Commission summary, 8/23/2022 — Grant PUD will continue to evaluate X-energy nuclear option
Focus on X-energy will allow additional in-depth analysis about whether to move forward and build
Grant PUD will focus on the technology of Maryland-based X-energy in the utility's continuing feasibility analysis of building a small modular reactor (SMR) nuclear energy plant.
For the past 18 months, Kevin Nordt, Grant PUD Chief Resource Officer, has led a team of Grant PUD employees and nuclear power consultants in exploring SMR technology as a potential power generation resource. Grant PUD is predicting that with expected growth, its present generation resources will be insufficient by 2026 during winter and summer months. Due to state-mandated clean-energy standards, any long-term power solution must have zero carbon emissions.
Nordt said X-Energy's Xe-100 SMR technology merits future exploration as a resource to potentially meet the county's needs. The Xe-100 offers technical and economic potential as a carbon-free, firm, dependable, flexible power resource that also exhibits superior attributes for operations, safety, and maintenance, plus potential licensing advantages.
The Xe-100 design was awarded up to $1.2 billion from the Department of Energy's Advanced Reactor Demonstration Program. The possibility of partnering with X-Energy to take advantage of the ARDP program in putting the Xe-100 design into production was another factor in the evaluation and recommendation, Nordt added.
During board discussion, Commissioner Tom Flint said he supported moving forward with continued evaluation of the X-100 technology and the carbon-free power it could provide to supplement Grant PUD's hydropower resources.
"We have to understand that we're in a new world," Flint said, adding that Grant PUD needed to have new power resources that could provide around-the-clock, on-demand energy to blend in with its hydropower generation.
Commissioner Nelson Cox said he agreed with Flint's comments.
The three other commissioners, Larry Schaapman, Terry Pyle and Judy Wilson said they would like to see more information brought to them about how SMRs compare to other potential generation resources before they'd feel confident moving forward with any development commitments with X-Energy.
While a continued exploration of SMR technology is merited, there should be more information provided to the commissioners about how other potential power resources compare, Schaapman said.
"It seems like nuclear is overshadowing other sources of energy," Schaapman said. "I need to get more information."
Added Wilson, "We want to be assured that there is not a better option out there."
Nordt said the evaluation team will work to provide the commissioners with further analysis about how SMR nuclear compares to other viable sources of energy.
Nordt also told commissioners that it's still too soon for he and his analysis team to have cost estimates to build a plant, nor are they ready to recommend land purchases or construction. That information will likely be ready for commission review during the first quarter of 2023.
Hear the full discussion at 40:16 on the commission audio. For additional information see pages 1-3 of the FYI Packet here.
Commissioners to weigh need for electric-rate increase
Grant PUD commissioners Tuesday asked staff for additional cost-of-service data to help them decide if a series of small, predictable rate increases should begin in 2023, to offset inflation-driven cost increases on large capital projects expected in the coming years.
"Inflation is hitting us globally, everywhere," John Mertlich, senior manager of Financial Planning and Analysis, told commissioners of total expenditures for capital projects and operations and maintenance expected to end the year $14.3 million higher than the $301.7 million budgeted for 2022.
He said financial forecasts for 2023 and 2024 show the utility is well positioned for the immediate impacts of high inflation. However, in the years beyond 2023-2024, inflation-driven higher costs, combined with growing Grant County electricity demand, could weaken Grant PUD's financial metrics and jeopardize its credit rating.
A reduced credit rating would result in millions of dollars in higher interest payments on any new financing needed to help pay for capital projects.
Commissioner Tom Flint said it might be better to start preparing for that future now.
"From my perspective, it's better to have small, predictable rate increases rather than large ones," Flint said. "I'm trying to get my hands around this inflation thing. It's better to have a little cushion."
Staff agreed to collect the best data currently available and report back.
Tuesday's discussion came during presentations on the current year's budget results through June and a financial forecast through 2027.
--Heard that Grant PUD's Enterprise Project Management Office is shepherding 38 capital and other projects with a combined budget for 2022 of more than $118.3 million. The office expects work on projects underway will end the year at about $90 million, as some project work has been deferred to 2023 to allow additional time for planning. "More planning means increased likelihood of executing projects with less risk," Aaron Kuntz, manager of the Enterprise Project Management Office —Power Production, told commissioners. Hear the full discussion at 2:00:37 on the commission audio. See the financial reports and forecast on pages 15-48 of the presentation materials.
-- Unanimously approved a Resolution 8994, providing for filing the proposed, 2023 budget and setting a dates for a public budget hearings -- .Oct. 10/11/2022, 2 p.m. EHQ commission room w/virtual option; 10/11/2022, 6 p.m., virtual only; 10/13/2022, 6 p.m., In-person at Port of Quincy board room.
-- Unanimously approved Resolution 8995 for the 2023-2026 Climate Commitment Act Cost Burden. The act allows utilities to apply for payments to offset added costs of a state mandate to supply customers with carbon-free electricity.--Unanimously approved Resolution 8996 for the 2022 Integrated Resource Plan, which underwent a thorough review and discussion at the June 28, 2022 meeting. View the full plan on pages 23-179 of the commission packet.
-- Unanimously approved changes to the Grant PUD Strategic Plan including updated value statements as well as including values that form part of the "Commitment to the Code of Excellence,", a collaborative initiative that has been adopted.
-- Unanimously authorized General Manager and CEO Rich Wallen to execute a contract for engineering services with Gannett Fleming for a not-to-exceed amount of $15 million with a completion date of 12/31/2032. The contractor will evaluate Wanapum Dam's earthen embankment for seismic strength and design improvements, if needed. Commissioners received an in-depth report about this contract during their Aug. 9, 2022 meeting.