Fillmore, towns go to open market for higher-cost power
Electric ratepayers in some Millard County communities might soon be seeing their monthly bills increase.
That’s because their city or town is probably paying more for the electricity it sells residents than they or their customers are used to paying.
Member communities of UAMPS, the Utah Associated Municipal Power Systems, have been feeling the pinch lately from being forced to buy more expensive power on the open market since last Fall.
So far the communities have mostly absorbed the increases. But long-term that’s untenable and residents will likely be asked to foot more of the bill in the near future, multiple officials have warned.
Local UAMPS members include Fillmore, Oak City, Holden, Meadow and Kanosh.
Those communities are seeing higher costs after a cascade of events disrupted the available power supply—general shortages in coal supplies, a coal mine fire in Carbon County, closing of a major power generator in New Mexico, a slow-down at the Hunter power plant in Emery County, drought-related dwindling of hydro-electric resources and more.
Fillmore City Councilman Dennis Alldredge, who oversees electricity in his city, has been saying for months how each electricity bill is bigger than the last, costing the city far more than the nine cents per kilowatt hour it currently charges residents.
“The power bill for January was better than double what we normally pay in January. In fact it was approaching three times. February might be as bad,” he warned council members last week. “You’ve got IPP and Hunter both now… can’t get coal. So they power down this time of the year to stockpile coal for the summertime. So they can go full schedule in the summertime.”
Alldredge said Hunter is running probably at a third to a fourth of what it normally does.
“Hunter provides most of the power for all these areas around here. And they’ve powered down. So now we have to go out on the open market looking for power. And they are taking advantage of us,” the councilman said.
Holden is seeing the same and warning residents there that higher rates are imminent.
David Wood, a Holden Town Council member who also serves on UAMPS’ board of directors, said last month he expects to have a rate study partly completed this month.
“The Hunter plant was shut down because of the coal mine fire (at the Lila Canyon Mine near East Carbon) over there…our two sources of power for the town are Hunter and the CRSP Project (Colorado River Storage Project), which is the hydros on the dams,” he described at a Jan. 11 town council meeting. “As you know, the hydros aren’t doing well either. So we’re going on open market right now. Our bill (December) that we received from UAMPS for the power is delayed a month, so you don’t know what last month cost. But it will be higher than November’s. And January will be higher than last month was.”
Wood said Holden’s most recent power bill was 141 percent higher than in the same month the previous year.
“That’s the wholesale power that we get charged,” Wood said. “From October to November, it went up 89 percent.”
Wood predicted the town would be forced to buy power on the open market until at least March.
“We’ll probably be looking at some rate increases,” Wood said. “Holden can’t cover that. We have to cover our costs. If it costs us that, where is that money going to come from? We’re charging less than what we are getting billed.”
UAMPS communities have long been in the position to sell power above their own costs, generating much-needed revenue from electricity sales. But lately those days seem at an end.
LaVarr Webb, a UAMPS spokesman, said disruption in the power markets is happening nationwide.
He said the only way forward is to continue to develop alternative supplies.
“There have been these disruptions in the power market. Prices have gone up. UAMPS, along with its members, is considering additional power projects…encouraging its members to develop more UAMPS-owned, or even locally-owned, power generation projects so that they are not as reliant on the open market,” he said during a recent interview.
Fillmore for one has been a diligent UAMPS participant, supportive of recent efforts to develop a carbon-free, small-scale nuclear alternative to the coal-fired power it is used to buying.
Called NuScale, the development was projected to deliver some 700 megawatts of power from a combined six small nuclear reactors by 2030. Original plans called for 12 such modules in 2016. But a lack of power purchase agreements combined with higher than expected development costs is threatening now to scuttle even the scaled down effort entirely.
Eric Larsen, a UAMPS board member representing Fillmore, last week urged the city to stick with its NuScale investment for one more year. He said if the city jumped ship now—once a year communities can weigh whether to continue supporting the project or leave it—it would need to reimburse UAMPS for its costs related to the project. However, if it stayed one more year and the project continued to fail in getting more support, the whole effort could collapse and the city would be reimbursed instead.
“If we wait and everyone gets out, we’ll get reimbursed for the costs that we’ve had,” he said.
Fillmore council members agreed to give the project one more year, with Alldredge saying that even with the higher development costs the electricity from the project—it was originally predicted to supply power at about five cents a kilowatt hour—would still only cost the city about nine cents a kilowatt hour.
Larsen said there were a few other generation projects in the works, including a solar project in Box Elder County that was scheduled to open in December, but was delayed by supply chain problems. It now should come online in September, he said.
Another solar project is slated for development near Cedar City. It will operate in conjunction with battery back-up for power generation even when the sun isn’t shining, he said.
Larsen also presented a concept project that Fillmore could build internally, as a way to provide backup power in an emergency. This involves a 1,500 kilowatt, natural gas fired generator that could be placed inside a vacant building within the city. However, the costs of the project—it ranged from $1 million to $10 million—could be prohibitive, he said.
Fillmore City’s peak electricity use is 7,000 kilowatt hours during the summer months, so a 1,500-kilowatt generator could only supply about 20 percent of the city’s overall needs.
Ironically, Fillmore and the other UAMPS member communities, also receive an allotment of electricity from the Intermountain Power Project—Utah municipalities technically own 14 percent of the power produced. But, they mostly choose to layoff that electricity to users in California.
John Ward, a spokesman for Intermountain Power Agency, who happened to be in Fillmore last week to give council members an update on the IPP Renewed project, said their participation in IPP served as an “insurance policy” against unexpected cost increases related to power disruptions. As an example, he said Utah cities that exercised their options to call back power from IPP for themselves during the summer months in 2022 saved about $6 million by doing so compared to what their costs for power would have been on the open market.
Sidebar: Sen. Owens seeks funds for IPP coal units study
State Sen. Derrin Owens, a Republican representing the east side of Millard County as part of District 27, submitted a request for $500,000 in funding to study keeping the Intermountain Power Project’s two coal units open past 2025.
He first presented the funding request to the Business, Economic Development, and Labor Appropriations Subcommittee on Feb. 1.
“This is one of the crown jewel gems of Utah, which is set now to be dismantled and put in a landfill somewhere,” he told the subcommittee. “While some municipalities have rights to some of the power, 99-plus percent goes to California. The existing plant is Utah’s largest power plant and one of the newest, largest, most efficient plants in the nation, if not the world. That’s why I am here.”
Owens went on to cite the economic benefits provided by IPP’s existing operations, including the number of jobs associated with the plant, including mining and trucking positions.
“We should look at this carefully before having this expire and taken down. I believe there’s other possibilities out there,” he told the subcommittee.
The senator assured listeners he in no way wished the study to disrupt the ongoing transition project taking place at IPP.
“I want to make sure this is on the record. This in no way is to harm or hinder the progress going forward building the gas and hydrogen plant currently underway. This is a study to see if there’s a possible route forward.”
Owens said he did not believe this was the right time to “prematurely” be retiring the state’s energy infrastructure.
The request was laster passed out of the subcommittee and sent to the legislature’s Executive Appropriations Committee to await final approval. A spokesperson in Owens’ office said via email that if the request is funded it will show up in the state’s final budget, which will come out on the last day of the 2023 legislative session.
An earlier effort to purchase IPP’s coal units and other assets was made by a partnership between a Utah-based data center development business called Fibernet and an energy company, Enchant. IPA’s board of directors refused the offer last Fall.
When asked to comment about Owens’ request, an IPA spokesman declined to comment.
IPP’s coal units are scheduled to be offline in 2025. During a city council meeting last week in Fillmore, IPA spokesman John Ward said keeping the coal units open past 2025 would cost at least $300 million and require compliance with a host of new federal air quality and other environmental regulations.
