PUD General Manager shares his thoughts in ‘Clearing Up’
Roger Kline was recently interviewed for ‘Clearing Up’, the definitive news and information resource for electricity and natural gas in the greater Pacific Northwest. http://www.newsdata.com/cu/index.html
Bearing Down
Public Power Perspective: Northern Wasco County PUD
SUMMARY: This is the second in an occasional series of question-and-answer articles featuring public-power utility officials around the Northwest. This comes from General Manager Roger Kline of Oregon’s Northern Wasco County PUD.
1) Please share information about your utility demographics/trends: customer numbers/sectors, geography, annual revenues, number of employees, load growth, BPA customer status, any non-BPA resources, local economy.
Northern Wasco County PUD (NWCPUD) is based in The Dalles, Ore., along the Columbia River approximately 78 miles east of Portland. We’re in the Columbia River Gorge National Scenic Area and our location is essentially where the “green” part of the region transitions to the hotter, drier climate zone.
Historically, The Dalles was once home to much of the Northwest aluminum industry, but has transitioned into more of an advanced-technology area. We currently serve just over 10,200 meters with a new system peak just experienced earlier this August of 121 MW. That isn’t huge by any means, but for a historically winter-peaking utility, this is a change. Our largest build-outs are in the data-technology space, with expected loads in the next five-year planning horizon greater than 500 MW.
Our annual budget is just over $42 million in 2018 and our current asset value is just under $100 million. I should note we do have a 10-year capital investment plan of just over $37 million, and have completed our first new substation build in well over 20 years, with another starting next year.
NWCPUD is a full-requirements customer of BPA, but also owns a 5 MW hydroelectric generating station at The Dalles Dam fishway and is co-owner of a 10 MW unit at McNary Dam fishway. We market the output of one and bring the other into our system to serve our load. We also have contract resources for energy from third-parties.
2) How are you viewing BPA as a future power supplier as you look ahead to the current wholesale contracts expiring in 2028? What other options would you consider, at this point, and what are your criteria for evaluation?
NWCPUD considers BPA an integral partner for our mutual success. The Celilo Converter Station and Big Eddy substation are here in The Dalles, as is the U.S. Army Corps of Engineers’ The Dalles Dam. Being a good steward of the FCRPS is part of our value system, and we work very hard as a utility and through our various industry associations to ensure Bonneville receives the feedback necessary to help it shape its place in the future.
It is in all our best interests for Bonneville to be successful. That doesn’t mean we don’t have other resources available to us, or aren’t pursuing other options, but we will continue to bear influence towards supporting a successful BPA.
Cost, reliability, life cycle and environmental attributes are the primary evaluation criteria we are considering now, as they align with our values and strategic plan. Those aren’t in any specific order, nor are they weighted, contrary to what folks may believe (cheapest isn’t always best).
3) What’s your view of BPA’s efforts to control costs, increase revenues, strengthen its overall financial health and stay competitive, while investing in modernizing assets and system operations, as expressed in its strategic plan and elsewhere?
Generally speaking, I believe that working towards “bending the cost curve” is the right thing for BPA to do. There are specific actions within Bonneville’s various plans and strategies that I support more than others—such as BPA’s capital investment strategy, ensuring that planned resources are being executed appropriately—but overall, the work BPA is doing is necessary.
Personally, I believe a more aggressive cost-cutting approach is needed, but we will all eventually get to vote (or not) with our future contracts. As previously stated, I’m very supportive of the effort, but it’s time to use an ax, not a scalpel, in some areas. For clarity, that means the other federal partners, U.S. Bureau of Reclamation and the U.S. Army Corps of Engineers, as well as Bonneville. I think BPA is moving the right way; I’m not convinced about the others.
4) What’s your view of the Western EIM as well as potential new/expanded centralized markets in the Northwest and West? What concerns do you have with this market evolution as well as opportunities you see? What’s the best market scenario for your utility, at this point, and why?
Full disclosure: I started my energy career after military service working for independent power producers and large for-profit corporations, so I’m a huge believer in market-based solutions.
My sense is that in bilateral-only markets, there tend to be winners and losers. Public power has been a winner for a long time, and that isn’t necessarily true anymore.
If policymakers (local, regional, national) can get out of their way a bit, there are benefits to be had across the West from a regionwide market. In my opinion, that will allow for more winners, or at least a true levelized playing field where businesses, utilities or otherwise, can make their own decisions based on their individual needs.
For NWCPUD, we have a varied customer base with different interests and motivations. Lowest cost may be best for one, highest environmental attribute may be best for another. I’m indifferent—I just want to provide it safely, reliably and fairly to both. I need flexibility, predictability and the associated technology tools and human capital resources to provide that.
Maybe BPA can provide that as a Western EIM participant, maybe I’ll be in the marketplace myself, maybe it’ll be through a completely different type of relationship in the future. We’re open to what’s best for our organization.
5) What state and federal energy policies (current or potential) are you keeping a close eye on? Which are most relevant and impactful for your utility?
Carbon policy in Oregon is an area of focus right now. We want to make sure it’s really about carbon, and not just subsidized renewables development (higher renewables portfolio standards don’t reduce carbon).
The worst-case scenario is that we exacerbate “oversupply” conditions, increase costs to consumers, and don’t actually reduce carbon output in the state or region.
There’s also a huge concern with “leakage,” or driving away business to bordering states with even less regulation, so all we reduce are jobs and tax base.
I look at what the competitive advantage is for NWCPUD and the Pacific Northwest region. At its base is low-cost, highly reliable, non-carbon-emitting hydropower. We’re a growing utility and adding huge benefits to our community. Anything that jeopardizes that is going to be in my crosshairs.
If carbon policy is done correctly—a “cap-and-trade” market seems to be the most efficient and cost-effective at the moment—we add value to the hydro system, which benefits NWCPUD, BPA and our region. That’s something I would gladly support.
6) How are you thinking about and responding to the changes in the electric utility industry, such as evolving customer interests, flattening loads, technology advances, business models, and decarbonization? What’s top of mind for you and your utility in this smorgasbord?
I see all of this as opportunity. We work very hard to have a trusted relationship with our customers. As their needs change, we need to change with them. All utilities have challenges with finding and communicating our optimal cost-recovery rate structures to be that provider of choice that we all desire to be. I think the challenges in our business model and recovering those fixed costs will eventually lead to more regional-sized utilities.
Whether this means mergers, acquisitions, contracting models, I’m not exactly sure, but I am hopeful good business decisions eventually win out for our customers.
7) What’s your vision for your utility in 5-10 years?
As previously stated, we’re in mega-growth mode—new substations, planned new large single loads, housing development, downtown renovation, etc. All of that is opportunity for NWCPUD.
We’re working hard with other community partners and leaders to envision what our community could look like in that same time frame.
I can’t focus on the utility without working with the other stakeholders, customers and our board of directors to make sure we’re all aligned and moving forward together.
We’re finalizing the next iteration of our strategic plan right now. It purposefully has a “through 2028” target because I believe in taking a longer-term view of what we do. I’m excited for the future; I hope others are as well.
[Roger Kline]
