By VERNON ROBISON
Moapa Valley Progress
Energy transmission costs will be increasing significantly less than was originally anticipated for the Overton Power District (OPD).
In an April OPD board meeting, General Manager Mendis Cooper told the Board of Directors that the cost for the district to transmit it’s power through NV Energy lines would be ballooning from about $1.2 million last year to around $2.4 million this year.
But in multiple communications over the past month between OPD staff and NV Energy officials, Cooper said that “a few things had been discovered” that brought significant reductions to those initial projections.
“As we looked through the documents we realized that they (NV Energy) had included in that transmission number the cost of all of our energy purchases that we had transacted during the year,” Cooper told board members. “Those amounted to about $650,000. So we were able to take those out of consideration.”
Still that left an increase of around $600,000 over last year, Cooper said; far less than the $1.2 million initially expected, but still a significant increase.
“As we worked on that remaining amount that was above last year, we haven’t made much progress on (reducing) that,” he said. “We will continue to work with them and ask questions and submit ideas.”
Cooper said that the driving factor in the increase was the One Nevada Transmission Line project which was completed by NV Energy ending in January of 2014. This is a 500 kV transmission line spanning from Ely to the Harry Allen substation near Apex. It was meant to provide, for the first time, a link between northern and southern systems of NV Energy.
“The cost of that project is being folded into their transmission fees,” Cooper explained. “So getting that increase removed is going to be very difficult for us.”
OPD Trustee Mike Young of Mesquite pointed out that the contract between OPD and NV Energy had long predated the One Nevada project and that the new transmission line had nothing to do with that old contract.
“FERC (Federal Energy Regulatory Commission) regulations on wheeling among agencies is point-to-point,” Young said. “It is supposed to be how much it is to use that piece of line that is needed to transmit the energy.”
But Cooper explained that he had spoken to a FERC attorney who had told him that OPD had no real case in disputing the increase.
“(The FERC Attorney) looked at the rates and said that we are essentially able to take advantage of the entire NV Energy system,” Cooper said. “Because of that, we can’t eliminate or include certain pieces of line. We have to work with their system as a whole. The contract references their transmission system, and that means their entire transmission system.”
Cooper continued by saying that the NV Energy pricing increase had not, in fact, come as a complete surprise to the district. OPD staff has been talking to the board for several years about this eventuality and discussion possible options to mitigate this possible problem, Cooper said.
One of the options that had been discussed is cooperating with other agencies in constructing a new transmission line to end the dependence on NV Energy transmission. This proposed project would bring together OPD with Lincoln County Power and Southern Nevada Water Authority (SNWA) in a line spanning from Mead Station near Boulder City all the way to Lincoln County.
Cooper said that OPD’s share of the annual debt service for such a project would be close to the amount it would have to pay NV Energy for transmission. This would make it a good option for OPD, he said.
“The trouble is that SNWA is having difficulty getting permission to pump water out of central Nevada,” Cooper said. “Until they get those rights, they have not been willing to start this project. If they participate, though, it would be a very do-able project for us.”
Cooper said that he would be meeting with SNWA officials as well as other entities that might also be willing to partner in the project, including possible solar generating projects proposed in the area.
Cooper explained that another way to reduce the district’s transmission cost would be to build its own generation facilities. He said that if the district installed its own natural gas plant, coupled with a new solar facility, it could reduce transmission costs enough to pay for itself.
“That is pretty much par,” Cooper said. “We could use what we are paying NV Energy right now to make that work out. So that is a very viable option and it is something that we could implement within the next two years if we so desired.”
Cooper said that the district is currently in negotiations for a new power contract. As that process continues this summer, he said he planned to see how much solar and natural gas could be implemented at a reasonable cost. He promised to follow up with the board by around the end of the summer on his findings.
During the meeting’s public comment period David Ballweg of Mesquite requested the board to consider hiring a FERC attorney to look more closely at the NV Energy contract and see if other legal options might be available to avoid the increase.
“I don’t think that the board should consider such an informal…. ‘I called a FERC attorney and he said such-an-such’…to be sufficient in this matter,” Ballweg said. “I think that a full report should be made. We should know the FERC attorney contacted and a written conclusion on the contract should be released. For now, this is way to informal for the cost that it will bring to the district.”
Young asked Cooper to continue his work in evaluating this issue; and to let the board know in a future meeting if a consultant should be retained to take a closer look at the NV Energy contract.
“This is big money we are talking about here,” Young said. “So we want to make sure that all the options are out there.”
In other business, the board approved a formal policy to reimburse staff for a percentage of job-related higher education costs as long as they had been approved by a supervisor. Historically the district has paid between 50 and 60 percent of the cost of tuition, books and fees for such education. But no firm policy had previously been in place for that practice, Cooper explained. The unanimous action of the board instituted that new policy.
In addition, the board approved a contract with Freepoint Commodities, agreeing to a confidentiality agreement with the company in obtaining energy pricing information for a possible purchase power agreement.
The board also approved contracts with JNA Consulting Group and Sherman and Howard bond counsel to refinance its 2008 bonds at savings to the district. The JNA contract was not to exceed $17,500 plus about $3,000 for a CPA review of the refinancing terms. The Sherman and Howard agreement is for about $25,000 and not to exceed $45,000.
