Agreement would cover power losses associated with third-party supplier
CHENEY – A City Council resolution passed at the Oct. 12 meeting will allow the Bonneville Power Administration to financially recoup some of the losses it sustains in physically transmitting power to Cheney — power the city is purchasing from another source.
In signing the agreement with BPA, the city agrees to allow the power administration to bill it directly for electricity losses incurred in the transmission of power purchased through the Northwest Inter-government Energy Supply instead of billing NIES. According to the Public Power Council website, NIES is an intergovernmental corporation formed with the mission of allowing consumer-owned utilities and public utility district members to make collective purchases of electric power.
Light Department Director Steve Marx told the council the city gets most of its power, 15 – 16 megawatts, from BPA and about one megawatt through NIES, which is power a third-party producer doesn’t anticipate using and therefore sells on the open market. Currently, Cheney has an agreement through NIES to purchase power from TransAlta, a Canadian company generating power in the U.S. and Australia as well as Canada.
Normal transmission losses due to elements such as temperature, weather conditions and other variables, amount to about 1.9 % of the energy transmitted over the BPA lines. To calculate the loss amount billed Cheney, that percentage is multiplied by the average energy price if the city received one megawatt of power over the month — 744 hours of energy.
Marx said this means the highest level of risk Cheney would assume paying for would be $488 a month.
“That’s if we received one megawatt for a whole month,” Marx added. “To put that into perspective, I don’t ever expect to see that.”
Marx said projected costs are difficult to calculate since it’s not known how the power from NIES will be routed through BPA’s system. Usually the power is directly routed, but could come via a second or third leg of the system.
Councilman John Taves asked if the agreement applied only to NIES power. Marx said it did, as BPA has already incorporated losses sustained from transmitting its power into Cheney’s prices.
Taves added that he was concerned the agreement wasn’t an item in the 2020 budget to cover the city’s power costs. Finance Director Cindy Niemeier said the city had budgeted “a healthy amount” to cover power costs for the year and that there was probably a financial consideration in place to cover the transmission loss agreement for NIES power.
John McCallum can be reached at [email protected].
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