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Energy Sales
Swift River plans to negotiate new power purchase agreements (PPA) for
the Turners Falls Hydro and Woronoco Hydro projects with customers who
want competitive
long-term energy prices and value renewable energy as clean, non-depleting and less expensive
over the long-term.
Based on operating records of IPC, we estimate that depending on
the time of year, initially Turners Falls and Woronoco will have between 1.2 and 2.0 GWH
per month for sale. Annual output is approximately 20 GWH per year. Once we
have rehabbed the equipment to improve efficiency and increased capacity at Woronoco and
when we have determined if the WMECO Water Exchange Agreement will be extended, we expect
average annual supply to be closer to 25 GWH per year.
Key Benefits
- Renewable energy resources are sustainable and do not cause environmental
impacts. The facilities will obtain the certification of the Green "E" so
that customers will be assured that the hydro generation has no negative impacts.
- Turners Falls and Woronoco have each operated for more than 80 years. There will
be no operating surprises, so generation will be reliable and managed by
SRHOCO, an operations company made up of experienced hydro
specialists.
- Competitive energy price benefits can be passed on to customers if
long-term contracts are negotiated.
In the early years, principals of Swift River and
Hobbs Contracting must repay the financing that IPC provided as an inducement
to sell its hydro
facilities. In today's market, renewable energy resources (hydro,
biomass and wind) are once again very competitive as long as the competition
is fair. However, there is political interference in
the renewable energy market brought
on by de-regulation. In Massachusetts, the new
renewable technologies of wind, fuel cells and landfill gas have successfully
lobbied to keep the old renewable energy sources of hydro, biomass and solid
waste from inclusion in the Renewable Portfolio Standard (RPS). All
electric distribution companies must include renewable resources selected from
the RPS as the energy source for at least 3% of their total supply by 2003.
In Maine, hydro must be 30% of that state's RPS, but in Massachusetts, in
order to encourage investment in new renewable technologies, hydro is
considered as a non-renewable energy source. In addition, the Renewable
Technology Lab has been set up to subsidize these new renewable technologies,
leaving hydro producers to find for themselves in a market whose marginal
energy price (based on the dump power, or surplus energy market of NEPOOL) has
prices that are less than half of the contract prices available a decade ago.
The cost structure of the utilities has shifted from a
blended mix of cost recovery
pricing for generation,
transmission and distribution. During the
last few years, the rules have changed to
permit distribution companies
to recover their stranded cost of capital after they were forced to sell
all of their generation assets.
Now these distributors can
recover only the contracted energy costs
charged by their wholesale
suppliers plus they are permitted to charge for their own
distribution and capacity costs. However, if these costs rise (as they presently
are under the
extreme pressure of OPEC pricing and fear of a Middle
East war), either the rules will be modified to allow energy cost
recovery (as existed during the time of the fuel adjustment clause) or the
distribution companies will have to finance the higher cost of their energy
supply and recover these costs over an extended period of time after energy price controls have been removed.
In either case, the customer should expect that they will pay for the fossil fuel
price rises in their electric rates, either now or later.
These are the forces that are threatening bankruptcy for
all the California electric distribution companies.
Signing a long-term contract with renewable energy
project is the best way to hold down the
energy portion of
these rising electric costs for the
long-run. It is possible to
contract for a long-term energy only price that is very competitive because
there is the expectation that green energy certificates representing the zero
emissions from hydro projects will soon command an additional price of from
$0.02 to $0.05 per kilowatt hour. There projects may not be able to sell
their renewable GIS certificates in Massachusetts in the short run, but their
may be sold to New York State, to Maine and soon to Vermont or Connecticut load
serving entities (LSEs) -- the latest name for a power distributor. When the
renewable attributes for Woronoco and Turners Falls are being sold via the
GIS to a LSE, the energy price can be reduced under the terms of the long-term
contract for the energy sales.
Hobbs rigs a rebuilt
generator through the 2nd floor window in order to reach the basement powerhouse
of the Valley Paper Company in Holyoke, Massachusetts.
Call to Negotiate a Contract
- Swift River Company can be reached at (978) 468-3999 or
send an e-mail to
Peter B. Clark at
pclark@swiftriverhydro.com
with information about the contracting terms that SRC would offer for a renewable energy PPA.
This might be for Woronoco Hydro LLC, Turners Falls Hydro LLC or for both projects together.
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