Thursday, April 18, 2024

PUD commissioners see benefits of joining regional utility group


WENATCHEE – Chelan PUD commissioners unanimously voted to join a Northwest resource adequacy program that will increase the value of hydropower, promote self-sufficiency among member utilities, and ensure that the region has the capacity to weather potential energy shortfalls in the future.

The Western Resource Adequacy Program (WRAP) is the first reliability planning and compliance program in the Northwest, and it’s been in the works since 2019. About 26 utilities from Canada to northern California are participating in the voluntary, non-binding phase of WRAP.

The idea is to avoid energy-related emergencies, as seen in California and Texas in recent years. The Pacific Northwest typically produces abundant energy supply, but there are warning signs of a less certain future ahead: Increased demand for electricity, the rise of intermittent renewables like wind and solar, increased regulatory requirements, and more large-load industries moving to the West.

WRAP has asked utilities to join the binding phase over the next several years, which means that utilities have guaranteed first priority to purchase energy from other member utilities in the event of a critical shortage. It also means that utilities may be subject to penalties if they don’t meet capacity requirements. The cost of joining is about $185,000 in the first year, and $150,000 annually.

The benefits of WRAP are many:

Increased reliability as dozens of utilities coordinates a diverse portfolio of energy resources across a large geographical footprint. If one area is hard hit by a heat wave or cold snap, utilities can tap into an emergency supply of energy from WRAP instead of relying on the increasingly volatile energy market.

Increased value of capacity, which is the ability to meet peak demand. That means hydropower is well-positioned to become more valuable because of its flexible, 24/7 availability.

Joining WRAP voluntarily makes legislative mandates less likely. Supporting the WRAP may increase the chance of success of future organized markets, which has had over 20 participants from the PNW to the Desert Southwest. A resource adequacy program is a standard feature of an organized market. If Chelan PUD joins a future organized market, the organized market will most likely have similar rules to WRAP.

Joining WRAP would allow Chelan PUD to have a lower planning reserve margin. That means Chelan PUD may have more energy available to sell and maintain low customer rates. “If it doesn’t work out the way we anticipate, we can exit the program with a two-year notice at any time,” said Shawn Smith, Managing Director of Energy Resources.

In other news, commissioners: Approved the 2023 budget with a bottom line of $102.7 million, and $495.9 million in total expenditures including $182.9 million in capital expenditures. Approved a motion to move forward with an estimated $30 million project to improve fire resiliency along the Beverly-McKenzie transmission line in the Leavenworth-Plain area. Heard a preview of the upcoming state legislative session.


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