Council eyes shorter-term power deal |

Council eyes shorter-term power deal

GLENWOOD SPRINGS, Colorado – The city of Glenwood Springs will pursue a shorter 10-year contract with its electric power supplier that will come with higher rates for electric customers compared to a proposed 30-year deal.

But it’s a chance to work with the multi-state Municipal Energy Agency of Nebraska (MEAN), the city’s wholesale supplier for the past decade, to increase the amount of local power generation allowed under a longer-term contract.

“I’ve stated it before, but leadership is not about what’s happening now. It’s about what’s happening down the road,” City Councilman Leo McKinney said at a special Thursday City Council meeting called to act on the power contract options.

“Some of the decisions made 40 and 50 years ago are the reason we don’t have a bypass,” he said, relating the potential consequences of a long-term power deal, with its limits on developing local renewable energy resources, to the city’s ongoing Highway 82 traffic problems.

“We’re making a decision here that is going to affect generations to come,” McKinney said.

After rejecting a motion to put the contract out to competitive bid, council voted 5-1 to work out a 10-year service contract with MEAN that would take effect in 2013. It also keeps the long-term option on the table.

A major sticking point in the “Service Schedule M” recommended by city staff and preferred by MEAN officials is a 2 percent, or 768-kilowatt limit on local power generation projects.

That could hinder the future ability to develop local power generation projects such as a geothermal binary system, a community solar garden, hydro power, or tapping the energy resource contained in the coal seam fire in South Canyon.

The 2 percent limit is intended as a “placeholder” for bond rating agencies related to financing for MEAN’s power plants elsewhere, explained Andrew Ross, energy services manager for MEAN, at the Thursday meeting.

If too much generation capacity is added to meet a local demand, it can put the financing for projects included in the overall power supply system at risk, he said.

That’s not to say the MEAN board of directors wouldn’t consider a higher limit. Even with the limit, as long as there’s not financial risk for MEAN as a whole, the board isn’t going to stand in the way of a local project that makes sense, Ross said.

“It does us no good to inhibit or limit projects that make financial or environmental sense,” he said.

While MEAN has been successful in increasing Glenwood Springs’ power supply portfolio to include 32 percent renewable resources, primarily wind and hydro, the system is still largely dependent on coal-fired generation.

Several citizens, including five former Glenwood Springs City Council members, urged the city to either seek competitive bids, opt for the shorter contract or seek to negotiate the 2 percent limit in the 30-year MEAN contract.

“I believe in coal, and I feel we still have hundreds of years worth of supply left,” former councilman Dave Merritt said. “But we do have lots of other resources in western Colorado that can be developed. I urge you to look at a 10-year contract that maintains flexibility.”

Glenwood Springs resident George Wear, who works with the National Renewable Energy Lab in Golden, said renewable resources are likely to become more cost competitive with coal within 30 years. He urged MEAN to consider a supplemental agreement as part of the long-term deal that would allow Glenwood Springs to develop its local resources beyond the 2 percent limit.

If not, “I think we should see who else might want to negotiate with us,” he said.

Sopris Elementary School student Hannah Juul stood before council to offer a voice for children on the issue.

“I realize you are trying to save money, but over a long period of time you have to consider the impacts on health and the environment, and I think it’s better to spend your money on renewables,” she urged.

Otherwise, “In 30 years, I’ll be the one cleaning up,” Juul said.

The long-term contract does provide the best rates for city electric users, though rates will be going up no matter what come January 2013, Glenwood Springs Public Works Director Robin Millyard said.

Based on current wholesale rates, the average monthly bill for residential users will increase from $52.57 now to $63.08 under the 30-year “Schedule M” deal. That would increase to $65.71 with the 10-year “Service Schedule K.”

Small commercial rates would increase from $188.96 on average per month currently to $226.75 under Schedule M, and to $236.20 under Schedule K.

Ross said the MEAN board might be convinced to reconsider the 2 percent limit. Even if the city goes with the shorter-term contract now, it’s possible to switch to the long-term contract before the 10 years is up, he said.

Glenwood Springs Mayor Matt Steckler said the long-term contract, as proposed, is not acceptable in preserving the city’s future energy development options.

“A perpetual agreement like this one is very difficult,” he said. “As the differential in cost [between fossil fuels and renewables] shrinks, we have to look at these viable options that we have here.”

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