Commission Recap 7-14-2020: Power Production overcomes unique challenges of COVID-19

Even with the obstacles brought by COVID-19, Power Production operations had a strong performance during the second quarter of 2020. This according to Senior Manager of Power Production Engineering, Dale Campbell as he shared highlights with commissioners of the group's ongoing efforts to safely and reliably generate power.

Campbell told commissioners that except for five hours in June, the "project availability" - the percentage of time that turbine and generator units at Priest Rapids and Wanapum dams are available to generate electricity - met or exceeded targeted goals for the first half of the year.

Scheduling shifts in maintenance and planned outages due to COVID-19 will result in below targeted availability for July and August, Campbell said. Although he foresees meeting targeted plant availability goals again later in the fall.

The department expects to underspend its $40.8 million capital budget in 2020. Mainly due to final permitting delays in the group's largest project, the Priest Rapids Right Embankment Improvement Project. The anticipated start of the federally mandated construction project has been moved from April to October. The new embankment on Yakima County side of Priest Rapids Dam will help with the seismic resistance of the embankment. Commissioners previously approved a change order to accommodate the delay.

Other key projects discussed include the deployment of the third new unit at Priest Rapids Dam in August, followed shortly by the last of the new generator units at Wanapum Dam coming online. The group also expects completing the roof replacement project for the Wanapum Dam Powerhouse later this summer.

See Power Production's full quarterly briefing to the commission on pages 1-16 of commission presentation materials and hear the discussion beginning at 30:05 of the commission audio.

Grant PUD Recreation Areas Seeing Plenty of Summer Activity

Commissioners learned that Grant PUD's recreation areas are seeing a strong number of visitors since facilities reopened to the public following COVID closures in March.

"In the parks and recreation front, it's turning out to be a very interesting year," said Manager of Lands and Recreation, Shannon Lowry as recreation area use is exceeding early season expectations.

Lowry surmised that the combination of changing working conditions experienced by many, along with the limited number of leisure activities due to COVID-19 have resulted in the increased number of visitors enjoying Grant PUD's sites.

"They've certainly found our project," said Lowry who noted that campsites are full on the weekends and recreation day-use areas are very busy. Since reopening, security personnel are ensuring that social distancing requirements are being met. In general, visitors are respecting the social-distancing rules, she added.

Planned visitor surveys at Grant PUD's recreation areas will be delayed until next year. The delay is a result of the atypical usage pattern this summer due to COVID-19. The surveys are generally conducted every three years and provide insight over time into visitor perceptions of the recreation areas and details as to how the sites are being used.

The group is seeing an uptick in the number of encroachments along the project shoreline areas, including unauthorized buoys, placement of fire pits and other personal property, motorized vehicle use, and illegal construction. Staff continues to work with adjacent landowners and homeowners' associations to provide education on Grant PUD's shoreline requirements and to resolve existing encroachments.

The department completed six filings with the Federal Energy Regulation Commission (FERC) during the past quarter. Staff also continued their efforts to support business continuity throughout the utility by providing real estate and GIS support for priority Wholesale Fiber, Power Delivery, and Power Production projects.

See the full quarterly report from Lands and Recreation on pages 20-30 of commission presentation materials. Listen to the discussion starting at 1:04:40 of the commission audio

Commissioners:

— Heard from Manager of Enterprise Risk Paul Dietz about his team's efforts to measure risk and increase employee understanding of risk. Benefits could lead to lower insurance premiums, increased revenue from sale of surplus power and more reliable service. Dietz has played a key role in Grant PUD's response to the COVID-10 pandemic by tracking and predicting trends that influence decision-making. Efforts by the Enterprise Risk Team support the Grant PUD objectives of long-term stable rates; financial strength and safe, responsible operation. Hear the discussion at 1:35:40 on the commission audio. View pages 31-41 of the presentation materials.

— Heard about preparations for the upcoming North American Electric Reliability Corporation (NERC) audit of Grant PUD's compliance with national standards for electric system reliability. Compliance with these standards is required by law. The audit will take place Aug. 10 to 21 and happens approximately every 3 years, Compliance Program Manager Gene Austin old commissioners. Due to the COVID-19 pandemic, the "on-site" portion of the audit will be conducted virtually, Austin said. The results should be ready approximately 30 days from the close of the audit. Hear the discussion at 2:50:50 on the commission audio. View pages 43-56 of the presentations materials.

— Heard from Senior Wholesale Manager Rich Flanigan about advanced plans to reduce risk by entering into new slice contracts to forward-sell energy generated by Priest Rapids and Wanapum dams.

Grant is working with the winning bidders on two new contracts. In the largest contract, the bidder pays Grant PUD a premium price for 33.31% of the dams' output. The bidder agrees to supply a fixed amount of firm energy back to Grant PUD to help cover local "load" (in-county energy demand). The bidder benefits from the potential to sell any power not needed to supply Grant PUD's load to other buyers at a higher price for the power's carbon-free attributes and/or on-demand availability.

Companies have paid more for carbon-free hydropower and for the use of the dams' flexibility to balance wind and solar power, Flanigan told commissioners. The new 5-year contract replaces a similar contract with Shell Energy that expires at the end of September. The second contract is for a 3-year slice for 20% of the dams' output. The names of the winning bidders will be announced when the contracts are signed.

A 3-year slice contract is already in place with Avangrid Renewables for the remaining 10% of Grant PUD's total, 63.31% share of the dams' physical generation.

The amount of Columbia River flow varies wildly from year to year, Flanigan said, and so does the price Grant PUD would get on the regional wholesale market for its surplus generation. Selling slices of generation forward reduces water risk by locking in predictable, above-market price and expected volume. The predictability contributes to Grant PUD's strategic objectives to provide long-term stable rates and maintain a strong financial position.

Hear the discussion at 3:23:35 on the commission audio. View pages 56-75 of the presentations materials.

Commissioners also:

— Unanimously approved a revised General Service Rate Schedule 2, Street Lighting Service Rate Schedule 6 and fee schedule. Staff recommended the changes. The modification to Rate Schedule 2 would add a new fee schedule for small devices that consume energy but do not justify the cost of a meter. The change to Rate Schedule 6 would add LED into the Street Lighting schedule in response to recent interest from cities within the County.Changes to the Fee Schedule corrects fees associated with Customer Service Policy Section 4.5.1.A. For more information, see pages 7-10 of the commission packet.

— Unanimously agreed to authorize General Manager/CEO Kevin Nordt, on behalf of Grant PUD, to execute Change Order No. 6 to Contract 430-4151 with Jack R. Benjamin and Associates for seismic analysis of the Wanapum Dam left bank. The change order increases the not-to-exceed contract amount by $510,000.00, for a new contract total of $1,500,000.00, extending the contract completion date to December 31, 2021 and resetting the delegated authority levels to the authority granted to the General Manager/CEO per Resolution No. 8609 for charges incurred as a result of Change Order No. 6. For more information, see pages 10-16 of the commission packet.