Council authorizes search for cheaper power

CHENEY — The best time to buy is when the price is right, and Cheney’s Light Department believes that time is right now.

Or more specifically April 16 — the date department Director Steve Marx told City Council at its April 13 meeting he was looking at to make a purchase of Tier 2 power for the city. Tier 2 power is energy purchased in addition to the city’s regular supply from the Bonneville Power Administration and is usually power produced by other utilities or energy companies and marketed through agreements with Northwest Intergovernmental Energy Supply (NIES), which is regulated by Northwest Requirements Utilities (NRU).

Council approved the resolution authorizing Marx to purchase power for 2022 at prices not to exceed $35 per megawatt hour (MWH) and not to exceed $34 per MWH in 2023. The amount budgeted in the resolution totaled $604,440 — $306,600 for 2022 and $297,840 in 2023.

As of April 2 the price for Tier 2 power was $33.18 MWH. In comparison, Marx said the city negotiated a price of $24.77 MWH from NIES for 2021 — power purchased under an agreement in place before he took over as director in 2018. He added the price was $22 MWH in 2020.

While prices were dropping, as of April 13, many power officials expect them to eventually climb for a number of reasons ranging from efforts to move from some fossil fuels to clean energy sources to environmental factors.

“The good news for the Pacific Northwest is the icepacks, snowpacks are good for water,” Marx said. “California is only at 58% of what they predicted for the snowpack. That’s affecting prices as we’re thinking California is going to have a really dry summer.”

City Administrator Mark Schuller, who serves on the NRU board, said recommendations are to make power purchases now with the momentary movement down before prices spike up due to other factors.

“Trends are energy will become more and more costly with some of clean energy initiatives and taking some fossil fuels off line,” Schuller said. “There’s a lot of concern prices are going to go up significantly in the future.

“So there’s really not a so-called ‘glut of power’ right now?” Councilman Paul Schmidt asked.

Both Marx and Schuller answered “No.”

Despite authorization, Marx said in an April 26 email the purchase did not take place on April 16 as rates were higher than the caps set by council. The city is obligated in its contract with NIES to purchase two megawatts of power per year, and has already met half of that agreement through previous purchases for 2022 and 2023.

“The current approval by the council is open to purchase until June 2021,” Marx said. “If prices do not come back down over the next few weeks, I will have to go back to council and get the cap raised and purchase period extended to meet our obligation.

Cheney is also obligated to purchase 15MW from BPA this year, and they will allow the city to purchase up to 1 MW of Tier 2 if needed.

“Usually, BPA’s Tier 2 is a lot higher than what NIES offers, therefore the NIES purchases,” Marx said.

Also at the meeting, council approved a binding site plan to allow property owner Dick Roccanova to split one of his lots at 1717 1st St. to allow for future construction of another office building. The proposal was originally brought before council in late March, but differed to the Public Works Committee for discussion on access to the site via Andrus Road, located to the east of the parcel.

The result was verbiage being added stating that if “at the time of development of Lot 2 there is any access to Lot 2 from Andrus Road, street improvements would be required between the developed site and 1st Street.

“In other words if there’s any connections to Andrus Road there needs to be road improvements on that site,” Public Works Director Todd Ableman said.

John McCallum can be reached at jmac@cheneyfreepress.com.