|
 Southern California Public Power Authority continues in its role to meet the challenges facing the electric industry by acquiring additional reliable energy sources for its members. In meeting the renewable power mandate, wind energy power was added to its portfolio with the addition of two wind projects: the Milford Wind Corridor, and Pebble Springs Wind Projects. The Milford Wind Corridor Phase I Project consisting of 200 MW, will be located in Utah. Wind power will be delivered to SCPPA through the IPP switching station located in Delta, Utah. The term of the project is for 20 years with commercial operation expected to commence in late 2008. The Pebble Springs Wind Project is approximately 100 MW and will be located in Oregon. The wind power is scheduled to be delivered to SCPPA through the project substation by late 2008. The term of the project is for 18 years, including a right of first offer following the 10th contract year. Both wind projects are in the final planning stages, and participant approval is expected in the near future.
SCPPA is acquiring additional reliable energy sources, continuing in its commitment to its members. Following the successful completion of Phase I of the acquisition of in-ground reserves this past year in Wyoming and Texas, SCPPA developed a Natural Gas Prepayment Program designed to add additional stability in the participant’s fuel portfolios. The Natural Gas Prepayment Program developed consists of the acquisition of the right to receive an aggregate amount of approximately 129 billion cubic feet of natural gas over 30 years from a supplier pursuant to the terms of Prepaid Natural Gas Sales Agreements. The Gas Prepayment Program was divided into two projects; with the cities of Anaheim, Burbank, Colton, Glendale, and Pasadena as Project No. 1, and Los Angeles Department of Water & Power as Project No. 2. Project No.1 is expected to be completed later this year, with Project No. 2 following in early 2008. This structure will provide flexibility and will benefit the participants in several ways. First it will lock in natural gas prices on a discounted basis. It will, enhance the reliability of supply through a long-term prepaid contract and supplier diversification, and provide substantial savings over time. It also provides for a favorable risk allocation so that all debt service payments by SCPPA associated with the issuance of tax-exempt bonds for the prepayment and gas payments by SCPPA participants are contingent upon the delivery of the gas. It includes several termination events to unwind the structure at no cost to SCPPA. Rating agencies have provided favorable reviews of natural gas prepay deals, and exclude natural gas prepay bonds from the calculation of the SCPPA participants’ debt calculation. SCPPA is in the process of negotiating the agreements, on behalf of interested participants, and this project is in its final stages of completion.
The Authority consists of its twelve members (Anaheim, Azusa, Banning, Burbank, Cerritos, Colton, Glendale, the Imperial Irrigation District, Los Angeles, Pasadena, Riverside, and Vernon), and collectively deliver electricity and provide services to over two million customers. Proudly serving as its Executive Director, now in my eighth year, I am honored to have been associated with SCPPA for most of its existence. Traditionally, SCPPA’s investments have been in the areas of coal, hydroelectric, natural gas-fired generation, and nuclear, as well as high voltage transmission to deliver electric energy to California. Over the past year, SCPPA’s success has continued with the addition of renewable energy sources as well. SCPPA continues to grow at a record setting pace with the addition of its latest wind projects and, together with The Natural Gas Prepayment Project, will experience another 30% in growth. Over the past two years, the number of projects has almost doubled.
This phenomenal growth and continued success has been attributable to the member’s effective use of joint action. Through visionary planning, SCPPA’s members have not only added locally-owned generation with the addition of the Magnolia Power Project, but investment in natural gas reserves to hedge against volatile natural gas prices as well. SCPPA also continues its commitment in renewable energy with its latest request for proposals and consideration for additional renewable resource supplies, such as wind, and geothermal.
The success and growth of SCPPA has provided the members with the ability to maintain the local demand for energy. With the continued uncertainty in California’s electricity industry, SCPPA will continue to proactively assist its members in aggressively meeting new challenges. Over the years, SCPPA’s success has been attributable to the collective and visionary leadership of its members. Working together, we know that we will be positioned to face the new challenges within our industry.
Bill D. Carnahan
Executive Director
|
