Commission recap 03/10/2020: Electric system improvement plan in the works

This week's commission meeting was held digitally, by audio conference, in an effort to follow state health officials' recommendations to reduce public gatherings to prevent spreading COVID-19 Coronavirus.

Meetings will take place this way until further notice. The meeting was recorded in a different way and isn't immediately able to be posted on the Grant PUD website. We're working to make it available as soon as possible.

Power Delivery to make 10-year electric system improvement plan

Grant PUD has developed best-practice guidelines for design improvements to increase electric-system reliability and will soon have a 10-year plan for guiding repairs or upgrades to the parts of the system that need them.

Jesus Lopez, senior manager of Power Delivery, told commissioners his team is developing a "10-year System Improvement Plan" to make the Grant PUD electric grid more reliable for better operation and easier maintenance.

Upgrades will happen over time, as new loads are connected or to correct for deficiencies in system performance and aging equipment, Lopez said.

Improvements include creating more system redundancy – secondary power sources to reduce or eliminate outages – and adding capacity at substations that are reaching their capacity.

"I'm just glad to see you planning," Commission Nelson Cox said. "The end result's a win."

A recent in-house study concluded that 14 of the 24 transmission lines in the Grant PUD system don't meet at least one of the guidelines for system best practices, all transmission systems have at least one deficiency, and six substations have loads that require a second power source but don't yet have one.

On the distribution side, 21 of the system's 175 electrical feeders don't meet guidelines for acceptable voltage levels.

"We will use the guidelines to drive system expansion to bring existing infrastructure into compliance," Lopez said.

"We're moving rapidly," General Manager Kevin Nordt told commissioners. "Everything new will be built to these guidelines."

Lopez couldn't immediately say how long it would take to make the desired improvements or estimated costs. He'd know more when the 10-year Electric System Improvement Plan is finished within the next few months. View the presentation materials here, pages 67-93. Audio is not available.

Cost of transmission system discussed

Staff analysis to determine the annual costs to operate Grant PUD's transmission system is complete. The Cost of Service Study for the utility's transmission system shows the yearly cost of service to be $26.3 million. Tuesday's presentation to commissioners focused on staff's approach for determining the opportunity cost for use of the utility's transmission system, referred to in the study as return on equity.

Grant PUD Economist, Bob Brill presented the components of the study highlighting how the group determined the return on equity using a similar method employed by the Federal Energy Regulatory Commission. The approach averages the latest FERC rate proceedings of two regional investor owned utilities, PacificCorp and Puget Sound Energy, which results in the study targeting a 9.8% return on equity.

During Tuesday's public comment period, commissioners heard from representatives of the U.S. Bureau of Reclamation and Bonneville Power Administration. Each entity told commissioners they felt the study's target goal for return on equity within the study was high and should be adjusted, since the PUD is a public entity.

The Bureau and BPA both utilize Grant PUD's transmission system. BPA serves public customers over Grant PUD's transmission system. While the Bureau has an agreement with Grant PUD on behalf of local irrigation districts to deliver Bureau generated power across the utility's transmission lines for the irrigation districts, a process known as wheeling.

Tuesday's presentation was not a request for commission to take action. Commissioners will continue to review staff recommendations. Additional information and potential decisions will come during future commission meetings.

See additional details on pages 45-66 of the staff reports.

Smaller rate increases approved for 'evolving industries'

Commissioners Tuesday unanimously approved lower-than-originally forecast rate increases in 2020 and 2021 for customers who fit Grant PUD's "evolving industries" designation under Rate Schedule 17.

Currently, the only customers who fit this description are cryptocurrency mining operations.

At least one member of the cryptocurrency community welcomed the approval.

"Even though this final resolution doesn't meet everything we were hoping for, it's more than we had a year ago and it certainly doesn't put us out of business," said Ryan Reed a cryptocurrency consultant from Moses Lake. "I want to thank the commission and staff for all the work they've done on this.

Beginning April 1, larger cryptocurrency firms that operate under Rate Schedule 17b, will see their all-in electric rate increase to 4.2 cents per kilowatt hour, up from the current 3.4 cents. The new rate was originally forecast at 5.3 cents.

Smaller cryptocurrency firms that operate in residential areas will see their all-in rate increase to just over 8 cents per kilowatt hour, up from the current 6 cents. The approved all-in rate for April 1 is down from the original forecast of more than 9 cents per kilowatt hour.

April 1, 2021 the all-in rate for the larger cryptos will increase to 4.9 cents per kilowatt hour, down from the original forecast of 8 cents per kilowatt hour.

The all-in rate for the smaller crypto firms will increase to 11.2 cents per kilowatt hour, down from the original forecast of nearly 14 cents per kilowatt hour.

"All-in" rates include the monthly basic, energy and demand charges rolled into a per-kilowatt hour calculation.

The new rates approved are for the second and third year of the three-year phase-in period for Rate 17, which commissioners approved Aug. 28, 2018. The first phase-in took effect April 1, 2019.

The revised increases come after Grant PUD's first annual analysis of the concentration, business and regulatory risk presented by the evolving industry class. The rate is designed to cover costs and protect both Grant PUD and its customers from the elevated risk presented by nascent businesses.

The rate increases approved Tuesday are lower than the original rates approved because risk from cryptocurrency firms has declined.

Commissioners approved Rate 17 in 2018 in response to a big influx of energy requests from cryptocurrency miners in 2017, as the price of a leading cryptocurrency, bitcoin, peaked. Since the first phase-in of the new rate took effect, the total of energy currently used by crypto mining in Grant County, combined with hook-up requests from cryptocurrency firms, has declined.

Cryptocurrency miners currently use 22.5 average megawatts of electricity in Grant County, up from 8.7 average megawatts in 2017. View a presentation materials with staff's revised rate proposal here, pages 38-66. Read a detailed description on pages 6-16 of the March 10 commission packet.No audio is available.

Commissioners also:

— Heard about key projects that Grant PUD's Fish and Wildlife Department will focus on in 2020 as the group begins ramping up for its core season of field work.

Grant PUD Fish and Wildlife Manager Tom Dresser told commissioners that after analyzing a variety of options, an additional well will be added to Grant PUD's Carlton fish-acclimation facility located in Okanogan County on the Methow River.

An additional well is needed because the facility's water source, the Methow River, is migrating away from the location's water intake. This new alternative will provide a backup water supply while also proving to be the lowest-cost option at approximately $550,000.

Commissioners also heard that repairs to two of the eight wells at the Priest Rapids Hatchery should be complete within the upcoming weeks. In total three of the hatchery's eight wells became inoperable when the Priest Rapids Reservoir was lowered in 2018 to accommodate work on the dam's spillway. One of the three wells have already been rehabbed and is working properly.

A few of the longer-term activities highlighted include:

  • Future evaluations of survival standards of juvenile Chinook salmon.
  • Strategy implementation regarding bird predation outside the project area.
  • An implementation of a hatchery program for spring Chinook salmon in Chelan County's White River.
  • Various vegetation management programs.

See additional details on pages 30-44 of the staff reports.

— Heard from Manager of Cultural Resources Brett Lenz who reported on the following activities for the department:

  • Completed memorandum of understanding for the Priest Rapids right embankment project for its stakeholder group.
  • Deconstruction of the Wanapum Tule Mat Lodge. A project that occurs once every decade to ensure the knowledge and skill is passed down.
  • Ongoing mitigation efforts of project-wide cultural resources.

See additional details on pages 30-44 of the staff reports.

Heard the 2019 year-end results of Grant PUD's key "metrics" — financial and performance indicators, which changed little from the 2019 third-quarter results. Most targets are at or exceeding their marks. Others are forecast to improve. See the presentation here, pages 1-6.

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