seriously consider entering into the Slice contract," he said.

Clallam PUD serves about 28,500 electricity customers in

Sequim, Forks and unincorporated Clallam County, plus the Port Townsend Paper Corp. mill.

The district buys 99 percent of its electrical power from the Bonneville Power Administration, the federal power marketing agency that supplies wholesale power to the Northwest.

Bonneville's utility customers must sign one of two new 20-year power contracts by the end of the year that will be effective in 2011.

The first option, dubbed "Load Following," is continuing to buy the current power allocation from Bonneville at Tier One rates, which are being decided now in the current "rate case."

(That's an administrative process where Bonneville submits its proposed power rates to the Federal Energy Regulatory Commission for approval.)

Then any additional power would be bought from Bonne-ville at more expensive Tier Two rates.

The second option, dubbed "Slice," is to buy a portion (or slice) of the federal power system's output. Then additional power either would be bought on the open market or by joining with other utilities to build power projects or buy power on the open market.

The three-hour workshop held Aug. 19 at the Clallam PUD headquarters in Port Angeles included a presentation by The Energy Authority, an energy trading consultant out of Seattle.

Two of the district's commissioners said afterward the presentation seemed to indicate the financial difference between the two options would be slight, making the decision more of a philosophical one.

"What those people told us - as far as cost to the district it probably didn't make much difference, Load Following versus Slice," Clallam PUD commissioner Ted Simpson of Port Angeles said.

According to the consultant's presentation, if Clallam PUD chose Slice, it probably could operate with the current number of employees, maybe one more, he said.

"So from the standpoint of protecting resources and providing service to customers, there's not a strong reason financially to go one way or another.

"I guess it's a question of philosophy," Simpson said.

Commissioner Hugh Haffner said the consultant's analysis of what Slice customers paid from 2002-2007 versus what Load Following customers paid showed the latter paid 60 cents more per megawatt-hour, "which is nothing."

"There's no real cost savings. It's just if you have to buy nonrenewable resources that (don't have a reliable backup power source) then you have problems with your long-term load balance," Haffner said.

Clallam PUD became an Energy Northwest member in June, which enables the district to have priority access to similar projects developed by the 22-member utility group.

The district sought membership in the group in case it needs to either buy power on the open market or develop its power projects to supplement what it receives from Bonneville.

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