I attended the Aug. 23, 2016 meeting of the Snohomish Public Utility District Board of Commissioners and came away surprised by a few things. Here are my takeaways.
1. The Commissioners are “revisiting” the Sunset Falls project.
Just reconsidering its value, mind you. According to them there needs to be “a lot of number crunching” before anything like that can be decided upon. So this is good news, but you have to wonder just how many numbers they’ve crunched so far if they are still even considering the Skykomish River Sunset Falls project.
Take a look at our Facts Check 1 page, where SnoPUD’s own data show that the project is highly likely to operate at a loss for the first 30 years, and already estimated construction costs have increased by over 30% in the last 3 years.
2. The Commissioners appear to not be completely up to speed on a number of things.
Those of us sitting in the audience were pretty surprised to hear Commissioner David Aldrich appear to not be aware that the FERC approval process for the Sunset Falls hydroelectric project was complicated by the fact that SnoPUD would need an exemption from Department of Ecology regarding the minimum flow requirement, and would also have to demonstrate to the Northwest Power and Conservation Council that the project provided an “exceptional” benefit to fish. These things have been issues since the project was first proposed – why did they seem to come as a surprise?
Which brings me to my next thought.
3. How well do the Commissioners know their numbers?
When Andrea Matzke stated at the meeting that two of Snohomish PUD’s current hydroelectric facilities are losing money she got immediately shut down by the Commissioners. According to David Aldrich, that was some kind of “rumor” that they “have answers to” and he remembered former CEO/Steve Klein talking about it at one point. (Not exactly a ton of information there.)
So here’s the thing:
Youngs Creek and Henry M. Jackson hydropower projects lose money every year on energy sales.
Here are the numbers (from Snohomish PUD public documents) for Henry M. Jackson:
And here are the numbers for the much smaller Youngs Creek hydro project which began operating in 2011:
As a smaller facility Youngs Creek loses less total money on power sales, but loses it at a higher rate per megawatt, resulting in a cumulative loss of nearly $4.7 million in four years. (During the year ending September 2015 it produced power at $133.60 per megawatt hour.) By contrast, the Tier 1 power SnoPUD gets from Bonneville Power Administration (BPA) costs in the mid-$30 range.
The main question:
What’s a reasonable cost per megawatt hour for hydropower? Of course not everything is going to match the BPA Tier 1 rate, and Jackson may be running at a reasonable rate in the mid-$40/MWh range now. Part of the reason for the lower cost is that Jackson was a pre-existing facility and it has storage capacity, which allows it to operate more efficiently than a run-of-river project.
The run-of-river Youngs Creek facility, on the other hand, appears marginal in the $90 per MWh range, and downright expensive over $133 MWh.
Contrary to what was implied at the meeting, Snohomish PUD does file to FERC for an exemption from land use charges every year on the basis of its “not-for-profit” operation. Here’s an example of the language from the exemption application. As you can see, in this letter Snohomish PUD clearly states that Youngs Creek power is sold at a loss during the specified time period.
Where’s the transparency?
Snohomish PUD is fond of reminding people that they are a not-for-profit entity and that because the SnoPUD Electric System is obligated to purchase all the power the SnoPUD Generation System produces, their generation facilities can’t technically “lose money” – but when you produce power at $133.60/MWh and sell it for $37.40 per MWh, the Electric System (the system that buys from the facility and then sells to the consumer) loses $96.20/MWh on the transaction.
Seeing as these applications to FERC for the exemption of land use charges that Andrea Matzke was talking about have been getting filed every year, and both Brad Spangler and CEO/GM Craig Collar get cc’d when they get mailed to FERC (see below)…
…and Brad Spangler was sitting to my right at the meeting and Craig Collar was sitting to my left when Andrea asked her question – why couldn’t one of those guys have stood up and said, let me explain what the issue really is (or isn’t) here?
Here are my questions for Snohomish PUD:
- Does Snohomish PUD consider the power from Youngs Creek to be cost-effective? If so, at what $/MWh would it not be cost-effective?
- What is the cost of Tier 2 power from Bonneville Power Administration, by comparison? (No one seems to be able to answer this question.)
- If small hydropower like Youngs Creek produces such expensive power, why is Snohomish PUD currently spending over $50 million on two new small hydropower plants near North Bend (Calligan and Hancock Creeks)?
- Why didn’t Craig Collar or Brad Spangler answer Andrea Matzke’s question about Youngs Creek and Jackson losing money directly at the meeting?
- Why weren’t the SnoPUD commissioners able to answer her question?
That actually leads to the biggest question: How much do the Commissioners really know about the massive projects they have so much say over?
Thanks to Garvin Carrel for the photos.